The Great Depression & New Deal

THE GREAT DEPRESSION: Dates

THE GREAT DEPRESSION: Policies

Hoover Years (1929-1932)

Smoot-Hawley Tariff (1930) An ill-thought act, introducing tariffs of 40% on most imported goods, in the hope of protecting American industries. The US volume of trade declined by some 60% after that.

RFC (Reconstruction Finance Corporation) (1932) created to provide federal financial aid to railroads, financial institutions and business corporations.

Federal Home Loan Bank Act (1932) provided for the creation of eleven regional Federal Home Loan Banks, supervised by a central board, to provide financial assistance to small savings & loans institutions engaged in mortgage lending.

First Glass-Steagall Act (1932) facilitated credit from the Federal Reserve to cash-strapped banks, creation of the Federal Open Market Committee (FOMC); also facilitated the payment of foreign investors in gold.

Roosevelt Years ("New Deal") (1933-1945)

Bank Holiday (1933) announced to stave off a third bank panic. The Emergency Banking Bill stipulated bank reforms & solvency conditions to be met before re-opening.

"First Hundred Days" (1933) Roosevelt's energetic introduction of new programs in the first hundred days of office. Hoover's RFC was also reinforced & expanded and the following agencies were created:

Second Glass-Steagall Act (1933) separated investment banks from regular commercial banks (i.e. preventing regular banks from owning or dealing in corporate stocks & bonds.) Also introduced the FDIC (Federal Deposit Insurance Corporation) providing federal insurance of small bank deposits (discouraging future bank panics).

National Industrial Relations Act (1933) This act created a massive program of public works, guaranteed workers the right to bargain collectively, established codes of fair practice and trade, and created the National Recovery Administration to carry them out. Created the NRA (National Recovery Administration), an agency to oversee fair-practice & labor codes, minimum wages, maximum work hours and labor union bargaining. Also regulated prices & credit terms. Ruled unconstitutional in 1935.

Truth-in-Securities Act (1933) Set up "full and fair" standards of information disclosure to anybody offering corporate stocks or bonds.

Farm Credit Act: (1933) Massive program to refinance farm mortgages. Created FCA (Farm Credit Administration) to oversee, coordinate & encourage further private bank lending to farmers.

Agricultural Adjustment Act (1933) Creates the AAA (Agricultural Adjustment Administration) provided subsidies to farmers to cut back agricultural production. Subsidies financed by a 30% tax on agricultural product processing companies. Declared unconstitutional in 1936 because it uses a tax on one group to subsidize another. Somewhat rectified in Soil Conservation Act (1937). After Roosevelt created a more pliable Supreme Court, AAA acreage limits revived in 1938, this time without the subsidies tied to a processing tax. 

Gold Reserve Act (1934) Following up on Executive Order 6102 (1933), ratifies the end of the Gold Standard by prohibiting private ownership and dealing in gold (jewelry and gold coins by 'collectors' are exempt).  Roosevelt subsequently raises the US mint price of gold from the century-old price of $20.67 per oz. to $35 per oz. (thus devaluing the dollar). 

Communication Act (1934) set up the FCC (Federal Communications Commission) to regulate broadcast licensing.

National Housing Act (1934) set up the FHA (Federal Housing Administration) to encourage and insure bank loans for building homes, farms and small businesses. Expanded in 1937 to be in charge of slum clearance as well.

Securities and Exchange Act (1934) made insider trading in securities illegal. Created the SEC (Securities and Exchange Commission) as a quasi-judicial agency to enforce this and the earlier Truth-in-Securities act.

Reciprocal Trade Agreement Act (1934) gave the president broad powers to pursue bilateral trade agreements with other countries to avoid destructive "trade wars".

National Mediation Board (NMB) (1934) created to oversee labor-management relations and provide a forum for arbitration.

Social Security Act (1935) introduced both unemployment insurance and an old age pension scheme for retired workers. Both overseen by an independent agency, the SSA (Social Security Administration)

REA (Rural Electrification Administration) (1935) created to oversee the electrification of rural areas in an attempt to stem migration of the rural poor to cities.

Wagner Act (1935) sets down labor relations and fair practice guidelines. A new agency, NLRB (National Labor Relations Board) created to protect the right of worker unionization and prevent unfair practices by either management r unions.

Banking Act (1935) comprehensively reorganized and centralized the Federal Reserve system by strengthening the powers of the Board of Governors and handing discretionary monetary policy to the FOMC. Also establishes the FDIC on a permanent basis.

Emergency Relief Appropriations Act (1935) authorizes another $5 billion to create jobs for the unemployed in another slew of massive government work projects (e.g. construction of roads, public buildings, bridges, tunnels, airports, etc.) The WPA (Works Progress Administration) created to administer and mobilize the unemployed into these projects. It also oversees the previous CCC & PWA efforts.

Robinson-Patman Act (1936) expands upon the price-discrimination provisions of anti-trust laws (essentially, protecting small retailers from the effects of 'chain-store' discounting).

Soil Conservation and Domestic Allotment Act (1936) Passed after the Supreme Court declared AAA unconstitutional. Provided federal subsidies to farmers who planted soil-enriching, rather than staple crops (thus curtailing major commodity production, but in a different way).

Fair Labor Standards Act (1938) Establishes a federal minimum wage (25 cents an hour) and a maximum work week (44 hours).

Second Agricultural Adjustment Act (1938) This act, in response to the Supreme Court's 1936 decision, allowed the AAA to determine acreages for staple export crops and award loans according to stored surplus crops. Subsidies come out of general taxation, rather than being tied to a tax on processors.

Wheeler-Lea Act (1938), increases the power of the Federal Trade Commission (FTC) to prosecute firms for anti-competitive practices.

Federal National Mortgage Association ("Fannie Mae") (1938) established, a government-sponsored private corporation to buy and securitize FHA-insured mortgages, thereby providing a secondary market for banks to offload mortgage debt. 

Bretton Woods Agreement (1944), creates new exchange rate regime pegging world currencies to the dollar and the dollar to gold.  Creation of International Monetary Fund (IMF) to run the exchange rate system and alleviate balance of payments problems and the International Bank for Reconstruction and Development (IBRD, 'World Bank') to assist in post-war recovery and set down plans for the eventual creation of the General Agreement on Tariffs and Trade (GATT).

Employment Act (1946), assigns responsibility for maintaining 'maximum employment' on the Federal government and requires the submission of a yearly "Economic Report of the President" to lay out the measures to that end.  President's Council of Economic Advisors (CEA) and the Congressional Joint Economic Committee (JEC) created.

Top

Back