THE GREAT DEPRESSION Causes of the Depression Hoover’s Actions FDR Elected in 1932 First Hundred Days

John Maynard Keynes 1936 “General Theory”: Keynesian theory 1936 “General Theory”: Keynesian theory Economic cycle: 1861,1873,1993,1907,… Economic cycle: 1861,1873,1993,1907,… Fiscal Policy (Pres & Con): Deficit finance Fiscal Policy (Pres & Con): Deficit finance –During a recession: gov. spending & tax cuts –During a boom: pay off the deficit Monetary policy (FED): Friedman 1970s Monetary policy (FED): Friedman 1970s –During a recession lower interest rates & –increase the money supply –During boom: raise interest rates

THE DEPRESSION STARTS 1929 Stock Market Crash of October Over speculation in Stocks, Black Thursday: –Oct 24 $9 billion lost, stocks down 45% 1929 Causes of Depression: Causes of Depression: –1) FED: 10% Margin limit and monetary policy (rates up 11%, money supply down 14%) –2) Congress: Smoot-Hawley Tariff up 60%, single unit bank laws, international loans –3) President: huge tax hikes

Herbert Hoover

HOOVER PRESIDENCY Historians blamed him for Depression He took more action than any president Lowered taxes, urged credit easing NCC-helped banks, RFC-aided companies POUR-volunteers, Farm Board, Public work Depression deepens: GNP down 50% –1–1–1–1932 unemployment 30% - 12 million people –H–H–H–Hoovervilles, Bonus March, then raises taxes

5190 Bank failures in 1933

Unemployment 30% in 1933

Breadline: widespread hunger

“Hoovervilles”

Rise of Franklin D. Roosevelt FDR’s Background FDR’s Background Election of 1932 Election of 1932 New Deal Speech New Deal Speech We must try “bold experimentation” We must try “bold experimentation” Most gifted politician in American history Most gifted politician in American history “Brain trust,” many smart advisors “Brain trust,” many smart advisors Inaugural Address: don’t fear fear Inaugural Address: don’t fear fear Fireside chats-used radio and press well Fireside chats-used radio and press well

Franklin D. Roosevelt:

New Deal Program: WPA

First Hundred Days: The New Deal “Relief, Recovery, and Reform.” “Relief, Recovery, and Reform.” Bank Holiday Bank Holiday National Recovery Adm. (NRA) National Recovery Adm. (NRA) Civilian Conservation Corp (CCC) Civilian Conservation Corp (CCC) Agricultural Adjustment Act (AAA) Agricultural Adjustment Act (AAA) FDR tries to build up gold reserves, tax hikes. FDR tries to build up gold reserves, tax hikes. Public Works- work ethic: relief and recovery Public Works- work ethic: relief and recovery –CWA: emergency money for 4 million workers –WPA: $5 billion for relief work, artists too –***PWA: big projects, schools, roads, hospitals –FDR never spent enough money to “prime the pump”