Transcript Legacy of the New Deal

Economic Theories
• What is “Supply Side
Economics?”
Calvin
Coolidge
– Versus
• What is “Keynesian
Economics?”
• What does the “failure of
aggregate demand” mean?
John
Maynard
Keynes
** Supply-side Economics
** If taxes were lower, businesses and consumers would have
more $$$$ and spend & invest more in the economy, causing
the economy to grow
** Keynesian Economics
– Keynes’s solution: Government should massively increase
its own spending in the short-term, even if it meant runing
a significant budget deficit
** What does a failure of aggregate demand mean?
– In simple terms, “private businesses were not hiring and
consumers were not buying products.”
Legacy of the New Deal
** Reading page 445,
“What is the legacy of
the New Deal?”
Legacy of the New Deal
[1] Government Intervention into the
nation’s economy “Laissez-faire” Economics is Dead
[2] The Safety Net
[3] On-Going Debate about the Role of Government
Hoover Responds to the Great Depression
• Conventional economic
thought …
• Hoover Dam (1931 – ‘36)
benefits …
– Water supply
– Hydro-electric power
– Flood control
• Emergency Relief Act
(1932) …
– $$$ to states for public
works projects
Hoover Responds to the Great Depression
• By 1932, unemployment
is at 24% …
• Bonus Army (1932) …
– 40,000 war veterans
want their promised
bonus
– U.S. Army evicts veterans
from Washington D.C.
Check on Learning
• (8) The old faith of self-reliance pervasive during
much of U.S. History and at the beginning of the
1930’s can best be understood as ______.
– A. Neighbors should band together to help each other
– B. Rugged individualism, in that if you’re unsuccessful,
it’s your fault
– C. Settling in communes, small, self-sufficient
communities, is the way to solve all economic
problems
Check on Learning
– The old faith of self-reliance …
– National government in 1930 …
–(9) Percentage of mortgages in default by
1930 was at ________.
Check on Learning
–(10) To the country of ________, 100,000
Americans left our country during the
1930’s in search of a better life.
Write down the following prompts / questions in
notebooks, leaving two lines between preparing for a video
clip about 1929 - 1935 “Stormy Weather”:
• (11) There were four million unemployed in
1930, but in 1933 there were _______ million
people unemployed.
“Migrant Mother”
• “Dust Bowl
refugees?”
– “Oakies”
– States of Oklahoma, Texas,
Kansas, Colorado, Arkansas,
etc.
• Sharecropper vs.
Tenant farmer …
– Sharecropper – tended to
not own any livestock or
farming equipment
– Tenant – Possibly used to
own the land; often owned
some items
Station Two
• Skyscraper
construction
boom in the
1930’s …
– Cost of labor were
low, and workers
were easy to
replace.
“Lunch atop a Skyscraper”
Living During the
Great Depression
• Effects upon families …
– Men – bread lines
• “Bread-winners for family …
– Women – Also worked outside the home
• Tended to starve themselves …
– Children – poor health conditions
• By 1933, 2,600 schools closed down
• Rail car accidents …
– Many of these travelers were children
• Family Life in the Great Depression
Fertility Rates, (per 100,000 women aged 15-44)
• - 1928: 93.8
- 1929: 89.3
- 1930: 89.2
- 1931: 84.6
- 1932: 81.7
- 1933: 76.3
- 1934: 78.5
- 1935: 77.2
- 1936: 75.8
- 1937: 77.1
- 1938: 79.1
- 1939: 77.6
- 1940: 79.9
- 1941: 83.4
- 1942: 91.5
- 1943: 94.3
** The U.S. fertility
rates declined by nearly
20% from 1928 to 1935.
• Average divorce rate, (per 1,000 people)
• - 1920-1929: 1.6
- 1930-33: 1.4
- 1934-39: 1.8
- 1940-46: 2.8
- 1947-64: 2.5
** Divorce rates decrease, so
especially for women, they stay
in many unhappy marriages.
• Dust Pneumonia
– [1] overexposure to dust
causing excessive
inflammation of the alveoli,
– [2] Prairie dust was
extremely fine
• Home Remedies
– [1] People would rub Vaseline in their noses to try to keep
from inhaling dust
– [2] Chest plasters out of a mixture of turpentine, kerosene,
skunk oil, and lard
Deflationary Spiral
Franklin
Roosevelt
- Franklin Roosevelt enjoyed the presidency as much
as anyone …
- Franklin Roosevelt’s political philosophy …
- Roosevelt’s Optimism …
- Fireside Chats …
FDR & Eleanor Roosevelt
- A handicapped president …
- Eleanor Roosevelt, a new kind of “First Lady”
- The Temper of
the Poor
- “Heyday of American
Communism” …
- 1934 Midterm
Elections …
- Second New Deal …
New Deal Comes
Under Attack
- Father Coughlin …
- Dr. Townsend …
- Huey Long …
New Deal Goals
Banking Reform
- Emergency Relief Banking Act
- 4-day bank “holiday”
- Federal inspection of industry
- Securities Act of 1933
- Securities and Exchange Commission
- Complete transparency on stock values
- SEC to regulate stock market
- Glass-Steagall Act (1933)
- Federal Deposit Insurance Corporation
- Separates commercial & investment banks
- FDIC guarantees banking deposits, very important!!!
Economic Recovery (Industry-Wide)
- Agricultural Adjustment Act (AAA)
- Reduce supply of agricultural goods:
(1) Livestock, (2) Certain targeted crops, especially dairy,
and (3) Conserve land
- Tennessee Valley Authority (TVA)
- Multiple Goals: Flood control, navigation, employment
and electricity
TVA – “Harnessing Nature”
- Still exists today!!
Tennessee Valley Authority
Relief Programs
- Federal Emergency Relief Administration (FERA)
- Continuing a program begun by President Herbert Hoover,
called ERA (Emergency Relief Administration)
- Federal government used state and local governments
- Civil Works Administration (CWA)
- “Emergency” program for winter of 1933-34
- Four million immediate jobs, spending $1 billion
- Workers directly paid by federal government
* Constructed schools, airports, over 500,000 miles of roads
Relief Programs
- Civilian Conservation Corp
(CCC)
- Employed men aged 18 to 25
- Later employed war veterans
* Building roads and water
reservoirs
* Developing parks and trails
* Planted trees
- $30 a month, $25 to
be sent home
- More than 3 billion trees were planted across the
Great Plains to prevent another Dust Bowl
Relief Programs
- Works Progress Administration (WPA)
- Largest public works program of the New Deal!!
- Replaced the Federal Emergency Relief Administration
(FERA)
- Workers directly paid by federal government
* Constructed highways, roads, streets
* 125,000 public buildings
* Over 800 airports and 8,000 parks
* Employed actors, writers, musicians, etc.
Reform Programs
- Wagner Act
- Protect rights of workers to unionize
- Established National Labor Relations Board to investigate possible
unfair labor practices
- Social Security Act
- (1) Monthly retirement benefit to those 65 and older (today you can
receive it at 62, 65, or 68)
- (2) Unemployment insurance to the temporary unemployed
- (3) Modest welfare payments to the needy, disabled, and poor mothers w/
dependent children
- Indian Reorganization Act of 1934
[1] Communal ownership of land
[2] Children can attend on-reservations schools, which would be
friendlier to Native American culture than boarding schools away from
the reservations.
[3] Tribal councils could govern themselves, leading to tribal self-rule
New Deal Coalition
- African Americans left the Republican Party
- Southern whites, farmers, industrial workers, Catholics,
various urban groups (Italian Americans and Irish
Americans), new immigrants, ethnic minorities including
Mexican Americans, unionized workers, women, and
“progressives.”
** So what ended the
Great Depression?
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1920 – 5.2%
1928 – 4.2%
1930 – 8.7%
1932 – 23.6%
1933 – 25%
1934 – 21.7%
1936 – 17%
1938 – 19%
1940 – 14.6%
1942 – 4.7%
1944 – 1.2%
1946 – 3.9%
- In 1934, the national government deficit
increased to $2.9 billion.
- In 1937-1938, the deficit fell back to $100
million.
- During 1939, the deficit rose back to $2.9
billion.
- At the height of government spending during
WWII, the national deficit was at $54.5 billion
in 1943.