M keynes explains deficit spending fdr doesnt get the

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When Economist J.M. Keynes explains deficit spending, FDR doesn’t “get” the economics but does “get” the positive impact it will have on the American people. Shows willingness to act! FDR: “The country needs, and unless I mistake its temper, the country demands bold, persistent experimentation. It is common sense to take a method and try it: if it fails, admit it frankly and try another. But above all, try something.” 1932 Election Blow-out by FDR But he “won” a devastated country What could he do? Very little before taking office Saw many people with wide range of advice Took his own council; waited until he took office in March, 1933 (Depression rapidly expanding, Nov. 1932 to March, 1933) FDR does have Ideas Unlike most Democrats at that time (Bryan, Cross of Gold), FDR does not believe that the answer was simple inflation FDR saw U.S. economic problems as a domestic issue – something that did not require the U.S. to take an international leadership role Extremely important (we know what is coming) Sets tone, connected to European appeasement FDR sees greatest problem as over-production “Commonwealth Club speech” San Francisco Fed. Gov’t needed to play a permanent role in regulating unemployment “New Dealers” FDR brings in a lot of ideologues Republicans fear (still do) “Washington insiders” Party-within-a-party “Mandarins” Young, well-educated, energetic Progressives Harold Ickes Francis Perkins Henry Wallace Marriner Eccles Harry Hopkins Felix Frankfurter Most Importantly: FDR Sets a new tone for Hope Inauguration “Fear itself” 8
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Congress called into special session Emergency Banking Act Fireside chat Keep your money in the bank First 100 Days Farm Bill (AAA) “domestic allotment” (subsidies not to plant) Aggressively pursue federal planning Alger Hiss Henry Wallace $3.3 B Also contains the Civilian Conservation Corps (CCC) New Deal farm policy reversed in 1995 (Newt Gingrich-led Congress) with “Freedom to Farm” Act Direct subsidy to LAND OWNERS – not “farmers” or farm families National Industrial Recovery Act (NIRA) Section 7 (a) Regulation of the workplace, max. hours Creation of National Recovery Admin. Sets rules and wages for large industrial cartels Textiles, coal, oil, retail all benefit Auto and steel already ahead of NRA Not anti-business; codes written by businesses Public Works Administration (PWA) $3.3 B to pump into economy RFC and Monetary Policy Hoover wanted to provide credit to elite banks New Deal uses RFC to go around elite banks Undermine their authority Immediately, 7,000+ institutions now creditors to U.S., $11B 3,723 banks in Texas use RFC from 1932-1945 RFC controls flow of capital (huge change) Gold Standard (US and UK off by 1933) U.S. promises the world that they would maintain strong dollar Inflation running wild in Europe, need strong country to absorb losses for a while for others to recover FDR refuses to do it Hitler saw this, U.S. unwilling to act for international community 1934-36 U.S. clearly not recovering fast enough Radicals gaining greater voice 9
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Fascists Communists Socialists
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Christopher Reinemann
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