Ch 24 The New Deal First New Deal 1933 1934 Second New Deal 1935 1941 What were the goals of the new deal General goals of 1st New Deal relief recovery and reform o Not much of anything had improved in over 3 years o Do not forget the mentality of the American people and politicians that is the What policies were implemented and what institutions were created to meet those goals background of the decade General goals of 2nd New Deal social insurance 1st New Deal Relief o Works Projects Administration employed creative artists focused on relatively small projects like roads and Was formerly the Works Progress Administration but name changed to avoid Main concern was creating employment contribution of infrastructure to the left wing associations economy was secondary o Public Works Administration focused on relatively large projects like dams hospitals and airports o Federal Emergency Relief Agency o Unemployment reduced from 16 9 to 9 9 1st New Deal Recovery o National Recovery Administration Antitrust laws were suspended Allowed for formal agreements to set prices and output cartels 1 Identified as one of the crown jewels of the New Deal o National Industrial Recovery Act NIRA reducing hours and prevented price cutting by competitors trying to maintain volume raised prices and wages spread work by National Recovery Administration supervised code of fair practice for each industry Agreements among sellers to set minimum prices limit output and establish minimum wages and maximum hours of work Effective The codes redistributed rather than expanded outcomes Unemployment although reduced was still incredibly high and most manufacturing firms were operating at far less than capacity In 1935 declared unconstitutional 1st New Deal Reform Part 1 Financial Sector o Federal Deposit Insurance Corporation Federal Savings and Loan Insurance Corporation insured depositors Tremendous drop in bank failures after implementation o Glass Steagall Act separated commercial and investment banking Today no longer exists o Securities Exchange Commission o Ended commitment to the Gold Standard o Federal Reserve System 1st New Deal Reform Part 2 Agricultural Sector regulated securities i e Wall Street created Fed Board of Governors located in Washington o Agricultural Adjustment Administration attempted to limit supply to increase prices Acreage allotment was the best tool farmers compensated by adjustment payment Declared unconstitutional in 1936 Congress passed a new AAA in 1938 Marketing agreements cartels to reduce output and raise prices and surplus removal programs The Food Stamp Plan Secondary effects high unemployment and hunger 2nd New Deal Social Security and Unemployment Insurance 2 o General goal social insurance o The attitude of the country towards social insurance changed dramatically after 1932 o Social Security Act of 1935 sold to the public as insurance with employee and employer equally sharing in contributions The employee usually bears the burden of taxes resulted in lower wages for workers Amendment in 1939 converted the system to a pay as you go What were the reactions to those policies and institutions Many policies were not warmly received but the idea that something was being tried was generally well received by the public Fireside chats were great tools From Labor Groups o Labor was very supportive o National Recovery Act provided new powers to unions to strike and organize free of employer interference o After NRA was declared unconstitutional the National Labor Relations Act Wagner Act provided even more support for union activity Further guaranteed workers the right to form and join a labor organization to engage in collective bargaining to select representatives of their own choosing and to engage in collaborative activity Additionally outlawed unfair managerial practices Between 1930 and 1939 union membership increased from 6 8 to 15 8 of the o The Fair Labor Standards Act creates many of the laws we deal with today labor force Minimum wage Rules for overtime pay Child labor laws o The New Deal failed to accomplish its largest goal restore full employment Persistence of unemployment was the result of sticky wages Real wages did remain high perhaps too high The unemployed were slow to adjust their reservation wage as they searched for jobs and New Deal policies helped maintain wages 3 From the Supreme Court o The Court supported some but not all New Deal policies o Ruled unconstitutional National Recovery Act delegated too much arbitrary authority to executive branch and attempted to regulate interstate commerce Agricultural Adjustment Act financed by improper taxes FDR attempted to appoint additional justices and pack the court but failed o Ruled constitutional Fair Labor Standards Act powers of the federal government Critics o 1937 is argued to be a major turning point in American history with regard to the o Turning the U S into a bureaucratic state o Funds spent to maximize political support for New Deal not for genuine relief o New Deal prolonged the depression What are some of the legacies of the New Deal and Great Depression 1 Enduring institutions and programs federal aid to agricultural industry FDIC SEC unions Fair Labor Standards Social Security Unemployment Insurance 2 Idealistic spirit additionally liberal legislation in the future 3 Attitude that government can give solutions to economic difficulties 4 Did not try to overthrow capitalism just tried to reform and conserve the system 4 Ch 25 World War II How did America prepare for war Since the US had many idle resources it was in a good position to mobilize for war At first the US supplied the Allies with war products Economic effects in 1940 the government was spending 8 2 of GNP in 1944 the Later the US supplied itself and the Allies with war products government was spending 52 3 of total GNP o From mid 1940 to mid 1945 the US produced LOTS of war products like tanks airplanes rifles carbines and sidearms field artillery and mortars artillery shells small arms ammunition landing vessels navy ships and cargo ships and transports Key points o Since the US was far inside its PPC it could quickly increase production o Civilian purchases during WWII were generally lower than during the Great Depression o Within 3 years the US was producing more war munitions than Germany and Japan combined The US had several distinct economic advantages o Except for Pearle Harbor the war was fought on foreign soil o The US had