Beruflich Dokumente
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Depression and
the New Deal
Module 24
The Crash and the First New Deal
Major Concept I
- The Postwar Economy was designed to grow at any cost which leads to
excessive lending and borrowing.
- The Postwar Economy - Corporations have become the largest form of business in the US.
- Mergers have consolidated banks, making Wall Street the financial center of the world.
- Increasing prosperity gap between urban and rural Americans.
Cont.
- Direct Causes of the Great Depression
- Too much lending makes consumer credit more difficult to obtain.
- Exacerbated by global economic recession as a result of WWI
spending and destruction
- The US continues to strictly adhere to the gold standard - causes
contraction in the credit supply - harder to get loans.
- Massive overproduction of goods, priced to high for Americans to
afford.
- As consumer spending falls, industrial production also crashes.
- Falling production causes a spike in unemployment.
- Bank failures occur en masse as people panic and
attempt to pull out their savings. Makes it even
harder to get credit.
- Bank Runs
Major Theme I
- Private Charity will not be able to handle the burden of so many
unemployed.
- Who is big enough to handle the burden?
- The Federal Government!
- Leads to the creation of the welfare state
Key Concept II - Early responses by the federal government and Herbert Hoover fail to provide
relief and in many instances make the situation worse.
-
Cont.
- The Agricultural Adjustment Act
- Direct government support and regulation of the farm economy -
provides subsidy (welfare) to farmers to cut production - causing a
rise in prices.
- Primarily benefits large farms - not sharecroppers.
- Unemployment Relief
- The Federal Emergency Relief Administration
- Avoided direct payouts and instead put people back to work.
- Public Works Administration - puts people to work building infrastructure
projects.
- Civil Works Administration
- Civilian Conservation Corps - Works to preserve the national parks
- Tennessee Valley Authority - Brings electricity to rural areas
Resistance and the Second New Deal