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The New Deal

The New Deal. Response to the Depression Success, Failure FEDS and it’s implications TODAY. “Prosperity is around the Corner”. Herbert Hoover Do nothing, economy will work itself out Franklin D Roosevelt The NEW DEAL Today: temporary “jobs” and short spurts in market,. Immediate Relief.

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The New Deal

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  1. The New Deal Response to the Depression Success, Failure FEDSand it’s implications TODAY

  2. “Prosperity is around the Corner” • Herbert Hoover • Do nothing, economy will work itself out • Franklin D Roosevelt • The NEW DEAL • Today: temporary “jobs” and short spurts in market,

  3. Immediate Relief

  4. THE NEW DEAL • Immediate Relief • WPA, CCC, NIRA • Reform Financial System • Safety net for Banks • Separate: commercial from investment • No interest on deposits • End of GOLD • Federal Reserve

  5. Agricultural Reform • Biggest Problem: raise farming good prices • Foreclosures a 38% • “FAIR” Farm Prices • Agricultural Marketing Act of 1929 • Commodity Credit Corporation • Agricultural Adjustment Act 1938

  6. LABOR AND THE NEW DEAL • National Labor Relations Act • Collective bargaining • Wagner Act • Employers HAD to bargain • Fair Labor Standards Act of 1938 • Min wage • 44hr work week

  7. THE WELFARE STATE • Social Security Act of 1935 • Structured as insurance plan • 1939 payments were NOT saved, pay as you go • Looked to FEDERAL GOVERNMENT FOR RELIEF

  8. Critiques of NEW DEAL • This experience convinced the majority of Americans, on both economic and ethical grounds, of the need for a permanent federal plan to cope with severe losses in income. • Recent research by Price V. Fishback, Michael R. Haines, and Shawn Kantor (2007) shows that New Deal relief spending lowered infant mortality rates, suicide rates, and other forms of premature mortality. • Joseph Schumpeter (1939) one of the leading economists of the day, argued that Roosevelt’s antibusiness rhetoric and his constant addition of new regulations and taxes had discour-aged private investment, and that lack of investment had inhibited recovery.

  9. Aftermath… • Securities and Exchange Commission • The Federal Deposit Insurance Corporation • Minimum wages and other workplace regulations, • Social Security, • unemployment compensation, • Agricultural price supports • Big government arrived in the 1930s and the role of • State and especially local government shrank in relative terms (Wallis 1984). • Look to Washington for answers!

  10. “Federal insurance of bank deposits was the most important struc- tural change in the banking system to result from the 1933 panic, and, indeed, in our view, the structural change most conducive to monetary stability since state bank note issues were taxed out of existence immediately after the Civil War” -- A Monetary History ofthe United States, Milton Friedman and Anna J. Schwartz

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