U.S. History Chapters 24,25

From Boom to Bust

Chapter 24

The Great Depression

Depression Mentality-

-Everyone is cautious about spending.
-Lack of confidence in the American System

a) no purchasing, buying, selling
(economic activity)

b) unemployment

Hoover's method -
"We are still fundamentally sound
and will work our way out of the Depression".


Hoover -
very bright and intelligent man
He stood pat and did nothing.

Meanwhile...

The Dust Bowl
John Steinback's "Grapes of Wrath"

Hollywood - "At the Movies with Shirley Temple"

Shanty Towns - "Hooverville"
"Hoover Flags"


Hoover loses the 1932 Presidential Election

FDR and the New Deal

FDR's approach -use the executive office to attack economic problems

-direct government spending to stimulate the economy

**The economic philosophy of
John Maynard Keynes

"Priming the pump"

1. Federal spending to direct economy
(New Deal Programs)

2. Running a budget deficit
(spend more than receive)

3. Create inflation -
a) print more money circulate
cheapen the money to favor those in debt.
Creditors will be unhappy but satisfied

4. Enable the poor to s
5. spend more and the rich to spend less

5. Operate at a tremendous budget deficit and pay it back during periods of prosperity.


The New Deal
FDR, " The only thing we have to fear is fear itself"


FDR's personal qualities
He was a self-assured skilled politician,
great speaking voice


He had genuine concern for the underprivileged

He had Polio - strengthened his convictions


The New Deal - The first hundred days
He asked Congress for a grant
of broad executive power and got it

He addressed the Banking Industry
a) Emergency Banking Act(1933) declared a Bank Holiday to halt run on banks. This stopped banks from failing and gave them time to re-organize. He found them in better shape financially than first thought
b) created FDIC, insuring all depositors up to $5,000

Stockmarket- He formed the Securities Exchange Commission to supervise brokerage firms

Direct Relief - set up federal Emergency Relief Administration to help states set up work relief programs


Public Works - provided $$ and a sense of dignity

Public Works Administration (PWA), built new bridges, dams, and other projects

Civilian Conservation Corps(CCC)- unemployed young men working on conservation and reforestation projects

Tennessee Valley Authority(TVA) - constructed damns and power plants to improve the economic and social health of a seven-state area

Works Progress Administration(WPA)
permanent attempt at work relief.
1. employed 2mil men per year
2. about 1/3 for public works and conservation
3. cultural activities


Aid to Farmers
Agricultural Adjustment Act(AAA)
-paid farmers not to plant crops
-set aside money for debts


*Aid to Business and Labor
The National Recovery Administration

1. Drew up codes to end unfair business practices
2. Set up a minimum wage and max hours for labor
3. Abolished child labor
4. Gained Collective Bargaining to insure labor rights

Aid to Home owners
set aside money for new construction and renovation of homes and for those about to lose their mortgages

FDR showed the American people
that he cared about their welfare.

He assembled the leading men and women in their respective fields to help him attack the problem of the Great Depression. *Brain Trust*

His greatest asset - his wife
Eleanor Roosevelt



*****Evaluation of the New Deal******

1. Not radical - only fast

2. Abandoned Laissez Faire

3. Aimed at the Common Man

Accomplishments
a) preserved, not destroyed the capitalist system

b) speeded up the recovery and reformed the economy including the relationship between business and labor (Wagner Act )

c) effective regulation of business

d) improved the condition of the working class (Social Security Act)

e) helped to insure a fair distribution of income