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The Great Depression and New Deal

The Great Depression and New Deal - The Great Depression...

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The Great Depression and New Deal Causes of the Depression- stock market crash o Global Recession- related to the way post-war situation was handled, Germany saddled with reparations bill, they find that all profit goes into that, but they can’t pay it all, what they should have done was rebuild their economy, by 1923 it defaults on their reparations payment, Britain and France retaliate by invading Ruhr Valley, US says it’s a bad idea, such a stalemate that US creates the Dawes Plan, Charles Dawes, he says we need to find a way to economically support Germany’s economy, creates economic stimulus package, Germany uses that money instead to just pay off their reparations bill, then France and Britain pay this to US because they owe, the economies stagnate because of this o Lack of Economic Diversity- steel and oil are main industries, so if those industries have problems everything else goes bad, people stop buying cars, total economic decline o Poverty- endemic problem throughout this time period, 60% of American families make 2000 dollars a year or less, supplement their income through credit, in 1930 10% of the American population was unemployed, 1933 25% are unemployed, 1937 about 30%, once all these problems come together it sends people over the poverty line Hoover Responds- Hoover not looked at as great American president, not as bad as most American historians have made him, he responds to the great depression in traditional ways, he is unsure how to proceed, he gets locked into thinking about the depression in limited terms, a lot of the economists now say that the government needs to spend into deficit to support companies, this is looked down upon at this time o Volunteerism- get companies and people to volunteer to help, Hoover tries to promote this, of course corporations don’t respond, not a bad idea but it doesn’t work, with individuals it doesn’t work when you’re poor, bread lines and soup kitchens where churches and city groups provide for people o Reconstruction Finance Corporation- RFC, few programs that Hoover does, government body that is going to finance reconstruction for the US, 500 million dollar budget, had 2 aims 1) going to finance these businesses so that they can keep paying salaries, to keep them from laying people off, they don’t use it for that, 2) public work project, put Americans to work doing public works projects, anything that could turn a profit, the problem with the RFC is that is constantly underfunded and the money to keep people employed isn’t going towards that,
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Hoover tried, but a lot of the stuff that he does causes more harm than good, examples 1) the Hawley- Smoot Taritt, 1930, raises the tax on about 20,000 different imported items, idea is to make people want to buy from the US, problem is that the other countries raise them as well to retaliate, further damages the American economy, terrible idea 2) 1932, Hoover is having trouble funding the RFC, and govt. is going into debt so he signs into law the Revenue Act, it is a
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