Notes on The Great Depression and New Deal

Stock Market Crash of 1929
- Buying on the margin inflated stock prices.
- Investors borrowed money from brokers, leading to high debt levels.
- If the market crashed, brokers demanded repayment.
- Resulted in a 90% loss in the Dow Jones index within three years.
- By 1930, 60% of Americans lived in poverty.
Economic Factors Contributing to the Crash
- High levels of debt due to easy credit.
- Low interest rates incentivized businesses to borrow excessively.
- Agriculture already in recession, affecting sales in other sectors like steel, railroads, textiles, and auto industries.
- Increased unemployment led to less consumer spending, decreasing demand and jobs, creating a self-reinforcing cycle.

Bank Failures and Economic Collapse
- By 1933, approximately 25% of banks had failed.
- 9 million savings accounts lost, wiping out personal investments.
- 400,000 farms foreclosed; many families migrated westward for work.
- Natural disasters such as the Dust Bowl exacerbated hardships.
- Hawley-Smoot Tariff of 1930 instituted a trade war.
- Hoover's laissez-faire policy: limited government intervention and minimal aid to consumers despite providing $2 billion to businesses.

Political Shift
- Hoover's unpopularity highlighted by shantytowns known as Hoovervilles.
- Franklin D. Roosevelt, optimistic and wealthy, rose to prominence after surviving polio.
- Won a decisive victory with the slogan, "The only thing we have to fear is fear itself".

Objectives and Philosophies
- Aim to address the powers of big business and redistribute wealth.
- Questions arose about the effectiveness of capitalism versus possible socialism.
- Government increased its regulatory role, abandoning laissez-faire while maintaining capitalism.
Main Themes of the New Deal
- Boosting demand to stimulate the economy; purchasing power was emphasized.
- Stabilizing key sectors: banks and agriculture.
- Infrastructure projects aimed at creating jobs, fostering future growth, and providing social welfare.

Key Legislation Passed
- JOBS AND RELIEF:
- March 31: Civilian Conservation Corps established.
- May 12: Federal Emergency Relief Act passed.
- RURAL REFORMS:
- May 12: Agricultural Adjustment Act introduced.
- May 18: Tennessee Valley Authority Act enacted.
- FINANCIAL REFORMS:
- March 9: Emergency Banking Act.
- June 16: Glass-Steagall Banking Act aimed to separate commercial from investment banking.
- Insured deposits through FDIC to restore public trust in banks.

Establishment of Key Programs
- Civilian Conservation Corp (CCC): employment in public works projects.
- National Recovery Administration (NRA): established minimum wage and child labor laws.
- Social Security: retirement benefits and unemployment insurance created to support families.
- Notable figures like Frances Perkins made significant contributions, particularly regarding labor rights.
Long-term Effects
- The New Deal's effectiveness was debated; it relieved suffering but did not end the Depression.
- Created stability within capitalism without radical changes.
- Recognized the importance of consumer demand; however, it largely catered to the existing societal structures favoring certain demographics over others.

Social Impact
- Social Security and unemployment benefits primarily targeted established workers, with many marginalized groups excluded (women, Black individuals).
- Contribution and benefit systems reinforced gender and racial inequalities.

Worldwide Economic Trends
- The Great Depression was not isolated to the United States; it affected global economies.
- Trade wars led to deteriorating international markets.
- Rise of extremist political responses: fascism in Italy, Spain, and Germany as reactions to the economic chaos.