NANO-ck

Mise-à-jour le 28 May 2024, 7 minutes de lecture

Chapter 1 : The Economic and Social Impact of the 1930s Depression

Summary:

• I. USA in the 20s
• II. The Crash - The Great Depression
• III. The Government’s response and The New Deal

I. USA in the 20s

A. Economic Change

• Age of electricity
  • e.g. longer working days + radio + cars
• Between 1920 and 1930, technology increases in number
  • At the same time, economic weakness
  • Economic wealth isn’t equally distributed
  • Keyword : Wealth distribution
  • The wealthiest 1% had a 60% growth
  • 17% of families had an income below living standards

B. Social Change

• Women could vote
• Flappers

II. The Crash - The Great Depression

A. The Causes of the Crash

• Crash of the stock market
• People started speculating
• In 1928, shares were very very high
  • People stopped buying
  • Investors sold 26 million shares

    B. The Effects of the Crash

• Bank failures
• Farm failures
• Unemployment

III. The Government’s response and The New Deal

Summary

• A. What was the New Deal
• B. New Deal Impact
• C. New Deal Limits
• D. End of the New Deal

  A. What was the New Deal

President Hoover

Believed in finding ways to help people help themselves => Cooperation and voluntary action

Until in 1932 he created:

• Reconstruction finance corporation
• Federal Home Loan Bank

=> This was a change in the role of government

Hoover was criticized for not giving direct beliefs to people. He gave money to banks and not directly to the people who were hungry

Franklin Delano Roosevelt

Democrat from NY elected president : 1932; 1936; 1940; 1944
Died from Polio (he had Polio, and was concerned about it) in his office in 1945

• He fought for the new Deal, and launched it
• Gave a famous speech that includes :

  We have nothing to fear but fear itself
  

The New Deal in 3 words

• Relief
  Growth in government responsibility for less fortunate members of society
• Recovery
  Recovery of the depressed economy, saved the capitalist economic system
• Reform
  Programs that would regulate economy and avoid another crash
  Growth in government
  
  

Effects

• Started a revolution
• The entire concept of the state underwent change => the state was becoming interventionnist

How did it begin?

• Stated through The Hundred Days, from March to June 1933
• Banking reform:
  • Closing all banks
  • People couldn’t take their money out of the banks, so they couldn’t loose it
  • Emergency banking act
    • Reform that gave the government power to investigate and fix any bank
    • Plans worked, little by little banks reopened
  • Glass-Steagall Act
    • Encourage people to leave their money in Banks
    • Forced weak banks out of buisness & encourage stronger ones
    • Set up the Federal Deposit Insurance Corporation (FDIC)
      • Assure people that if they loose their money through banks, the FDIC would issue a refund
  • Set up a whole bunch of agencies
    • Called the alphabet agencies due to their fun acronyms
• Social Recovery
  • Civilian Conservation Corps (CCC)
    • Recovery Agency that address the unemployment issue amoung young men
    • They create useful jobs for young men to help the country
  • Agricultural Adjustment Act (AAA)
    • Attempt to recover agriculture
    • Helps farmers to produce less (due to overproduction) and earn more
  • National Industrial Recovery Act (NIRA)
    • National Recovery Administration (NRA)
      • Role is to stabilize the market (prices)
      • Industries should cooperate with each other
      • A stabilized market would create more jobs
    • Public Works Administration (PWA)
      • Government’s spending to create jobs
      • Includes housing programs
      • Includes public works such as bridges, roads, houses…
    • Tenessee Valley Agency
      • Created jobs by building dams
        • Creates jobs and electricty : Double Impact
  • Security & Exchange Commission (SEC)
    • Agency that sets up government regulations on trading and stock exchanges
• Social Security Act
  • Make sure that retired people and disabled people have a paycheck
• Fair Labor Standards Act
  • Sets up a minimum wage
  • Sets up maximum work hours

Where is the money coming from? Governments create money

B. New Deal Impact

Millions of people found a job following the new deal, sometimes for a short time but they got a job. By 1939, they were 9 million of unemployed people, compared to 18M before the new deal.

The economy rapidly improved before diving again, it wasn’t stable.

The New Deal transformed the role of the government, no previous government was so dynamic in a peace period. It transformed political, social, and economic structures of the United States.

It was criticized by both the liberal and conservatives. The liberal said it wasn’t good enough, where the conservative criticized the excessive amount of government interventions.

C. New Deal Limits

The economy was rescued and started to go again… the recovery was up and down, some people said that there were too many drops. There were limits for all sorts of people, specially for African-Americans due to segregation and racism. Some African-American were paid less than others. Unequal wages between women and men.

For many, the New Deal was a disaster…

Some would say that the New Deal was favoring poor people, at the exprense of the rich.

• Social Security Act
• Expension of Welfare
  • Before 1930, there was practically no money for relief
  • 1930: 9M$
  • 1940: 479M$ + 480M$ on unemployment
• Legacy of the WPA (roadways, bridges, dams, public buildings, schools, hospitals…)

Changes in the political system

• Growth of Executive over other branches such as legislature & Judiciary
• Federal government grew - Americans began to look at federal government rather than the states for action to meet problems

D. End of the New Deal

The New Deal ended with a lot of criticism. Roosevelt didn’t have a lot of support to continue the changes. The New Deal really ended with the World War II. Millions of American people ended up in the factory lines (thanks to) World War II.

The WWII created a lot of migration, including intra-national migration. The Great Depression really ended due to the increased efforts of citizens, forced by WWII. The war economy, helped by the New Deal, triggered the economic to get back.