Well hey there and welcome back to Heimler’s
History. So we’ve been going through Unit 7 of the AP U.S. History curriculum
and in the last video we considered the 1920s with all of its uproarious
roaring, but in this video it’s time to get depressed because we need to talk
about the Great Depression. So if you’re ready to get them brain cows milked limited
welfare state style, then let’s get to it. So in this video I’m going
to try to do the following: Explain the causes of the Great
Depression and its effects on the economy. So despite the cultural and moral crises
that were playing out in the 1920s, it was, in general an era of American prosperity,
not for all, but for a lot of people. But all that prosperity came crashing down on
October 29th, 1929, otherwise known as Black Tuesday when the stock market crashed. Now to
be clear, the crash was a weeks-long process, but generally speaking, the bottom fell
out on October 29th. So, what caused this? Well, first, farmers across the nation had
overproduced for several years and were therefore in severe debt. And you might wonder how in the
world OVER production can be a problem. Well, when you combine overproduction with high tariffs,
then baby, you got a depression stew going. Tariffs, which is to say, taxes on imports,
were exceedingly high in the 1920s. And in 1930, president Herbert Hoover signed the Hawley-Smoot
Tariff into law which crippled the ability of the United States to sell its excess products, both
agricultural and otherwise, on a global market. So that’s why agricultural overproduction put farmers
in a bad way leading up to the stock market crash. Additionally, the stock market itself was
artificially inflated during the 20s due to risky investment behavior like buying
on margin, otherwise known as speculation. Because it was assumed that the stock
market prices would continue to rise, then it became a common practice to borrow
money to buy stocks. And this was a good bet for a while because the stock prices rose
and you made back the money you had borrowed. But what happens when you borrow a bunch
of money you don’t have to buy stocks on the assumption that prices will increase and then
the bottom falls out? Well, in addition to losing all the value of your stock purchases, you’re also
in crushing debt without the funds to pay it back. So without getting too far into the weeds,
these were some of the causes of the stock market crash of 1929, which is generally
understood as the beginning of the Great Depression. Once the Depression hit Americans,
poverty and homelessness abounded and people began foreclosing on their home mortgages left and
right. And no small amount of people who had lost their homes took up residence in shantytowns which
they dubbed Hoovervilles after President Hoover. They did this as a criticism of Hoover’s laissez
faire economic policies at the beginning of the Great Depression. Hoover, as a Republican,
believed that given enough time, the economy would correct itself, and therefore minimal
government intervention was the right move. Now in 1932 it was time for a presidential
election and Democrat Franklin D. Roosevelt won in a landslide. Part of the reason is
because in the face of American suffering, Roosevelt was the opposite of Hoover. Roosevelt
campaigned on the promise of heavy government intervention, and once he came to power,
Roosevelt did more to expand the size and scope of the federal government than any
president before him. Now I know that some of my more conservative students just threw
up in their mouths a little when I said that, but you know, apparently that’s what the
majority of Americans wanted in 1932. And so it was under Roosevelt’s leadership
that policymakers in the 1930s responded to mass unemployment and social upheavals caused by
the Depression by transforming the United States into a limited welfare state, and that just
means that the government was going to take responsibility for the social and economic welfare
of its citizens. Now the big program you need to know here is Roosevelt’s New Deal which was the
banner under which many pieces of legislation were passed in order to shore up the American
economy and address joblessness in America. Now technically, there are two phases of the
New Deal, but I’m going to talk about it as if it was one thing so as to avoid confusion.
Now according to Roosevelt’s reckoning, the New Deal was there to address the
three R’s: relief for the unemployed, recovery for businesses, and reform of
economic institutions and let’s look at some of the New Deal legislative solutions
to each. Under relief for the unemployed, you saw works programs like the Public Works
Administration (PWA) which employed Americans to do federal infrastructure work like building
roads and dams and bridges. Similarly you had the Tennessee Valley Authority (TVA) which hired
people to run electric power plants which did work to control flooding and erosion. Also you
had the Civilian Conservation Corps (CCC) which employed young men between the ages of 18-24 to
manage soil conservation and forestry projects. Under the heading of recovery for businesses, you
should know the National Industrial Recovery Act of 1933. Roosevelt believed that one of the main
factors causing economic hardship was the cut throat competition in the business sector that had
caused workers’ wages to remain low which in turn meant that they couldn’t buy as much. So the NIRA
sought to resolve this problem by establishing a set of codes agreed upon by representatives
from the laboring community and representatives from competing corporations. These codes created
security for workers by establishing minimum wage levels, shorter working hours, and the regulation
of the prices of certain petroleum products. Under the heading of reform of economic
institutions, you need to know the Glass-Steagall Act of 1933. Because many folks
had lost confidence in the banking system, the Glass Steagall Act came in to shore up that
confidence. Essentially it increased regulation in banks and limited the ways banks could invest
people’s money. To this end, the Glass-Steagall Act gave birth to a new entity called the Federal
Deposit Insurance Corporation (FDIC) which guaranteed people’s bank deposits with federal
money. Additionally, under this heading you should know about the Securities and Exchange Commission
(SEC). Not only had people lost confidence in banks, but also, understandably, in the stock
market. The SEC was established to regulate the stock market and prevent turdish behavior
like buying on margin and insider trading. Now in the second phase of the New Deal,
you need to know about one of the most enduring programs that was established,
namely, the Social Security Act of 1935. This law provided for a safety net of income
for workers over the age of 65. Basically, part of a worker’s wages were withheld
by the federal government and then paid back to them when they reached retirement age.
And that program is still going strong today. So I’ve only named a fraction of the
New Deal programs, but what you need to remember about the New Deal as a whole is
that it transformed the United States into a limited welfare state and seriously expanded
the aims of modern American liberalism. Now it won’t surprise you to know that not
everyone was happy about big daddy government getting so heavily involved in American life.
And what’s kind of crazy is that the New Deal was criticized BOTH by liberals and conservatives.
Liberals griped because the New Deal did too much for big businesses at the expense of
the unemployed and poor. In other words, for some liberals, the New Deal wasn’t liberal
ENOUGH. Conservatives, on the other hand, criticized the New Deal because of the extreme
federal overreach that it represented. Now the conservatives on more than one occasion took
Roosvelt’s New Deal to the Supreme Court, won a few of the cases and effectively
narrowed the scope of what part of the New Deal was constitutional and
what part was unconstitutional. Now Roosevelt was none too happy about this
narrowing of his efforts by the Supreme Court so he proposed a judicial reorganization bill, also
known as the court packing scheme. Basically, the idea was that this bill would allow the president
to appoint new Supreme Court Justices for every justice that was older than 70.5 years. At that
time, that meant that Rooselvet could appoint six additional judges to the Supreme Court. Of course,
Roosevelt aimed to pack the court with judges sympathetic to the New Deal and theoretically the
judicial limitations on his programs would cease. However, whether that would have been
the case or not, we’ll never know, because both parties in Congress
strongly opposed this measure as an abuse of constitutional checks and balances.
TO them it seemed that Roosevelt was grabbing too close to dictatorial powers for their
taste, and so the bill never materialized. Now regardless of its success
and failures, the New Deal was a BIG Deal. [chuckle]. It left a legacy
of reforms and regulatory agencies in its wake while also fostering a long term political
realignment of Black people, working class folks, and ethnic minorities to the Democratic
Party, because those groups believed that Roosevelt and the New Deal sought to help them
in their suffering during the Great Depression. Okay, that’s what you need to know about Unit 7
topic 9 and 10 of the AP U.S. History curriculum. class and a five on your exam in May. And
hey, if you’re not too depressed after this video and you want me to keep making them,
then subscribe and let me know. Heimler out.