Transcript The Roaring 20s and the Great Depression

Ing. Tomáš Dudáš, PhD.
1933 – situation report
 Every bank in the nation had closed its doors and no
one could cash a check or get at their savings
 The unemployment rate was 25% and higher in major
industrial and mining centers
 Farm prices had fallen by 50%
 Thousands of mortgages closed down
The New Deal
 Franklin Delano Roosevelt - 1933
 Two main goals – help the troubled economy and
introduce major reforms into capitalism
 3 Rs
 giving Relief to the unemployed and badly hurt farmers
 Reform of business and financial practices
 promoting Recovery of the economy during the Great
Depression
"First New Deal“ – 1933/34
 Banking acts
 On March 6, 1933, two days after becoming president, Roosevelt declared a
five-day national bank holiday to close banks temporarily.
 On March 9, Roosevelt sent to Congress the Emergency Banking Act,
drafted in large part by Hoover's Administration; the act was passed and
signed into law the same day.

It provided for a system of reopening sound banks under Treasury
supervision, with federal loans available if needed. Three-quarters of the
banks in the Federal Reserve System reopened within the next three days.
Billions of dollars in hoarded currency and gold flowed back into them
within a month, thus stabilizing the banking system
 Congress created the Federal Deposit Insurance Corporation (FDIC), which
insured deposits for up to $5,000
 The government suspended the gold standard for United States currency
"First New Deal“ – 1933/34
 Economy Act
 Improving the budget balance
 NIRA – National Industrial Recovery Act
 "Code of Fair Competition„
 NLRA - National Labor Relations Act
 Farm and rural programs
 The Federal Emergency Relief Administration (FERA) – 500 million
USD
 The Civil Works Administration (CWA)
 The Public Works Administration (PWA)
 The Agricultural Adjustment Act: stabilized prices on farm produce
through paying farmers to reduce their acreage under cultivation
 Repeal of Prohibition
The Civil Works Administration (CWA)
• Built 800,000 km of roads.
• Built 40,000 schools
• Built 500 airports & rebuilt 500 more
• Built 150,000 public toilets
• Paid people to sweep up leaves in the parks.
• Paid unemployed actors to give free shows.
• Hired 100 people to scare pigeons away with balloons
from public buildings in Washington DC.
The Public Works Administration (PWA)
• Built 70% of USA Schools.
• Built 35% of USA Hospitals.
• Built for river dams.
• Electrified the New York Washington railway.
• Built 50 military airports.
• Built two aircraft carriers.
• Built four cruisers & destroyers for the US Navy.
Social security - 1935
 Anglo-American society – minimal security net
 Local level and not very generous
 The Social Security Act provided:
 An income for the aged
 A scheme for unemployment compensation
 Relief aids to the aged, blind and dependent children
 USA was the last major industrial nation to adopt
some form of comprehensive social insurance
New Deal - conclusion
 Federal government directly provided services to the
American people -- “welfare state”
 Vast centralization of national power
 Increase in power of the presidency
 Creation of a mixed economy – market economy with
government interventions
 Did the new deal stop the depression?
“Prosperity” of Wartime
 The American GDP doubled between 1941 and 1945
 World War II produced demand for American products as early
as 1940
 It became clear that the US must supply war goods for Great
Britain
 Lend-Lease Act – 1941
 By august 1945 the US was supplying war materials in value around
50 billion USD to its partners under this act
 Lend-Lease deliveries were greater than the sum of all federal
expenditures between 1933 to 1939
Financing the War
 Increased taxes
 Debt financing
 Rising government deficits (-29,1 billion USD in 1945)
 Rising public debt (271 billion in 1945)
 The US government was selling bonds to the public
(157 billion USD) and to the Federal Reserve
 Increase of the money-supply
Change to command economy




New “war powers” to the president
1940 – National Defense Advisory Commission
1940 – National Defense Research Council
1942 – War Production Board and Office of Price
Administration
 1943 – Office of War Mobilization
 Huge power of FDR
 In 1942 he sent 115 000 persons with Japanese ancestry
into internment camps by an executive order
Labor and materials
 The armed forces had 12 million soldiers by 1945
 250 billion USD has been spent on these soldiers
between 1941 and 1945
 The civilian nonagriculture labor force expanded by 30
%
 Unemployment vanished (1,2 % in 1944)
 New people in the labor force – women, teenagers,
disabled, aged people