Read the handout and answer the following questions in your notes, regarding the handout, “The Great Depression: Economic Collapse” (1) What “perfectly rational individual decisions” by Americans led to the worst depression in our nation’s history? (2) What does a failure of aggregate demand mean, and what was John Maynard Keynes’s solution?

FDR in a dress … =

Read the handout and answer the following questions in your notes, regarding the handout, “The Great Depression: Economic Collapse” (1) What “perfectly rational individual decisions” by Americans led to the worst depression in our nation’s history? (2) What does a failure of aggregate demand mean, and what was John Maynard Keynes’s solution?

(1) What “perfectly rational individual decisions” by American led to the worst depression in our nation’s history? – Falling crop prices – farmers produce more crops – Falling demand for products – factory owners cut costs by laying off workers – Workers might lose their jobs – reduce spending money – Banks might fail – depositors withdraw their money and put it in a shoe box

(2) What does a failure of aggregate demand mean, and what was John Maynard Keynes’s solution? – Too much production, leading to not enough people having the demand to buy automobiles, cotton, pork, beef, etc. – Also, not enough demand by employers to hire more workers – In simple terms, “private businesses were not hiring and consumers were not buying products.” – Keynes’s solution: Government should massively increase its own spending in the short-term, even if it meant running a significant budget deficit

Consumption Investment Government Spending C + I + G = GDP

Looking at the Articles from Tuesday … ** “The New Deal Saved Capitalism From Itself” And Make sure we understand from these articles … – People were “on the edge of desperation” … – The problem of “Aggregate Demand” … – What caused unemployment … – Criticisms of the New Deal … – What ended the Great Depression … ** “How FDR’s New Deal Harmed Millions of Poor People”

“The New Deal Saved Capitalism From Itself” (1) What is the morale behind the personal story told by the author of this article? (2) What is the main argument presented in this article, aside from the obvious reference to “saving capitalism”? “How FDR’s New Deal Harmed Millions of Poor People” (3) What are the points this article makes regarding taxes? (4) What are the criticisms mentioned regarding the various New Deal programs mentioned within this article? (5) What evidence does the author present that “poor people” were harmed by New Deal legislation?

“The New Deal Saved Capitalism From Itself” (1) What is the morale behind the personal story told by the author of this article? – Desperate times called for desperate measures, as the man’s father (this is when the author was a boy) had to find food for the family and stated, “I’ll get it anyway,” even if the grocery store will not extend credit. Millions of people were “on the edge of desperation.” (2) What is the main argument presented in this article, aside from the obvious reference to “saving capitalism”? – The New Deal placed value on “people,” not “markets”; at a time when parts of the world were falling to totalitarianism, capitalism and democracy survived in the United States.

“How FDR’s New Deal Harmed Millions of Poor People” (3) What are the points this article makes regarding taxes? – Federal taxes tripled over the years of 1933 to 1940, rising from $1.6 billion to $5.3 billion over this time. – Excise taxes, corporate income taxes, etc. went up – The big deal … this author argues that “Consumers had less money to spend, and employers had less money for growth and jobs.”

Unemployment Rates, 1900’s 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% ** So unemployment during the 1930’s was caused by … - Which article is correct, is it according to “How FDR’s New Deal Harmed Millions of Poor People” that taxes discouraged hiring? - Or, is it according to “The Great Depression: Economic Collapse” that a lack of demand encouraged firing and discouraged hiring?

Deflationary Spiral

The Problems … Industrial production fell by more than half … Construction of new industrial plants fell by more than 90% … Production of automobiles dropped by two-thirds … Steel plants operated at 12% of capacity …

“How FDR’s New Deal Harmed Millions of Poor People” (2) What are the criticisms mentioned regarding the various New Deal programs mentioned within this article? – National Industrial Recovery Act cut back production and forced wages above market levels, making it more expensive to hire people … – Agricultural Adjustment Act cut back food production and hurt tenant farmers. – National Labor Relations Act gave unions monopoly bargaining power. – The New Deal did not create jobs because it increased taxes and reduced consumption. – Took $$$$ away from the South, the poorest region in the country.

“How FDR’s New Deal Harmed Millions of Poor People” (3) What evidence does the author present that “poor people” were harmed by New Deal legislation? – Tennessee Valley Authority’s dams flooded an estimated 750,000 acres and TVA agents dispossessed thousands of people; poor black sharecroppers who didn’t own the land did not get compensation. – Excise taxes increased the costs of playing cards, radios, cigarettes, chewing gum, alcohol, etc., which disproportionately hurt the poor. – Agricultural Adjustment Act, which focused upon cutting production, forced tenant farmers off the land.

** So what ended the Great Depression? **

Unemployment Rates, 1900’s 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 , 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.

“A Traitor to His Class” =

Franklin Roosevelt - Franklin Roosevelt enjoyed the presidency as much as anyone … - Franklin Roosevelt’s political philosophy … - Roosevelt’s Optimism … - Fireside Chats …

Franklin Roosevelt & the New Deal -First 100 Days … -The Goals … – (1) To get Americans back to work – (2) To protect bank savings accounts and create prosperity – (3) To provide relief for the unemployed, sick, poor, and elderly – (4) To provide economic recovery of sectors of the economy – industry and agriculture back on their feet

- A handicapped president … - Eleanor Roosevelt, a new kind of “First Lady” FDR & Eleanor Roosevelt

The Temper of the Poor - “Heyday of American Communism … Midterm Elections … - Second New Deal …

New Deal Comes Under Attack - Father Coughlin … - Dr. Townsend … - Huey Long …

New Deal Comes Under Attack - Supreme Court Reacts (1936) … - Court-Packing Plan (March, 1937) … Midterm Election & end of the New Deal … Roosevelt “Trying to Change the Umpiring ”