Fiche de révision : Great Depression and New Deal Strategies

📋 Course Outline

1. Economic growth and stock market boom before 1929 crash
2. Causes and effects of the 1929 Black Thursday financial crash
3. Global and European economic impacts of the 1929 crisis
4. Franklin D. Roosevelt’s New Deal and Keynesian economic policies
5. Key programs and reforms during Roosevelt’s First Hundred Days
6. Financial regulations and taxation measures under the New Deal
7. Economic outcomes and social changes from the New Deal era
8. Daily life hardships and social consequences during the Great Depression

📖 1. Economic growth and stock market boom before 1929 crash

🔑 Key Concepts & Definitions

• Industrial production increase : Economic indicator reflecting the overall growth in manufacturing and industrial output, which increased by 50% globally between 1923 and 1929.
• Stock market boom : Rapid rise in stock prices in New York, driven by unmonitored speculation and artificial wealth creation, making it the global financial center.

📝 Essential Points

• New York became the global financial center due to the stock market boom.
• The U.S. government followed a non-interference principle, avoiding regulation of financial markets.
• Unmonitored speculation created artificial wealth, leading to overpriced stocks and unsold goods while workers remained underpaid.

💡 Key Takeaway

Rapid industrial growth combined with laissez-faire financial policies created unstable economic conditions before the crash.

📖 2. Causes and effects of the 1929 Black Thursday financial crash

🔑 Key Concepts & Definitions

• Unemployment : Condition in which workers lose their jobs, as experienced by one-quarter of U.S. workers within four years after the 1929 crash.
• Black Thursday : The event on October 24, 1929, when panic selling by traders triggered a massive stock market crash in the U.S.
• Bank failures : 1/5 went bankrupt.

📝 Essential Points

• On October 24, 1929, known as Black Thursday, panic selling triggered a massive stock market crash.
• Raw materials and manufactured goods became either worthless or excessively expensive after the crash.
• In the U.S., one-quarter of workers became unemployed within four years and one-fifth of banks went bankrupt.
• = Bank failures: 1/5 went bankrupt.

💡 Key Takeaway

On October 24, 1929, known as Black Thursday, panic selling triggered a massive stock market crash.

📖 3. Global and European economic impacts of the 1929 crisis

🔑 Key Concepts & Definitions

• Global economic contagion : widespread spread of economic disturbances across countries, characterized by a sharp decline in international trade and financial stability, notably following the 1929 crash.

• European unemployment crisis : a period marked by extremely high joblessness within European nations, exemplified by Germany’s 44% unemployment rate in 1932, the highest among industrialized countries.

• International trade collapse : a significant reduction in cross-border commerce, with imports dropping by two-thirds after the 1929 crisis, severely affecting global economic activity.

• Neoliberalism disillusionment : widespread loss of confidence in neoliberal economic policies, which were blamed for the crisis, leading to a shift toward alternative political and economic ideologies.

📝 Essential Points

• Following the 1929 crisis, international imports decreased by two-thirds, causing a severe decline in global trade. By 1931, all European countries experienced economic downturns, with Germany particularly hard-hit, recording a 44% unemployment rate in 1932—the highest among industrialized nations. European colonies were also impacted by the worldwide economic downturn, reflecting the global reach of the crisis. The economic collapse contributed to widespread disillusionment with neoliberal practices, which many blamed for the downturn, prompting citizens to lean toward alternative, sometimes radical, ideologies. The crisis also led to social consequences such as young people leaving school to seek work. Despite ongoing instability, some optimism emerged following actions by leaders like Franklin D. Roosevelt, though not universally regarded as a savior. Overall, the crisis resulted in significant economic and social instability across Europe and beyond.

💡 Key Takeaway

The 1929 crash triggered a global ripple effect, causing economic collapse and social upheaval in Europe and its colonies, while also fostering disillusionment with prevailing neoliberal policies and prompting political shifts.

📖 4. Franklin D. Roosevelt’s New Deal and Keynesian economic policies

🔑 Key Concepts & Definitions

• New Deal : Denounced = financial traders as “money changers” = wealthy elites for selfishness = complicity of the previous government
• Domestic expenditures : Keynesianism to renew the Middle Class
• Reduce poverty : Keynesianism to renew the Middle Class

📝 Essential Points

• Franklin D. Roosevelt was elected in 1933 on a platform promising the New Deal to combat economic and social crises.
• The New Deal was underpinned by Keynesianism, advocating increased domestic spending to stimulate consumption and employment.
• The multiplier effect justified government expenditure as a means to boost economic activity.
• The New Deal aimed to reduce poverty, create jobs, and strengthen industrial and farming capacities through increased government intervention.
• To resorb this crisis, FDR increased domestic expenditures to stimulate consumption, aiming to reduce poverty, create new job opportunities, and industrial and farming capacities.
• In 1933, FDR became the 32nd president of the United States, elected on an ambitious program of reforms to address the social and economic crisis that had battered the country since 1929, called the “New Deal”.

💡 Key Takeaway

Roosevelt’s adoption of Keynesian principles marked a fundamental shift in U.S. economic policy to combat the Depression.

📖 5. Key programs and reforms during Roosevelt’s First Hundred Days

🔑 Key Concepts & Definitions

• Industries : Economic sectors involving manufacturing and production that received federal investments to promote factory deployment, both public and private.
• First Hundred Days : The initial period of Roosevelt's presidency marked by rapid legislative activity, including laws for public works, agricultural support, and industrial regulation.
• Public services : Government-provided utilities and infrastructure, expanded through nationalization and development of electrical systems, roads, airports, and other public works.

📝 Essential Points

• During the First Hundred Days, Roosevelt passed laws to create large-scale public works projects employing millions.
• The AAA aimed to reduce agricultural surpluses to raise prices and support farmers.
• The NIRA coordinated industrial recovery by regulating wages and prices and promoting fair competition.
• Federal investments expanded factories, public services, and infrastructure including roads, airports, and electrical networks.

💡 Key Takeaway

The rapid legislative response during Roosevelt’s First Hundred Days launched transformative public works and agricultural reforms to revive the economy.

📖 6. Financial regulations and taxation measures under the New Deal

🔑 Key Concepts & Definitions

• Banking Acts : Legislation enacted to prevent shortages of gold and money, regulate financial transactions, and restore bank and treasury funds.
• Securities Act : Legislation requiring registration of stock transfers using public services to increase transparency in the stock market.
• Widely : Refers to the broad employment of functionaries to monitor markets, impose regulations, and raise taxes on the wealthiest.

📝 Essential Points

• Banking acts were enacted to prevent gold and money shortages and regulate financial transactions.
• The gold standard was suspended to restore bank and treasury funds.
• In 1935, taxes on the wealthiest households increased dramatically, reaching up to 79% for incomes of $5 million per year.

💡 Key Takeaway

Banking acts were enacted to prevent gold and money shortages and regulate financial transactions.

📖 7. Economic outcomes and social changes from the New Deal era

🔑 Key Concepts & Definitions

• Unemployment reduction : a decrease in the percentage of the workforce without jobs, achieved through policies that promote employment, such as those implemented by FDR’s administration between 1933 and 1940, when unemployment dropped by 7% prior to the shift to military production.

• GDP recovery : the process of restoring the gross domestic product to its pre-Depression level, marked by an upward trend beginning in 1934 and reaching pre-Depression levels by 1936, indicating economic growth and increased production.

• Dust Bowl impact : a climatic phenomenon occurring from 1934 to 1939, characterized by sandstorms that damaged large agricultural areas, disrupted farming activities, and slowed economic progress in affected regions.

• Emergence of new Middle Class : the rise of a social group that gained economic stability and social mobility during this period, fostering belief in the 'American Dream'—the idea that everyone has the opportunity and freedom to attain a better life.

📝 Essential Points

• Between 1933 and 1940, unemployment decreased by 7%, reflecting initial progress in reducing joblessness through New Deal policies, before the economy shifted focus to military production, which further stimulated growth.

• Annual GDP began recovering in 1934, with economic activity reaching pre-Depression levels by 1936, signifying a substantial recovery in national economic output.

• The Dust Bowl, occurring from 1934 to 1939, caused widespread destruction of arable lands through sandstorms, disrupting agriculture and delaying the effects of economic recovery efforts in large parts of the country.

• A new Middle Class emerged during this period, supporting the belief in the 'American Dream' and the possibility of social mobility, which contributed to social transformation and optimism.

• Despite criticisms from the wealthy and their supporters labeling FDR as radical, he was re-elected multiple times— in 1936 with 61%, and in 1940 and 1944 with 54%— demonstrating broad political support amid economic and social upheaval.

• The economic hardships were especially severe for the working and middle classes, with impacts varying according to class, gender, race, location, age, and luck, highlighting the uneven distribution of recovery benefits.

• Efforts to combat hunger were limited and sporadic, relying on charities, counties, and churches to provide minimal aid during the crisis periods.

• The Dust Bowl’s destruction in 1934, 1936, and 1939 pushed many inhabitants off their lands, increasing migration and hardship in affected regions, further complicating economic and social recovery.

💡 Key Takeaway

The New Deal era saw a significant, though uneven, economic recovery marked by declining unemployment and rising GDP, alongside profound social transformations such as the rise of a new Middle Class and the reinforcement of the 'American Dream,' despite ongoing hardships caused by environmental and social challenges.

📖 8. Daily life hardships and social consequences during the Great Depression

🔑 Key Concepts & Definitions

• During the Great Depression : The time period in the early 1930s when millions of Americans lost their incomes, wages fell, and many families faced homelessness and social distress.

📝 Essential Points

• By 1932, 30 million Americans had lost incomes, with widespread wage cuts and reduced work hours.
• The Dust Bowl caused severe agricultural damage, forcing many families to migrate and become homeless.
• Marriage and birth rates declined, while divorce and suicide rates increased due to economic and psychological stress.
• Minority communities faced intensified discrimination and job losses, especially African Americans and Asian Americans.

💡 Key Takeaway

The Great Depression inflicted profound human and social suffering, with increased homelessness, family disintegration, and discrimination, highlighting resilience amid hardship.

📅 Key Dates

📊 Synthesis Tables

Economic Impact Comparison: Pre- and Post-1929 Crash

European and American Social Changes During the Great Depression

⚠️ Common Pitfalls & Confusions

1. Confusing stock market boom with economic prosperity
2. Assuming all European countries were equally affected
3. Overgeneralizing the social impact of the Great Depression
4. Ignoring environmental factors like the Dust Bowl in economic analysis
5. Misattributing the recovery solely to New Deal policies
6. Confusing short-term relief with long-term economic stability
7. Overlooking the uneven distribution of benefits from New Deal reforms

✅ Exam Checklist

1. Identify key dates related to the 1929 crash and New Deal
2. Describe the causes of the 1929 stock market crash
3. Explain the global impacts of the 1929 crisis
4. Summarize Roosevelt’s First Hundred Days reforms
5. List financial regulations introduced under the New Deal
6. Assess economic outcomes of the New Deal era
7. Discuss social changes during the Great Depression
8. Describe daily hardships faced by Americans during the 1930s
9. Explain environmental impacts like the Dust Bowl
10. Analyze the shift in economic policies post-1929
11. Evaluate the social resilience during economic hardships