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Questions and Answers
What were the primary goals of Roosevelt's New Deal?
What were the primary goals of Roosevelt's New Deal?
During which phase of the New Deal was there a greater emphasis on social policies?
During which phase of the New Deal was there a greater emphasis on social policies?
What was one of the first actions taken by Roosevelt to address the banking crisis during the New Deal?
What was one of the first actions taken by Roosevelt to address the banking crisis during the New Deal?
What was the purpose of the Reconstruction Finance Corporation (RFC)?
What was the purpose of the Reconstruction Finance Corporation (RFC)?
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Which of the following best describes the approach of the Brain Trust during the New Deal?
Which of the following best describes the approach of the Brain Trust during the New Deal?
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What was Roosevelt's primary intention behind injecting liquidity into the economic system?
What was Roosevelt's primary intention behind injecting liquidity into the economic system?
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What was one of the significant reforms aimed at preventing future economic downturns during the New Deal?
What was one of the significant reforms aimed at preventing future economic downturns during the New Deal?
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How did the New Deal primarily respond to the 1929 economic crisis?
How did the New Deal primarily respond to the 1929 economic crisis?
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What was a significant consequence of the Wall Street Crash of 1929?
What was a significant consequence of the Wall Street Crash of 1929?
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Which economic theory did John Maynard Keynes advocate for in response to market failures?
Which economic theory did John Maynard Keynes advocate for in response to market failures?
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Which of the following best describes the initial response of central banks to the economic situation in the 1930s?
Which of the following best describes the initial response of central banks to the economic situation in the 1930s?
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What was one of the main purposes of the New Deal implemented by Roosevelt?
What was one of the main purposes of the New Deal implemented by Roosevelt?
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How did the 1929 economic crisis impact American loans internationally?
How did the 1929 economic crisis impact American loans internationally?
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Which statement about the Welfare State's establishment is accurate?
Which statement about the Welfare State's establishment is accurate?
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What was one aim of the economic reforms during the Great Depression?
What was one aim of the economic reforms during the Great Depression?
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Which of the following was NOT a characteristic of the economic policies adopted in response to the 1929 crisis?
Which of the following was NOT a characteristic of the economic policies adopted in response to the 1929 crisis?
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What was a significant impact of the abandonment of the Gold Standard during the Great Depression?
What was a significant impact of the abandonment of the Gold Standard during the Great Depression?
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Which of the following best represents Franklin Delano Roosevelt's approach in his inaugural speech regarding the economic crisis?
Which of the following best represents Franklin Delano Roosevelt's approach in his inaugural speech regarding the economic crisis?
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What was one of the primary domestic policy objectives that began to influence monetary policy during the Great Depression?
What was one of the primary domestic policy objectives that began to influence monetary policy during the Great Depression?
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What resulted from the intransigent 'gold bloc' countries during the Great Depression?
What resulted from the intransigent 'gold bloc' countries during the Great Depression?
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How did the New Deal aim to address banking insecurity during the economic crisis?
How did the New Deal aim to address banking insecurity during the economic crisis?
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What was one political consequence of the crisis evidenced in the 1932 presidential election?
What was one political consequence of the crisis evidenced in the 1932 presidential election?
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Which factor directly contributed to the adjustments in prices and wages during the Great Depression?
Which factor directly contributed to the adjustments in prices and wages during the Great Depression?
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What was the typical justification for the refusal to provide liquidity to banks during the crisis?
What was the typical justification for the refusal to provide liquidity to banks during the crisis?
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Study Notes
State Intervention (Amatori-Colli, Ch. 13)
- This section covers state intervention in economic history.
- The focus is on the influence of the 1929 crisis on economic thinking and policy responses to the crisis, specifically the US response via the New Deal.
The Great Crash (1929)
- The crash led to a global financial and economic crisis.
- Reduced American loans.
- Massive global trade contraction.
- Restrictive monetary policies.
- Increased customs barriers.
- Control over capital flows.
- Increased unemployment rates.
- Rising taxes
- Remaining on the gold standard.
- Balanced budget policies.
The Father of the Welfare State (John Maynard Keynes)
- Keynes's background includes mathematical influences from Alfred Marshall and Arthur Cecil Pigou.
- Key publications include works on the economic consequences of the peace (1919), treaties on probability (1921), economic consequences of Mr. Churchill (1925), general theory of employment (1936), and leadership in the Bretton Woods Conference (1944).
The Father of the Welfare State (Writer Information)
- Writers include Vanity Fair and New York Times articles.
The Birth of the Welfare State
- State intervention became essential to correct market failures.
- The Welfare State was established.
- John Maynard Keynes's vision urged adopting counter-cyclical policies.
Goodbye Economic Orthodoxy
- During the 1930s, many countries disengaged their currencies from the gold standard, granting central banks the freedom to: decrease interest rates, and print money
- This was a response to the damaging effects of the 1929 crisis, which challenged the earlier economic orthodoxy based on self-regulation.
- Monetary policy was increasingly influenced by domestic policy objectives.
Gold Standard and Great Depression
- Refusal to provide liquidity to banks, intended to protect fixed exchange rates, led to more bank failures.
- Countries like the UK (1931), USA (1933), and Scandinavia utilized devaluation to adjust prices and wages, stimulate growth, and recover from unemployment.
- Some countries, like France, Italy, Belgium, and Holland, experienced persistent stagnation and higher unemployment due to their adherence to the gold standard.
The Earlier You Abandon the Gold Standard the Better...
- The graph displays industrial production indexes for various countries across 1929-1937.
- It suggests that countries that loosened their adherence to the gold standard experienced faster industrial recovery.
USA: FDR and the New Deal (1932 Presidential Election)
- Herbert Hoover was defeated by Franklin Delano Roosevelt, who had been elected Democrat leader.
- Americans blamed Hoover for the handling of the crisis.
FDR
- Roosevelt's inaugural address, stressed that fear rather than economic realities were the main issue.
- Key themes of the address included the idea of national resilience and using policies to steer the economy forward.
USA: FDR and the New Deal (Who was FDR)
- FDR graduated from Harvard Law and Columbia University
- He held several positions, including: New York State Assembly member
- Assistant Secretary of the Navy
- Governor of New York
- Became President in 1932.
USA: FDR and the New Deal (The First 100 Days)
- FDR instigated a series of economic and social reforms.
- The three-pronged approach focused on Relief, Recovery, and Reform.
- The "Brain Trust"
- The approach emphasized empirical evidence and moved away from mainstream approaches.
New Deal Programs (List of Programs)
- Various programs created to address the economic crisis including Agricultural Adjustment Act, Civil Works Administration, Civilian Conservation Corps, Federal Emergency Relief Act, Glass-Steagall Act, National Industrial Recovery Act, Fair Labor Standards Act, Public Works Administration etc.
USA: FDR and the New Deal (The First 100 Days)
- Specific measures like the Bank Holiday, liquidity injection to banks, and usage of RFC to buy bank shares and bonds were implemented to deal with the crisis.
- Moving away from adherence to the Gold Standars.
USA: FDR and the New Deal (Massive Public Works Program)
- This program aimed to stimulate demand, by providing income to unemployed individuals and improve infrastructure.
USA: FDR and the New Deal(Welfare Measures)
- 1935 introduction of welfare measures and regulations, including the Social Security Act, aimed to transition the US closer to a social democracy.
- These programs included old-age pensions, disability and unemployment insurance, and allowances for widows and children.
USA: FDR and the New Deal (Labor Market Regulation)
- The National Labor Relations Act introduced the concept of collective bargaining and recognized labor unions.
- These policies forced companies to allow employees to collectively bargain and to recognize labor unions.
USA: FDR and the New Deal (Limitations)
- Despite their symbolic importance, the New Deal measures had limited impact on scope of the economic recovery.
- This was, in part, due to the Supreme Court's rulings and currency devaluations.
GDP per capita (USA, 1920-1960)
- The graph shows the trajectory of GDP per capita.
- There's a notable increase during FDR's New Deal period in post-1933 levels.
Unemployment Rate (1926-1947)
- The graph shows the unemployment rate during the New Deal era.
- Significant decreases in unemployment rates are visible following the New Deal programs.
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Description
This quiz explores state intervention in economic history, focusing on the impact of the 1929 crisis and the US New Deal response. Additionally, it covers key economic theories from John Maynard Keynes and his influence on welfare state policies.
