Interesting read: The Great Depression
Posted: Thu Jul 21, 2011 9:41 pm
I found the similarities of what happened in the 1930's and what is happening now interesting. and how the actions that were taken by the Government in the 30's and how the results of those actions are eerily similar to whats happening now. I guess it's true. "those that forget their past are Doomed to repeat it"
Main articles: Great Depression in the United States and New Deal
Shacks, put up by the Bonus Army (World War I veterans) on the Anacostia flats, Washington, D.C., burning after the battle with the 1,000 soldiers accompanied by tanks and machine guns, 1932.[74]
Bennett buggies, or "Hoover wagons", cars pulled by horses, were used by farmers too impoverished to purchase gasoline.
President Herbert Hoover started numerous programs, all of which failed to reverse the downturn.[75] In June 1930 Congress approved the Smoot–Hawley Tariff Act which raised tariffs on thousands of imported items. The intent of the Act was to encourage the purchase of American-made products by increasing the cost of imported goods, while raising revenue for the federal government and protecting farmers. However, other nations increased tariffs on American-made goods in retaliation, reducing international trade, and worsening the Depression.[76] In 1931 Hoover urged the major banks in the country to form a consortium known as the National Credit Corporation (NCC).[77] By 1932, unemployment had reached 23.6%, and it peaked in early 1933 at 25%,[78] drought persisted in the agricultural heartland, businesses and families defaulted on record numbers of loans,[79] and more than 5,000 banks had failed.[80] Hundreds of thousands of Americans found themselves homeless and they began congregating in the numerous Hoovervilles that had begun to appear across the country.[81] In response, President Hoover and Congress approved the Federal Home Loan Bank Act, to spur new home construction, and reduce foreclosures. The final attempt of the Hoover Administration to stimulate the economy was the passage of the Emergency Relief and Construction Act (ERA) which included funds for public works programs such as dams and the creation of the Reconstruction Finance Corporation (RFC) in 1932. The RFC's initial goal was to provide government-secured loans to financial institutions, railroads and farmers. Quarter by quarter the economy went downhill, as prices, profits and employment fell, leading to the political realignment in 1932 that brought to power Franklin Delano Roosevelt.
Shortly after President Roosevelt was inaugurated in 1933, drought and erosion combined to cause the Dust Bowl, shifting hundreds of thousands of displaced persons off their farms in the Midwest. From his inauguration onward, Roosevelt argued that restructuring of the economy would be needed to prevent another depression or avoid prolonging the current one. New Deal programs sought to stimulate demand and provide work and relief for the impoverished through increased government spending and the institution of financial reforms. The Securities Act of 1933 comprehensively regulated the securities industry. This was followed by the Securities Exchange Act of 1934 which created the Securities and Exchange Commission. Though amended, key provisions of both Acts are still in force. Federal insurance of bank deposits was provided by the FDIC, and the Glass–Steagall Act. The institution of the National Recovery Administration (NRA) remains a controversial act to this day. The NRA made a number of sweeping changes to the American economy until it was deemed unconstitutional by the Supreme Court of the United States in 1935.
Early changes by the Roosevelt administration included:
Instituting regulations to fight deflationary "cut-throat competition" through the NRA.
Setting minimum prices and wages, labor standards, and competitive conditions in all industries through the NRA.
Encouraging unions that would raise wages, to increase the purchasing power of the working class.
Cutting farm production to raise prices through the Agricultural Adjustment Act and its successors.
Forcing businesses to work with government to set price codes through the NRA.
These reforms, together with several other relief and recovery measures, are called the First New Deal. Economic stimulus was attempted through a new alphabet soup of agencies set up in 1933 and 1934 and previously extant agencies such as the Reconstruction Finance Corporation. By 1935, the "Second New Deal" added Social Security (which did not start making large payouts until much later), a jobs program for the unemployed (the Works Progress Administration, WPA) and, through the National Labor Relations Board, a strong stimulus to the growth of labor unions. In 1929, federal expenditures constituted only 3% of the GDP. The national debt as a proportion of GNP rose under Hoover from 20% to 40%. Roosevelt kept it at 40% until the war began, when it soared to 128%.
WPA employed 2-3 million unemployed at unskilled labor.
By 1936, the main economic indicators had regained the levels of the late 1920s, except for unemployment, which remained high at 11%, although this was considerably lower than the 25% unemployment rate seen in 1933. In the spring of 1937, American industrial production exceeded that of 1929 and remained level until June 1937. In June 1937, the Roosevelt administration cut spending and increased taxation in an attempt to balance the federal budget.[83] The American economy then took a sharp downturn, lasting for 13 months through most of 1938. Industrial production fell almost 30 per cent within a few months and production of durable goods fell even faster. Unemployment jumped from 14.3% in 1937 to 19.0% in 1938, rising from 5 million to more than 12 million in early 1938.[84] Manufacturing output fell by 37% from the 1937 peak and was back to 1934 levels.[85] Producers reduced their expenditures on durable goods, and inventories declined, but personal income was only 15% lower than it had been at the peak in 1937. As unemployment rose, consumers' expenditures declined, leading to further cutbacks in production. By May 1938 retail sales began to increase, employment improved, and industrial production turned up after June 1938.[86] After the recovery from the Recession of 1937–1938, conservatives were able to form a bipartisan conservative coalition to stop further expansion of the New Deal and, when unemployment dropped to 2%, they abolished WPA, CCC and the PWA relief programs. Social Security, however, remained in place.
President Clinton. he signed it into law, he alone had the power to stop it if it was bad legislation. THAT WAS HIS JOB