260 Great Depression and New Deal

260 Great Depression and New Deal - Terms for the Great...

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Terms for the Great Depression Terms for the Great Depression and New Deal and New Deal Stock Market Crash Herbert Hoover Reconstruction Finance Corporation (1932) “New Deal” (1932-1937) FDR Eleanor Roosevelt First 100 Days (1933) AAA (1933) CCC NIRA NRA PWA Father Charles Coughlin Dr. Robert Townsend Huey Long Second 100 Days (1935) TVA WPA Social Security Act Wagner Act Court Packing
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U.S. Stands Alone at the Summit U.S. Stands Alone at the Summit Dawn of the “American Century” Economically… 40% of world’s wealth 2x per capita output of Great Britain Produced… • 2x Electricity than rest of world • 90% of all automobiles and accessories • Nearly all copper, refined petroleum products, and industrial chemicals Socially… Welfare Capitalism producing what socialism can only promise But if the U.S. economy caught cold, the world could get sick Jasper Johns, Jasper Johns, Three Flags Three Flags
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Yet 1920s Saw Tremendous Yet 1920s Saw Tremendous Business Cycle Instabilities Business Cycle Instabilities Rural Depression (1919- 1929) Automobile markets glutted, sales flat since 1925 Residential Construction flat $2B Business inventory in 1929 4x that of 1925 Stock speculation frenzy (1928-29) “High Tech” stocks like RCA climb 10-20% in a single day
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Questions for HIST-1302 Questions for HIST-1302 What caused the Great Depression and was it preventable? What responses are fashioned by Hoover and Roosevelt? Do they work? Why is this depression “greater” than others? Where does the New Deal come from, what is it, and when does it end?
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The Crash The Crash NOT THE CAUSE OF THE GREAT DEPRESSION !! Crash reflects instabilities Wed. Oct 23, 1929 (-$4B) Thus. Oct 24, 1929 (-$9B) Tues. Oct 29, 1929 (-$26B) But not a depression By 1930, 20% of value regained! In 1930, NYSE still 2x value in 1926
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What did “cause” the Great Depression? What did “cause” the Great Depression? A CONVERGENCE OF FACTORS (all predictable given what we’ve talked about) I. “Consumer Issues” Falling farm prices Farm Income falls 50% by 1929 Wages fail to keep pace with economic growth 60% U.S. families earned less than $2k/year Small businesses fail to keep pace with growth 70% of all manuf. by firms capitalized at over $1m 40% of all banking by <1% of banks Loose Local Credit $750m-$1b in unsecured consumer loans GMAC GMAC Automobile Automobile Financing Financing
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Cause” of Cause” of Great Great Depression? Depression? (cont) (cont) II. “Production Issues” II. “Production Issues” Over-production Over-production Huge inventories Huge inventories Marginal cash flows (tied to credit) Marginal cash flows (tied to credit) Advertising creates artificial demand Advertising creates artificial demand (tied to “consumer confidence”) (tied to “consumer confidence”) Declining housing starts Declining housing starts Home construction: multiplier effect
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This note was uploaded on 03/27/2012 for the course HIST 1302 taught by Professor Carter during the Spring '08 term at Texas A&M University, Corpus Christi.

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260 Great Depression and New Deal - Terms for the Great...

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