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Rethinking the Great Depression

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Rethinking the Great Depression Part II: The New Deal The Depression of 1937-1938 Anemic Recovery of 1938-1940 The Effects of WWII on the Economy FDR & Economic ... – PowerPoint PPT presentation

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Title: Rethinking the Great Depression


1
RethinkingtheGreat Depression
  • Part II The New Deal
  • The Depression of 1937-1938
  • Anemic Recovery of 1938-1940
  • The Effects of WWII on the Economy

2
FDR Economic Policy
  • No particular economics expertise.
  • Change f(academic advisors)
  • The problem of underconsumption/overproduction
    (?)
  • Industrial planning
  • Reform vs. Recovery

3
FDR Economic Policy
  • Banking
  • Relief
  • Jobs
  • TVA
  • AAA
  • NRA

4
1933 Economic Rebound
March to July
Non-durables Production 35
Durables 83
Unemployment -5
  • Gold inflows banks rebound.

5
1933 Economic Slide
July to November
Non-durables Production -19
Durables -32
Unemployment no change
  • AAA NRA kick in.

6
Back to July 1933
Date
Durables Production July 1935
Manufacturing Production August 1935
Unemployment October 1934
  • Industrial codes price fixing.

7
The Depression of 1937-1938
  • Ur decreased to 12 by 1937 . . . then, back to
    20
  • Production rising . . . now falling by 67 (dur.)
  • Stock prices rising . . . now down 50
  • Downturn worse than 1920-21 1929-30 !!!
  • Why?
  • FDR continues attacks on business.
  • Fed raises reserve requirements.
  • Labor laws raise labor costs.

8
Anemic Recovery 1938-1940
  • By 1940, back to where we were in 1937.
  • Ur decreased but still around 15.
  • Durable mfg. at 96 of July 1929 level.
  • Housing construction reached 1929 levels . . . in
    1951 !!
  • Why? Regime Uncertainty
  • Net Investment -18 billion 1931-1935.
  • From 1930-1940, Net Investment -3 bill.
  • Contractionary monetary policy.

9
Effects of WWII on the Economy
  • Ur decreased to lt2 by 1943.
  • Govt. spending rises by almost 900.
  • Rise in Consumption spending.
  • Economic recovery as prescribed by Keynes.
  • Were we better off?
  • Unemployed ? military.
  • Rationing and price controls.
  • Increased taxes.
  • Increased money supply.

10
Consequences of theGreat Depression
  • An end to the gold standard.--Increased monetary
    destabilization.--Culminated with inflationary
    1970s.
  • Increased Federalism.--Size of federal govt.
    still growing.--SL getting 25 from feds.
  • Growth in the Regulatory State.--What isnt
    interstate commerce?--Cap Trade next?
  • Rise of the Welfare State.--Can SS continue?

11
RethinkingtheGreat Depression
  • Part II The New Deal
  • The Depression of 1937-1938
  • Anemic Recovery of 1938-1940
  • The Effects of WWII on the Economy
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