Topic 10: The Great Depression

Topic 10: The Great Depression

Causal dissection of the Great Depression: 4 causal factors
Hoover’s failed policies (‘associationalism’)
FDR and the New Deal
The First 100 Days
The First Phase and the Second Phase of the New Deal
New Deal opponents from the Right and Left
African Americans and the New Deal: forms of exclusion; political realignment
Legacies of the GD

Lecture Videos: The Great Depression

Causal dissection of the Great Depression: 4 causal factors

#1: Unequal distribution of wealth (structural factor)

Middle class is more valuable - if they stop spending we go into a depression
when the middle class $$ shrinks the money flowing into the economy goes down
if the 1% has 80% of the wealth it puts the economy at risk (less money to put into the economy)

#2: Buying on Margin (structural and agency factors)

High interest broker loans (banking system)
Buying on margin - (stock Market)
as little as 10% allowed to be put down on stocks, the rest is borrowed
lack or risk management - did not anticipate the worst

#3: Mistakes by the Federal Reserve Board (agency orientated factors)

when depression worsened, the Federal Reserve raised interest rates while curtailing the money supply

#4: Hawley- Smoot Tariff 1930

raised tariffs on too many agricultural goods, and over 900 non-agricultural goods
Tariffs reached as high as 40%
want to promotes domestic good interests

First 100 Days in office (Hoover)

5 areas of reform

Banking

Emergency Banking Act - "Bank Holiday"

people could no longer pull out cash to prevent banks from closing
reorganize bank to make them stronger

> FDIC - provides insurance for the customers who bank at their bank
SEC - security exchange commission - oversees wall street

to prevent unscrupulous acts (like inside trading)

Glass-Steagall Act - separate the two sectors of banking

Agriculture

Creation of Agriculture Adjustment Act (AAA) - pay farmers not to farm to avoid overproduction
Farm Credit Act (FCA) - prevents foreclosures of farms

provide funds to help people prevent foreclosures

Business

creation of National Labor Relations Administration (NLRA), National Recovery Act (NRA) (failure - supreme court ruled unconstitutional)

setting "industry codes"

Unemployment

creation of the Federal Emergency Relief Agency (FERA): designed to set up employment relief
Example - Civilian Conservations Corps

Prohibition - repeals the amendment

African American and the New Deal

Political Realignment: Democratic Party
FDR's record on African American Issues

Anti-lynching bill - FDR did not sign the bill
Social Security (exclusion of Farmers, and domestic workers)

unemployment, aide, seniors
excludes African Americans by the domestic worker clause

Federal Housing Authorization

refusing to sponsor African Americans

He supported FDR because he was focused on helping the poor

Elenore Roosevelt spent time with African American

Legacies of the New Deal

never completely resolved the great depression
Shaped modern liberalism, modern politics

much less intervention from the Fed. Gov. before the Depression
first time fed. policies were geared towards the people vs business
shaped liberalism - activist government

Keynesian economic policy

economic theory - government interventionism in the economy
deals with demand in the economy - consumptions
trying to stimulate the economy focused on consumption
counter-cyclical spending

spend during the economical downfall

Political realignment of African American electorate

the shift in political allegiance

Beginning of "imperial presidency"

FDR had the highest # of executive orders
Served four terms - died in office
President is perceived as having more power

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