Government's Response to a Worsening Economy
Dam, a WPA project
- At first, many government officials thought that the depression
would end soon.
- President Hoover did not think that the government should get
involved with the economy. He and his advisors also thought that
people would depend too much on the government if it helped them.
They would stop trying to work for themselves.
- Hoover said that people, organizations, and city and state governments
should try to help the poor, but they did not have enough money
to do this.
The Bonus Army
- Veterans gathered in Washington, D.C. in 1932 to demand the money
that the government promised them. They were called the Bonus Army.
- When Hoover refused to listen to the Veterans, they organized
protests. Eventually, Hoover ordered troops, led by General Douglas
MacArthur, to make them leave. They set fire to the veterans' campsites
and used tear gas to force them out. Many veterans were hurt, and
two were killed.
Some government help
- In 1932, Hoover created federal jobs, such as road and airport
building. He also set up the Reconstruction Finance Corporation,
which aided city and state governments, banks, and railroads.
Raising money for the government
- To earn money for the government, the Hoover administration
raised tariffs on imports,
but foreign governments raised their tariffs as well, so American
companies had a hard time exporting products.
- Hoover and Congress also tried to increase government funds by
raising income taxes. This effort further decreased Americans's money.
The New Deal's three goals were relief, recovery, and reform.
- The New Deal was the first time that the U.S. government took
a central role in solving major economic problems.
Relief, Recovery, and Reform
1) provided money for the unemployed and the poor, and
2) helped get more money into the economy
1) created jobs, and
2) helped agriculture and
- Reform: prevented later economic problems by regulating
the stock market, banks, and labor organization.
New Deal Relief Efforts
Civilian Conservation Corps
|Offered work to young people.
Men and women cleaned parks, rivers, etc.
Some of their money was sent home.
Federal Emergency Relief Administration
|Offered federal funds to city and state governments
to help their relief efforts.
People were hired to do maintenance work around the cities.
The organization also donated over 900 million dollars for necessities
such as food and clothing.
Public Works Administration
|Gave people jobs.
Congress allowed PWA to
join with local governments and private companies to make buildings,
roads, airports, and other public responsibilities.
Civil Works Administration
|Put many people to work repairing schools, working
in parks, and completing other civil jobs.
Farm Credit Administration gave farmers long-term, low-interest
Home Owners Loan Corporation
|Gave low-interest loans to families.
Because of the HOLC, many people could keep their homes.
New Deal Reform Efforts
|Federal Deposit Insurance Corporation
||If a bank collapsed,
the FDIC would pay back the people who lost money.
|Federal Trade Commission
tell the truth to people buying and selling stock.
|Securities and Exchange Commission
||Said that all stock must be registered, companies
must report the amount of stock they sold. The SEC also made sure
that stock prices were not manipulated
Second New Deal Relief Efforts
|Works Progress Administration
||The government would start a big public works effort
(In earlier relief programs, private companies employed workers).
|The Wagner Act
||Said workers could choose to form a union. Also,
workers and managers had to discuss salaries and working conditions.
Unions could report unfair companies to the National Labor Relations
|Social Security Act
||Gave monthly payments to retired and disabled workers,
as well as their orphans and widows. Workers and employers had
to pay a small amount, which would go toward social security.
More Second New Deal Relief Efforts
|National Housing Act
||The U.S. Housing Authority would give cities money
for low-income housing.
|Fair Labor Standards Act
||1) set a minimum wage of 40 cents an hour
2) said that companies that dealt with interstate commerce could
not make employees work longer than 40 hours a week. Workers and
employers had to agree upon higher wages for overtime hours.
|2nd Agricultural Adjustment Act
||1) established a parity
system for farmers
2) paid farmers to limit the acres they farmed
3) got rid of a special tax for companies that processed farm
The Overall Effect of the New
- 1) With the New Deal, the government started to take responsibility
for the poor.
- 2) With the New Deal, the government had more control over economy.
It could control interest rates and loans, wages, work hours, and
stock trading, among other things.
- 3) With the New Deal, it was accepted that the government may
have deficits in difficult times.