Economic Challenges to the US

Session 8

ContentsI. America before the Great Depression

II. The Great Depression, A Critical Crisis

III. Franklin Roosevelt’s New Deal

IV. The Impact of the New Deal

V. Conclusion

I. America before the Great Depression

I. American before the Great Depression

• Territorial expansion• The Spanish-American War in 1898• An empire across the Atlantic and Pacific Oceans

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• Industrial revolution• Transcontinental railroad: For settlers along the railroad's

path, the tracks were a lifeline. More than 7,000 cities and towns west of the Missouri began as Union Pacific depots and water stops. President Lincoln would never see the completion of the transcontinental railroad, but perhaps he foresaw how it would change us. How it would draw Americans together – by trade, by travel and even by thought.

• Inventions: electricity, lights, telegraph, refrigerator & typewriter

• Ford’s mass production, Tailor’s scientific management, corporations

• New energy-oil• Leading industrial country surpassing Great Britain in 1890,

American industry produced twice as much as Britain

Continue• Immigration:

• From 1865 through 1918 an unprecedented and diverse stream of immigrants arrived in the United States, 27.5 million in total

• Economic prosperity• The average annual income (after inflation) of nonfarm workers

grew by 75% from 1865 to 1900, and then grew another 33% by 1918

Military victory

With the involvement of the US, the Allies won WWI

People’s mentality Laissez-faire

Coolidge: "The business of the American people is business."[19]

Hoover: A believer in the efficacy of individualism and business enterprise, with a little coordination by the government, to cure all problems.

Optimistic to the future

The American economic boom of 1920s

http://www.youtube.com/watch?v=PdDuiZwmAfo

Discussion

How does the economic boom in early 20th century affect the coming of the stock crash in 1929?

II. The Great Depression

Stock market crashed in Oct.29,1929, 89 percent decline in stock prices

In the United States between 1929 and 1933, unemployment soared from 3% of the workforce to 25%

Industrial production had fallen by over half from 1929 to1933

744 banks failed from Oct. to July, 1930. (In all, 9,000 banks failed during the 1930s).

Dust Bowl from 1930-1936/40)

III. Roosevelt’s New Deal

Relief - provided instant relief for those who needed (short term).

Recovery - put the United States' economy on a footing that would make it strong like it was in the 1920s. (Recovery means that it gets back to a previous state).

Reform -fix the economy so that it would never fail to the level that it did in 1929.

moviesThe Great Depression: Causes and Effects (4.10 minutes, pro-the New Deal)http://www.youtube.com/watch?v=-b1dTvNaL0Q

Causes of the Great Depression (6 minutes Anti-the New Deal)http://www.youtube.com/watch?v=M-4cXsfFgpc&feature=player_embedded

Discussion 2

How do you understand the causes of the Great Depression?

IV. Impact of the New Deal

The doctrine of laissez faire lost its domination. The Securities Act, which created the Securities and

Exchange Commission placed regulations on the stock market, the most classic of examples of the free market system

The Tennessee Valley Authority, provider of navigation, flood control, electricity generation, fertilizer manufacturing, and economic development in the Tennessee Valley , would create a means by which the federal government would compete with private business, a most revolutionary concept

Banking regulation, the TVA, SEC, and Social Security have become part of the American way of life.

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Economically, the Social Security Act introduced the modern welfare state into the US; pensions at retirement; unemployment benefits; aid to families with dependent children; and some public health care and disability benefits.

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Politically, it transferred power from Wall Street to the nation’s capitol (specifically the White House).

The Wagner Act helped give unions a dynamic voice in American society. The union movement still today is a solid backer of the Democratic Party.

Roosevelt’s fight against the Supreme Court The National Industrial Recovery Act was under

challenge from the Supreme Court: “Extraordinary conditions may call for extraordinary remedies. But … extraordinary conditions do not create or enlarge constitutional power.”

The Judiciary Reorganization Bill 70 vs. 20 in the Senate 40 vs.60 among the people Compromise: the Social Security Act, the National Labor

Relations Act were constitutional in the court

The rational: if the president could undermine the independence of the judiciary, then this would undermine the balance of power in the system that protected them from the president and ensured the continuity of pluralistic political institutions.

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Socially, the government laws Eliminated sweatshops and deterred child labor. Laws enforcing work hour standards and wages as well as working conditions.

Moreover, the New Deal rescued the American farmer and aided African-Americans more than any other government had done since the end of the Civil War.

ContinueConserved and protected American corporate capitalism by diffusing American radicals charged with bringing increased socialist reformHuey Long’s “Share-Our-Wealth” proposal

http://www.youtube.com/watch?v=sYOHDM7SN5U&feature=related

V. ConclusionThe Great Depression put the US into another

critical crisis. Facing huge unemployment, psychological fear, economic stagnation, and civil unrest, the New Deal was an effort and solution to deal with this crisis. The New Deal turned the crises into another opportunity: on one hand, it created a more fair society; on the other hand, it conserved and protected American corporate capitalism.

Questions?

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