Great Depression & New Deal

Transformation   The continued growth and consolidation of large corporations transformed American society and the nation’s economy, promoting urbanization and economic growth, even as business cycle fluctuations became increasingly severe.

Causes of the stock market crash of 1929   Business was booming, but investments were made with borrowed money (overspeculation).   There was excessive expansion of credit.   Business failures led to bankruptcies.   Bank deposits were invested in the market.   When the market collapsed, the banks ran out of money.

Consequences of the stock market crash of 1929   Clients panicked, attempting to withdraw their money from the banks, but there was nothing to give them.   There were no new investments.

Causes of the Great Depression   The stock market crash of 1929 and collapse of stock prices   Federal Reserve’s failure to prevent widespread collapse of the nation’s banking system in the late 1920s and early 1930s, leading to severe contraction in the nation’s supply of money in circulation   High protective tariffs that produced retaliatory tariffs in other countries, strangling world trade (Tariff Act of 1930, popularly called the Hawley- Smoot Act)

Impact of the Great Depression  Unemployment and homelessness  Collapse of financial system (bank closings)  Decline in demand for goods  Political unrest (growing militancy of labor unions)  Farm foreclosures and migration Impact in one sentence: The Great Depression caused widespread hardship.

New Deal (Franklin Roosevelt)  The New Deal permanently altered the role of American government in the economy.  Began to change people’s attitudes toward government’s responsibilities.  Organized labor acquired new rights, as the New Deal set in place legislation that reshaped modern American capitalism.

National Recovery Administration Congress established the National Recovery Administration (NRA) to help revive industry and labor through rational planning. The idea behind the NRA was simple: representatives of business, labor, and government would establish codes of fair practices that would set prices, production levels, minimum wages, and maximum hours within each industry. The NRA also supported workers' right to join labor unions. The NRA sought to stabilize the economy by ending ruinous competition, overproduction, labor conflicts, and deflating prices.

Tennessee Valley Authority This act of May 18, 1933, created the Tennessee Valley Authority to oversee the construction of dams to control flooding, improve navigation, and create cheap electric power in the Tennessee Valley basin.

Federal Writers’ Project The Federal Writers' Project was created in 1935 as part of the United States Work Progress Administration to provide employment for historians, teachers, writers, librarians, and other white-collar workers. Originally, the purpose of the project was to produce a series of sectional guide books under the name American Guide, focusing on the scenic, historical, cultural, and economic resources of the United States. Eventually new programs were developed and projects begun under the Federal Emergency Relief Administration were absorbed by the Writers' Project.

  Radical, union, and populist movements pushed Roosevelt toward more extensive reforms, even as conservatives in Congress and the Supreme Court sought to limit the New Deal’s scope. Huey Long “The Switch in Time that Saved Nine”

The New Deal   This program changed the role of the government to a more active participant in solving problems.   Roosevelt rallied a frightened nation in which one in four workers was unemployed. (“We have nothing to fear, but fear itself.”)   Relief measures provided direct payment to people for immediate help (Works Progress Administration— WPA).

The New Deal  Recovery programs were designed to bring the nation out of the depression over time (Agricultural Adjustment Administration—AAA).  Reform measures corrected unsound banking and investment practices (Federal Deposit Insurance Corporation—FDIC).  Social Security Act offered safeguards for workers.

Legacy of the New Deal  The legacy of the New Deal influenced the public’s belief in the responsibility of government to deliver public services, to intervene in the economy, and to act in ways that promote the general welfare.