1. Great Depression and New Deal
Ch. 12 & 13
Great Depression and New Deal

2. Causes of Great Depression
Economic weaknesses masked by prosperity and optimism
Overproduction
Farmers suffer b/c of high output and low prices
Consumers can’t buy all products being made
Uneven distribution of wealth
Top 1% of population make as much as bottom %42
Under consumption
Rich don’t buy enough to offset uneven distribution
Buying on credit  debt
Risky stock speculation

3. Great Depression Begins
Stock Market Crash – 10/29/29 (part of business cycle)
Doesn’t directly cause Depression, but leads to events that hasten the beginning of Depression
Businesses close and layoff workers
Unemployment rises
Bank runs  bank failures
People panic and take $ out of banks
Worldwide depression
Trade decreases – Hawley-Smoot Tariff hinders trade
American loans and economy supported world economy, when loans stop, other countries suffer

4. Hardships of Great Depression
Mass unemployment – 25% 1932
Mass poverty
Lose homes  Hoovervilles
Dust Bowl/losing farms  (Okies)
Overfarming and drought

5. Hoover’s Response Hoover believes govt. should not interfere
Volunteerism - People and businesses working together for the common good
RFC – provide govt. $ to businesses and banks
Believed that $ would trickle down to consumers (trickle-down economics), didn’t work
Bonus Army marches on Washington
Hoover blamed for problems, not doing enough

6. Franklin D. Roosevelt Wins 1932 Election
Provides sense of optimism and hope
Has polio, public is unaware
Eleanor Roosevelt acts as his “eyes and ears” by travelling the country
Used fireside chats to inform and reassure public

7. New Deal Provides Relief, Recovery, Reform “1st 100 Days”
Put people to work, restore confidence, provide economic reform
Pump Priming – Boosting the economy

8. New Deal Programs FDIC – Insures $ in banks
TVA – Provide electricity, flood control, jobs
CCC – Provide jobs in the outdoors
AAA – End overproduction, raise crop prices
NRA – Regulate business and industry, set minimum wages and maximum prices
PWA – Build bridges, dams, power plants
WPA – Built highways, conserved soil and water, jobs
SEC – Regulate stock market
Social Security – Helps elderly, disabled, unemployed

9. Opposition to New Deal Conservatives say New Deal does too much
Liberals say New Deal doesn’t do enough
Some opposed to concept of Welfare State
Supreme Court strike down some New Deal programs as unconstitutional  court packing

10. New Deal and Labor
FDR believes increasing the living standard of industrial workers was key to improving the economy
Wagner Act – Recognizes right of workers to join unions and collectively bargain over wages, hours, conditions
Fair Labor Standards Act – Establishes minimum wage and maximum hour work week

11. Impact of New Deal Does not end Great Depression
Role of government expands
More involved in economy, establishes a welfare state
Changes role of president, influences later presidents
Provides sense of hope and a safety net
Some programs still around today
New role for govt.