Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
The Great Depression and New Deal Ch 24 EQ’s • What were the causes and consequences of the Great Depression? • How did Hoover and Congress respond to the Great Depression? • What was the First New Deal, and how did it differ from the Second New Deal? • How did the New Deal expand the scope of the federal government in the South and West? • How did the Great Depression affect American cultural life during the 1930s? • What were the limits of the New Deal’s reforms, and what legacy did they leave? Herbert Hoover Elected President in 1928 Self-made millionaire Served in Wilson, Harding, and Coolidge administrations Efficiency movement and associative state No electoral experience or military rank (only other?) Born to Quaker parents/IA Humanitarian “Rugged Individualism” Associative State Hoover’s fortunes will be tied directly to the US economy October 29, 1929 – “Black Tuesday” Output Plummets and Prices Fall Unemployment and the Great Depression Unemployment (cont.) • More than 13 million Americans lost their jobs. – Of those, 62% found themselves out of work for longer than a year; – 44% longer than two years; – 24% longer than three years; and – 11% longer than four years. – Unemployment peaked at a staggering 24.1% in 1933, and never dropped below 14.3% until World War II. (By contrast, the unemployment rate has never surpassed 9.7% since.) Bank Failures Just a normal recession… • In the late 1920s, the economy started to enter a mild recession – House and automobile sales decreased – Governments had completed most of their infrastructure projects – Total spending in the economy was falling – Business firms began to cut production – The stock market crash in October signaled to shareholders that profits would fall – Wealth decreased and the ability of consumers to meet credit obligations was diminished Liquidationist/Austrian Keynesian Monetarist Easy monetary policy by the FED created “malinvestment.” The Great Depression was caused primarily by a fall in total demand (aggregate). The Great Depression may have originated in a fall in total demand, but its length and severity resulted primarily from the unwillingness of the Federal Reserve System to prevent bank failure and maintain a large enough supply of money Economy will adjust in long run. “In the long run, we are all dead.” Animal Spirits "It will purge the rottenness out of the system… High costs of living and high living will come down. People will work harder, live a moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people." The decline in demand was so severe that adequate demand could be restored only by large increases in government spending (deficit). FED should have served more effectively as lender of last resort providing liquidity (cash) to banks to stem bank failures stop contraction of money supply. Ideological implications? Ideological implications? How do you fix How do you fix How do you fix economy? economy? economy? Ideological “Liquidate labor, liquidate implications? stocks, liquidate the farmers, liquidate real estate.” What do people do when they EXPECT deflation? Uneven Distribution of Wealth Bank Failures Excessive Stock Market Speculation Weak farm economy 2 1 5 Easy Monetary policy in 1920’s 3 Excessive use of credit/installment purchasing 11 6 4 12 High Debt 7 Overproduction of goods 9 8 High Tariffs (HawleySmoot) 10 Buying on Margin Fischer and Over indebtedness and Deflation 1. Debt liquidation and distress selling 2. Contraction of the money supply as bank loans are paid off 3. A fall in the level of asset prices 4. A still greater fall in the net worths of business, precipitating bankruptcies 5. A fall in profits 6. A reduction in output, in trade and in employment. 7. Pessimism and loss of confidence 8. Hoarding of money 9. A fall in nominal interest rates and a rise in deflation adjusted interest rates. Hoover Response - “the Government should not support the people.” • What do you think? • International – Hawley-Smoot Tariff (1930) – Debt Moratorium • Domestic – Federal Farm Board – Reconstruction Finance Corp (RFC) • Emergency loans/prop up key business Bonus Army Hoovervilles Election of 1932 Solve the Great Depression Using fiscal policy (spending, taxing, and borrowing), how do you help the economy get through the following economic problems? Problem No confidence in banking system High unemployment Deflation Poor business and consumer confidence Unequal distribution of wealth Farming overproduction Solution "The money changers have fled from their high seats in the temple of our civilization” Franklin Delano Roosevelt - March 4, 1933 – April 12, 1945 • • • • • • • • • • 32nd POTUS New Deal Distant cousin to TR Aristocrat Democrat – NY Asst Sec of Navy Contracted polio in 1921 Unflinching optimism Charismatic Kept quiet between election and inauguration With Eleanor FDR at Warm Springs FDR Polio A president who cannot walk would now try and help heal a crippled nation The Three R’s • Relief • Recovery • Reform The Brain Trust First 100 Days Bank Holiday Fireside Chat Financial Recovery Repeal of Prohibition Gold Standard Level 1 Describe List Identify Level 2 Analyze Compare Group Level 3 Evaluate Imagine Predict Industrial Recovery – NRA*** “At this moment in time from the early days of the New Deal, it is difficult to recapture, even in imagination, the heady enthusiasm among a goodly number of intellectuals for a government planned economy. So far as can now be told, they believed that a bright new day was dawning, that national planning would result in an organically integrated economy in which everyone would joyfully work for the common good, and that American society would be freed at last from those antagonisms arising, as General Hugh Johnson put it, from "the murderous doctrine of savage and wolfish individualism, looking to dog-eat-dog and devil take the hindmost." “priming the pump” Relief for Unemployed • FERA CCC CCC Facts • 3 Million young men • “Mr. Roosevelt’s Tree Army” – 3B trees • Six month enlistments • Quota/Segregated Camps • $1 per day • Opposition TVA AAA*** The Dustbowl The Great Plow Up Black Sunday Grasshoppers Dust Pnemonia FDR Visit Okies http://www.youtube.com/watch?v=kyHYHrm_oE Classify the following New Deal policies as Relief, Recovery, and/or Reform AND EXPLAIN WHY NIRA AAA FDIC FERA Home Owners Loan Corp (HOLC) Farm Credit Admin Bank Holiday Removal of Gold Standard SEC PWA FHA CCC CWA Repeal of 18th Amendment Second New Deal (1935) “I welcome their hatred” WPA SSA • Good economics? Wagner Act/NLRB Taxes How did Roosevelt read these results? Opposition Conservative Opposition Demagogues Huey Long – “Share the Weath” Father Coughlin – National Union for Social Justice Schechter Butler “Court Packing” - 1937 • AAA and NRA Unconstitutional CIO UAW Strike Fair Labor Standards Act 1. Min Wage 2. Max work week 40 hrs plus 1.5x for OT 3. Child labor restrictions Last Phase of New Deal • Deficit spending = “priming the pump” Eleanor Roosevelt Marian Anderson Mary Mcleod Bethune • Federal Council on Negro Affairs Mary McLeod Bethune once noted, the Roosevelt era represented “the first time in their history” that African Americans felt that they could communicate their grievances to their government with the “expectancy of sympathetic understanding and interpretation.” A. Phillip Randolph Wheeler-Howard (1934) • Indian Reorganization Act/Indian New Deal