New Deal The Great Depression & - Orange County Public...
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Transcript of New Deal The Great Depression & - Orange County Public...
Causes of the Great Depression
● Overproduction/Underconsumption○ Led to mass unemployment.
● High Tariffs○ High tariffs protected American markets, but restricted trade.○ The Smoot-Hawley Tariff led to cut in U.S. trade by half.
● Stock Market/Banking Practices○ Speculation led to an overvalued stock market.○ Credit was over-extended and citizens borrowed more than
they could afford to pay back.
Stock Market Crash
● On October 29, 1929, the stock market crashed. ● Prices went lower as everyone competed to sell and no
one was willing to buy.● $30 billion dollars disappeared in three weeks.
Effects of Stock Market Crash
● Businesses could not raise money by selling stock.○ Businesses began closing their doors and
unemployment increased.● People who lost money in the crash could not pay back
loans.○ Led to systemic bank failures.
President Hoover’s Response
● Hoover was advised not to interfere with the economy.● Once taking action, Hoover:
○ asked business leaders not to layoff workers.○ cut taxes.○ increased federal spending on public works projects.
● Hoover rejected direct aid to the unemployed and needy.
President Hoover’s Response
● Reconstruction Finance Corporation (RFC)○ Voluntary action by local government and charities
was not effective.○ The RFC gave emergency loans to banks and
businesses.○ The amount loaned by the RFC was not enough to fix
the decline in corporate spending.
The New Deal
● President Franklin D. Roosevelt’s (FDR) plan to fix the economy was called the “New Deal.”
● It established that the government was responsible for the well-being of the economy and protection of Americans from extreme economic problems.
● “Relief, Recovery, Reform.”
Fixing the Banking Crisis
● Bank Holiday○ The “Bank Holiday” closed all banks and allowed
them to reopen after the government declared them financially stable.
○ The government helped unstable banks with emergency money.
Fixing the Banking Crisis
● Federal Deposit Insurance Corporation (FDIC)○ Insured deposits in banks to give people confidence that
they would not lose all of their savings if a bank failed.● Securities and Exchange Commission (SEC)
○ Federal agency to oversee the operations of the stock market.
○ Tasked with preventing fraud and to ensure investors were not mislead.
Unemployment Relief
● Civilian Conservation Corps (CCC)○ Gave outdoor jobs to young men planting trees and
draining swamps.● Public Works Administration and Civil Works
Administration○ Built public facilities like highways, bridges,
hospitals, airports, and courthouses.
Unemployment Relief
● Tennessee Valley Authority (TVA)○ Built and maintained dams that controlled floods
produced hydroelectricity, and manufactured fertilizers.
○ The TVA brought greater prosperity to impoverished regions of the South.
Recovery Efforts
● National Recovery Administration (NRA)○ Increased collaboration among businesses in the
same industry.○ The goal was to increase prices and reduce wasteful
competition by encouraging businesses to collaborate by setting standard prices and limits to production.
Recovery Efforts
● Agricultural Adjustment Acts (1933 and 1938)○ Intended to promote the recovery of farmers.○ The AAA limited production to limit production in
order to obtain a rise in crop prices.○ The government paid farmers to plant fewer crops
and kill excess livestock.
The Second New Deal
● Works Progress Administration (WPA)○ Increased employment by creating nine million jobs
through new public works projects to build public schools, courthouses, roads and bridges.
○ The WPA encouraged creative arts by hiring artists, architects, writers, and musicians.
The Second New Deal
● Social Security Act (1935)○ Most important law passed by the New Deal. The
law provides a “safety net” to fall back on if unemployed.
○ Provided unemployment insurance, retirement benefits, and assistance to the disabled.
The Second New Deal
● National Labor Relations Act (1935)○ The “Wagner Act” gave workers the right to form
unions, to bargain collectively, and submit grievances to the National Labor Relations Board.
○ This was an effort to increase wages, purchasing power among workers, and create fair working conditions.
Sit-Down Strike (1936)
● Sit-down strikes are where workers occupy the factory and prevent the owners from using it.
● General Motors automobile workers held a sit-down strike in Flint, Michigan.
● The government refused to help General Motors breakup the strike.
● As a result, General Motors agree to recognize the auto workers’ union.
FDR’s Court Packing Plan
● The Supreme Court ruled the National Recovery Act and the Agricultural Adjustment Act unconstitutional.
● President Roosevelt was worried the Supreme Court may overrule all of the New Deal.
● FDR wanted to appoint a new Justice for each justice who did not retire at age 70. He would have been able to add six new Justices.
● The plan was widely criticized. Congress rejected the proposal.
End of the New Deal
● As a result of the “Court Packing” Plan, the South refused to back additional New Deal efforts.
● The economy was recovering in 1936 and government spending was reduced. This led to worsening economic conditions. As a result, FDR resumed government spending.
● The New Deal never restored normal employment levels. This only happened as the U.S. prepared for World War II.
Long-Term Effects of the New Deal
● Reduced unemployment.● Completed valuable public works projects.● Created a safety net with social security and insuring
bank deposits.● Increased the power of organized labor.● Established the federal government should oversee the
economy and protect citizens from economic disaster.