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The New Deal
The Three R’s
•Relief: To help people cope
with the depression
•Recovery: To help end the
depression.
•Reform: To prevent future
economic problems
Franklin D. Roosevelt
1935 Supreme Court Decision
• Ended the first New Deal by declaring the
Agricultural Adjustment Act and the
National Recovery Act unconstitutional.
Did New Deal Prolong
Depression?
Yes- Folsom
• Anti-Free Market
program of high taxes
and special interest
spending to certain
banks, railroads,
farmers and veterans
created an
antibusiness
environment.
No- Biles
• In spite of minimal
reforms and nonrevolutionary
programs, the New
Deal created a limited
welfare state that
implemented
economics stabilizers
to avert another
depression.
Keynesian Policy
(“Cane”nesian)
• Argues that when the economy stalls and falls
into recession/depression, Congress should
lower taxes and create jobs.
• When the economy overheats and suffers from
inflation, Congress should raise taxes and create
jobs.
• Safety nets and safe banks that are closely
regulated are key policies.
Problem
The Stock Market Crash
•Buying “on Margin”
•Insider Trading
•Over-valuing of stock
Solution
Federal Securities Act
Securities and Exchange Commission
set up to enforce new government
regulations of stock market.
Reform
Problem
“Bank Runs”
Solution
Emergency Banking Relief Act
& Bank Holiday
Relief
Federal Deposit
Insurance Corp.
Lack of Consumer Confidence in
Banking System
Reform
Problems
Solution
“Hoovervilles”
People Can’t Afford Housing
Low demand for goods & services
Relief/Recovery
Federal Housing
Administration
Problem
Dust Bowl
Droughts in Mid-West cause
storms and ruin crops.
Solution
Farm Security Administration
Camp for Dust Bowl Refugees
Relief
Problem
Overproduction
Overproduction of farm goods
led to low prices. Some
farmers protested by dumping
crops or burning them for fuel.
Solution
Agricultural Adjustment Act
Farmers received subsidies in
exchange for limiting production.
Recovery
Problems
Massive Unemployment
•1/3 of population unemployed
•Families can’t pay rent
•Thousands migrate in search of
better conditions
•Hunger & even starvation
Extreme Poverty
Solutions: Unemployment
Works Progress Administration (WPA)
WPA Artist Sketches WPA
Workers
Recovery
Puts people to work on government projects.
 Both manual and intellectual projects.
 Federal Writers Project (Including Historians!)
 Artists Paint Post Office Murals
Federal Theater
Project
Solutions
Civilian Conservation Corps (CCC)
CCC Workers Build Fence in Greene, NY
Young people were given jobs doing conservation & recreation
related projects. Local examples include some of the pavilions at
Chenango Valley State Park.
Recovery
Problems
Solution
•Underdevelopment of South
•High Unemployment
TVA builds damns to provide
electricity to rural South.
Construction and operation also
provides work for unemployed.
Tennessee Valley
Authority (TVA)
Recovery
Problem
Solution
Factory Closings Cause
Unemployment
National Industrial
Recovery Act
Required industries to create codes
regulating wages, hours, working
conditions, & prices. It was
designed to promote recovery by
ending wage & price deflation.
Recovery
Problem
Labor Disputes
Solution
National Labor Relations
Act (Wagner Act)
A Sit-down Strike
Guaranteed workers the right to
bargain collectively and form
unions w/out fear of punishment
from management.
Reform
Problems
Solution
Poverty among elderly & disabled.
Social Security Act
Relief
•Old Age Pensions
•Aid to Disabled
Men signing up for social
security.
•Encouraged states to provide matching benefits.