Study Notes on Economic Factors and Historical Context of the Stock Market Crash and the New Deal

Changes to Assessment Categories

  • A category titled "Economic and Political Factors that Led to the Stock Market Crash and the Depression" was added to the test under general subjects.

  • The category regarding the AFL-CIO, specifically focusing on skilled workers versus industrial workers, has been removed.

PowerPoint and Slideshow Instructions

  • PowerPoint Requirement:

    • Students are discouraged from attempting to use the alternative slideshow if they do not have PowerPoint, as the second slideshow is complex and poorly organized.

    • Viewing individual slides in the alternate format is not advisable.

    • The suggested materials involve utilizing maps from the textbook for a clearer understanding.

  • Map Guidance:

    • One effective approach is to have a map that progresses along with the lesson, emphasizing its utility for visualizing information.

Historical Context

Important Historical Events

  • Rise of the Nazis (1933)

    • Students need to understand the relevance of the Nazis' rise in relation to other events, specifically in WWII context.

    • Italian aggression was not covered in class and will not be on assessments.

Student Group Work

  • The instructor supports working in smaller groups rather than lengthy discussions, promoting collaborative learning.

  • Questions are welcomed but should be specific and demonstrate prior effort to understand the material, rather than broad and unfocused inquiries.

Economic Concepts

Work Relief and Alphabet Agencies

  • Students should have a basic understanding of the following programs:

    • PWA (Public Works Administration)

    • WPA (Works Progress Administration)

  • Emphasis is on understanding what work relief meant and the impact of these programs on employment.

Political and Economic Factors Leading to the Stock Market Crash (1929)

  • Unbalanced Trade:

    • The relationship between international reparations, tariffs, and the agricultural sector's challenges is intricate and needs clarification.

    • The discussion should focus on the concept of balance in trade and its importance.

Investment Capital

  • The U.S. served as a major creditor post-WWI, heavily investing in Europe via loans, expecting returns with interest.

    • Capital Flows:

    • U.S. investment in Europe requires Europeans to sell goods back to Americans, creating a cycle of trade that depends on this flow.

    • Impact of Tariffs:

    • Tariffs can hinder this flow and worsen economic conditions, despite intentions to protect domestic industries.

Effects of the Stock Market Crash

  • Following the crash, asset values dropped, leading to widespread efforts to liquidate assets for cash.

  • This created a cycle of panic, reducing further investments and worsening trade balances.

  • The cascading loss of confidence among investors and consumers exacerbated economic issues, prompting misguided governmental interventions (e.g., increased tariffs).

Bank Runs

  • Defining Bank Runs:

    • The liquidation of bank deposits as individuals sought cash after losing confidence in the banking system, contrasted to government assurances.

    • Notable increase in bank runs occurred between late 1931 and early 1933, during FDR's election period.

    • The FDIC (Federal Deposit Insurance Corporation) was established in 1933 to restore trust in banks and prevent future runs.

Social Security and Government Response to Economic Crisis

Demand and Deficit Spending

  • Keynesian Economic Theory:

    • John Maynard Keynes argues that a lack of demand is a primary cause of industrial depression, suggesting that government intervention through deficit spending is necessary.

    • The government can stimulate demand by investing in public projects and infrastructure to alleviate unemployment.

  • Economic Sectors:

    • Three economic sectors: households, businesses, and government. If the first two sectors reduce spending, the government must provide stimulus.

Social Security Act Exclusions

  • Certain worker categories (e.g., domestic workers, agricultural workers) were intentionally excluded from benefits under the Social Security Act, largely due to political compromises.

  • This exclusion reflects a wider pattern wherein political support was garnered by privileging certain demographics over others.

Political Criticisms of the New Deal

  • Schisms Between Political Left and Right:

    • Critiques arise from both political ends, arguing the New Deal favored elites while neglecting broader societal needs.

  • Charles Coughlin:

    • A complex figure whose populist rhetoric straddles political lines and exemplifies the overlaps in critiques.

Conclusion

  • Critical reflection is required on the implications of these economic and social policies. Understanding the nexus of historical events, policies, and their socio-political critiques is vital for comprehensive knowledge of the era's challenges and responses.