Sign Kentucky Banking Agreement Later

Industry sign banking kentucky agreement later

today we are going to focus on the first hundred days of FDR's New Deal we're going to be looking specifically at the legislation that was passed between March 9th and June 16th of 1933 so remember FDR was elected in 1932 so he's inaugurated on March 4th and the hundred days begins March 9th now it's not imperative that you memorize these dates but it is important to think about all this legislation that we're going to be looking at major reforms major relief efforts major recovery efforts that are accomplished in this dramatically short period of time in 1933 it's pretty easy to compare this to sort of like how long we've come to expect reforms to get passed through Congress but in this emergency situation we see 15 major pieces of legislation being passed some of them so rapidly it's hard for people to even keep up with them and this sort of reflects FDR's first inaugural address where he talked about needing to move forward boldly right clothing the Great Depression in the language of a war that has to be fought so facing an enemy again you think about the language that's been used in this current crisis that we're facing and you see that same language right so this idea of facing a crisis and having to act immediately becomes an important part of the story so we're not gonna look at all 15 pieces of legislation we're going to focus on several of them that are most important to understanding the economic and political changes that were happening in the United States and also the long-term impact of these changes so the first emergency crisis that had to be dealt with when FDR took office as we mentioned in the previous lecture was the crisis that was occurring in banking as the depression got worse between the election of 1932 and FDR's inauguration one of the places that was most dramatically failed was in banking and so the country was suffering from what we're known as runs on banks like people running to the bank to get their money out and this was typically a result of panic and so the emergency banking follows the bank holiday that FDR established immediately upon taking office and this emergency Banking Act is passing that first day to basically try to restore some faith in the banking system so the emergency Banking Act first of all authorized the bank holiday that FDR had already done right so an FDR issued the bank holiday there was a lot of discussion about whether or not the President had the authority to shut down banks so this law is going to authorize that bank holiday as legitimate exercise of federal authority one of the things want you guys to keep in mind as we're going through this are all the ways that the power of the federal government is expanded as a result of the response to the Great Depression right all of these needs that are met by the federal government and the way that that increases the power of the federal government the second thing this law does is give the president and the Department of Treasury the authority to determine if banks were safe so essentially step one was close all the banks step two of this law was to give the executive branch the power to evaluate banks and determine whether or not they were safe to operate meaning they had enough cash on hand they had enough reserves their policies were safe enough that they could reopen and people could trust them this would largely be the role of people working for the Federal Reserve System and so the third part of this law is that the Federal Reserve System becomes basically a mandatory part of our banking system all banks who want to operate under the emergency Banking Act need to be member banks of the Federal Reserve System without getting too far into the weeds on this this basically meant that these banks had to contribute to this Federal Reserve System had to be part and agree to the rules and regulations of the Federal Reserve System this emergency Banking Act basically reassures people that their money in banks will be safe and what we see is that the runs on banks slow down dramatically and then stop right and so basically sort of putting a cap on the emergency crisis of banking now what FDR and his advisors in the brain trust realize is that this emergency man is not going to be enough so this is emergency right this is like a relief measure this is a recovery measure get the banking's going again this is not going to be enough unless there's a way to prevent this kind of crisis in the future so after passing the emergency Banking Act eventually during the HUD first hundred days Congress will pass the glass-steagall Act and this is the law where we see the major reform in our banking system and basically it's fairly simple for us to understand the glass-steagall Act required that all banks separate their commercial banking from their Investment Banking okay so how do you think about these two things right the difference between the two commercial banking is pretty much what everybody uses this is where you make deposits into your checking account this is where you put your savings account this is sort of your money that you earn safe in a place that you can access it okay for commerce for trade investment banking on the other hand is banking that is done through investments in the stock market in mutual funds and all of those things where a risk is involved right so whenever you're engaging in investment banking the money that you are putting into those accounts is at risk right if that money is going into mutual funds or that money is going into the stock market there's a chance you can lose that money and so what it previously happened in American banking and the reason for the crisis and the Great Depression is that people who put their money in what they thought was a savings account right was ultimately being used by banks to engage in investment banking and so in banks failed people who had saved money also lost their money so separating these two out is critical for protecting the banking industry right so that if you think about going to a bank today if you are in your checking account it's going to say this is protected by the federal government if you are in an investment account it will say this is not protected right this is money that you can lose so making sure people understand that difference and separating the banking system to protect that system now the other hugely important thing the glass-steagall does the major reform is establishing the FDIC the Federal Deposit Insurance Corporation the FDIC which is our basic fundamental protection in our banking system as citizens basically says that the federal government will ensure that the money you put in a member bank a bank that's been determined safe and as part of the FDIC will be guaranteed no matter what happens to that bank right so you guys have probably noticed those of you who have jobs or have been to a bank you've probably noticed this sticker on the door and they being gold instead of green this sticker on the door of a bank or on the window of the drive-through since nobody can go in a bank these days right this sticker basically indicates to you that that bank is part of the FDIC and therefore money that you put in the bank is protected initially it protected up to twenty five hundred dollars in a bank that was nineteen thirty three remember over time it has been gradually increased so that now the FDIC understands into underwrites or guarantees individual deposits up to two hundred and fifty thousand dollars and so this is the foundational piece that insures Americans that in times of crisis the money in the banking system will be safe right so this is one of the big reforms if we think about the three RS the other another major crisis that we know had been going on in the American economy for decades was the problem in agriculture right so want you guys to think about what we've talked about with populism and farmers and progressivism and farmers and World War one and farmers right and the overwhelming problem for farmers was what that's right it was over production so the root problem for farmers is overproduction this means that to deal with this problem FDR and his brain trust come up with legislation that addresses both the overproduction problem which is the long-term problem for farmers that has to be fixed in order to adjust agriculture to be an industry that can survive but also this law has to deal with the immediate crisis of farm foreclosures and farmers being an economic crisis in 1933 right now we've talked about this during the semester the only way to deal with the problem of overproduction is if farmers stop over producing and it can't be one farmer here one farmer there overproduction has to be dealt with across the board right so when we look at the Agricultural Adjustment Act think about adjustment applying to overproduction right that's what's trying to be adjusted and the argument is adjusting overproduction will result in dealing with farm prices farm income farm stability so the Agricultural Adjustment Act has an emergency measure in 1933 basically the decides basically passes legislation to pay farmers to destroy crops okay now this is shocking and creates some controversy in the first hundred days because it is not in a farmer's nature to destroy what they had planted and grown right there their job as harvesting crops not destroying them but here we see in him an image of a farmer plowing under crops in the field here's another image these are farmers taking calves basically to get rid of them right not a pretty picture they are paid to plow crops under to slaughter young animals which sounds horrific to those of us who care about animals right but the reality is those animals like this little guy right here was eventually going to be hamburger right or steaks or whatever and the idea behind this initial 1933 effort to destroy crops and animals is to do away with the overproduction right you can't adjust agriculture as long as too much is being produced so in the first year you are gonna pay and subsidize the destruction of crops animals whatever not only did this go against the nature of farmers but it created some controversy because people some people started to argue wait a minute the crop and the animals and although that could be used in cities where people don't have enough to eat people in FDR's administration understood that but basically argued that the longer term problem was the problem of making farming viable so other solutions are put in place to help people in cities this is what's done to help farmers so lots of propaganda has to be created here's a great poster achieving a balanced agriculture for the AAA to convince farmers to buy in but farmers had been in such a desperate situation for so long that for the most part buying into this system is not a problem now one of the ways one of the concerns people had about New Deal programs was the cost in the New Deal programs and we're gonna do with economic policy in just a bit this particular law focused on paying for itself through a tax on food processors right so the industries that had benefited from low agricultural prices essentially the industries that had benefited from overproduction low wheat prices low corn prices low beef prices those industries are taxed as a way to help farmers rights attacks those who benefited in order to help those who had been suffering under the agricultural system in the United States and the goal of the Agricultural Adjustment Act was to establish what they refer to as parody think about parody the root word is par right like being on par on a golf course means to shoot an even score with what you're supposed to shoot right so the idea here was to bring farmers back to an even income that they would have had prior to World War one or in the World War one ERA rights of early 1500 so the idea here was to bring farmers to their World War 1 income levels and to ensure that they could make a living and that the farm sector of the economy would be strong this was a very effective policy however it did have issues for example some farmers were unable to keep all the laborers on their farms some farmers some tenants were kicked off their land this is going to contribute to problems we'll talk about and the dustbowl eventually and the migration of people to California and other states and we will look at that as well but over what overwhelmingly the Agricultural Adjustment Act sort of ends the immediate crisis in farming and helps to establish policies that keep farming a strong part of the economic sector for those of you engaged in farming or know people who are farmers ever since 1933 there's been a great deal of federal regulation and federal protection of farmers from crop loans to farm protection in times of economic crisis or natural disasters to subsidies for certain crops this sort of establishes that the federal government has a role to play in maintaining the farm economy the Agricultural Adjustment Act also established the Farm Credit administration which was a way for farmers who needed it to get loans at low or no interest supported by the federal government again to help farmers stay on their farms the next piece of legislation we're going to look at their several we're gonna look at here were largely efforts that all had the same purpose and that purpose was to give people jobs right remember the biggest problem in the Great Depression was unemployed anywhere from 25 to 30 percent nationally and in many localities even higher than that so these are going to be three agencies three laws that are designed predominantly to put people to work okay the first of these laws was known as Farah and that stands for the Federal Emergency Relief Administration notice it's got the word relief in the name and so this is a jobs program right the person who directed this program is a member of FDR's brain trust his name is Harry Hopkins he was considered a very creative administrator so much so that people talk about him creating jobs that didn't need to be there and creating jobs that nobody needed but his goal was to put as many people to work as possible in a short period of time as possible so when this law was passed by Congress Harry Hopkins literally set up a desk in the halls of Congress for himself because it didn't have an office yet and the day the legislation was passed he started issuing checks to local government state governments nonprofit organizations to give people jobs he didn't really care what they were doing they could be raking leaves he didn't care if they rake the same leaves every day of the week they could be painting fences that could be telling stories to children he didn't really care as long as people had a job and we're making an income remember the whole point of filling in that hole in the economy was to give people jobs to restore consumer power so that people were spending money because that would create jobs for other people so for example 20 million jobs are created over a two year period by farah and harry hopkins believe if a person got a job telling stories at a local library truly maybe that's a creative job nobody should be paid for but that person's wages are gonna go back into the economy right that person is going to buy a pair of shoes that person is going to maybe buy extra food that person is going to buy clothing possibly for their children and the idea is that that would create jobs for people working in two factories people working in grocery stores people working in textile factories the idea is to get the economy going again right the second agency whose job was also creating jobs it's called the Public Works Administration this was led by another member of FDR's brain trust Harold Ickes who was the opposite of Harry Hopkins in that he was very cautious he was very reserved he believed that all jobs should be real jobs they should have a real purpose so he wasn't sort of a make-work kind of person he and Harry Hopkins butted heads a lot it's what FDR liked on his brain trusts right people who could give him different ideas and you can see here that FDR went with both ideas the creative idea the cautious idea Public Works Administration focuses on building amazingly enough public works this is roa s hospitals airports bridges basically the things that we refer to as infrastructure long-term permanent building projects as an example in the years that the PWA operated in the 1930s they built about 3/4 of all the schools that existed by 1950 in the United States right so 75% of the school buildings that existed or built by the Public Works Administration these of course were construction projects that local and state governments couldn't afford during the Great Depression they were permanent they generally benefited the entire nation this is a great example in our local area if you guys have ever been down 3rd Street in Greenville there's a building called the 3rd Street School which now operates as sort of an annex auxilary building for things that Pitt County Schools does in reality the 3rd Street School was a PWA project so it's sort of a lasting monument to the Public Works Administration so again millions of jobs in Public Works are created by the PWA and then one of the most beloved programs of all in the in the New Deal in the first hundred days was the CCC or the Civilian Conservation Corps the Civilian Conservation Corps focused on the job problem affecting young men right so it was very difficult to be a teenager at the start of the Great Depression when factories are closing and jobs were closing and there was no opportunity right and so young men teenagers young 20s or some of the most vulnerable in terms of like being able to support themselves and many of these young men did not want to stay at home and be a burden on their family many of them had like taken off the term hobo is invented to describe young men who go off on their own with nothing but like what they can carry across their back I'm jumping trains to try to survive begging panhandling that kind of thing so Civilian Conservation Corps is created and the idea here if you think about the ending of the name right a Corps like the Marine Corps is a military organization so the CCC was basically set up as a pair of military organization young men join teenage early 20s they're paid a salary and their salary basically is sent back to their families they live in military-style organization they live in cores they live in battalions they live in barracks they're commanded by a military officer they were you know form everyday but instead of being in the military and training for warfare they engage in conservation projects right so conservation of natural resources here's where you can connect Franklin Roosevelt to Teddy Roosevelt remember Teddy Roosevelt had pushed conservation for the first time in American history from the federal government as something that the government should be engaged in protecting the natural environment and assuring it would be there for generations to come and so these young men are going to engage in all kinds of conservation projects most famously the Civilian Conservation Corps protects forests these are this is an image that's been recolored in modern times the beautiful image of CCC workers and this one I believe is in South Dakota clearing a forest so they're clearing out underbrush to prevent forest fires and other images you'll see them planting trees they plant hundreds of millions of trees in the United States they establish and build trails through national parks which is part of what's going on here so if you've ever been to a national park camping you're on a trail hike or hiking on a mark trail at a national park it was probably originally created by the Civilian Conservation Corps in North Carolina they engaged in projects like building dunes and planting grasses on the Outer Banks so these could be any type of conservation project and this gives millions of young men a salary all of their salary except a very small amount was sent back every month to their families because of course these young men have their clothes provided in their food provided in their housing provided so most of the money went back to their families where again it would go into the circular flow of our economy it would be spent for food clothing necessities of life that get the economy going again right the CCC will be one of the most loved programs it will last until World War two starts when of course all of these young men find different jobs here's a map that illustrates projects that were constructed by the PWA um so it's a great illustration that the PWA carried out projects across the entire country with every from building ports in North Carolina to building airports in New York to building monuments out west electricity in the Rocky Mountains all sorts of things railroads all of these would be considered public works another major piece of legislation in the first hundred days and one of the most controversial was the National Industrial Recovery Act the Nira or Neera notice the word Recovery is in the name so the purpose of this law predominantly its goal is to keep factories and businesses open by regulating production wages and costs okay so the idea here by by FDR and the first hundred days the idea here is to prevent businesses from closing they also want to prevent people from losing their jobs and so the idea here is to create a system make rules if you will that achieve that goal of keeping businesses open so basically the way this law works is that business leaders and the executive branch would work together to write what were called codes of fair competition they're sometimes called the Blue Eagle codes right so Blue Eagle codes you can add to your notes that would set wages per industry right so there's no minimum wage yet but the idea was to get all the business leaders working with the federal government in an industry to set wages for that particular industry right they would also set production quotas for each factory or each facility in the industry in other words don't try to drive each other business don't keep over producing goods set production quotas that can lead to your business stay in operation and he also encouraged in each separate industry to set a work week per industry what they didn't want to see where some workers working 60 hours a week and other people losing their jobs so for the most part they're trying to get industry to set a common workweek 30 hours 35 hours that would spread the work to more people so rather than have one person work a 60-hour week have two people hired that worked 30 hour weeks again the idea was to stop the unemployment and ensure that people had jobs one of the most important pieces of this legislation was that it guaranteed the right to collective bargaining remember this means the right of workers to have and join unions this is something that organized labor labor unions have been working for ever since the days of Samuel Gompers and the Knights of Labor right in the late 1800s and it's something that the federal government had never been willing to do but here in this law they guarantee the right of workers to have and to join unions which will be critically important to the future of workers in the United States here's an example of a restaurant that agreed to these fair labor codes and so they'd get to put this poster up right this poster over here becomes the propaganda and all businesses to show they were doing their part or they were part of the solution to the problem could show this poster another major piece of legislation is the Tennessee Valley Authority the TVA the Tennessee Valley Authority is one of the most overarching programs of the first hundred days because it's not just about one segment of the economy or one particular problem in the Great Depression the idea here was that they would use this opportunity to develop an entire region of the country so in that way it's very much a reform effort the Tennessee Valley Authority still exists this was the original emblem this is the current emblem or logo for the Tennessee Valley Authority so the idea here is that the Tennessee Valley TV Tennessee Valley was one of the poorest regions of the United States in the early 1900's had always been an extremely poor region Appalachia right the mountain area it's a huge region that includes the Tennessee River Valley the southern Appalachian Mountains all the way from West Virginia Kentucky area all the way south into the Sippi Alabama right or regions of the Tennessee Valley includes the goal here was to generate economic growth and economic recovery for this entire region right a multi-state region across the south to try to develop its economy and get it out of the depression and into an era of economic growth huge goal of the Tennessee Valley Authority which is shown here and shown here is to provide electricity to the region right so we know that electricity was invented in the late 1800s but for the most part it was still very limited in the most rural areas of the United States and the Tennessee Valley area was one of the most rural areas of all so we see this idea that by providing electricity to a region you could encourage the economic development of the region once it had electricity you can build factories you could encourage economic growth people would have access to consumer goods that were based on electricity appliances toasters all those things right and so this is sort of the key now to provide electricity in a mountainous region it involves a lot of labour right this is where the providing the emergency jobs would come from so jobs clearing forests jobs putting up powerlines job constructing hydroelectric dams tremendous numbers of jobs in the poorest region of the country would be provided to establish this system in the Tennessee Valley it's also important to understand that the federal government was the only entity that could engage in this level of building in the early 1900's no single state was going to construct an electric system for a small number of people living in the mountains no state or private corporation was going to make enough money on electricity stretched across mountains in rural areas right so remember with electricity you're having to run electric lines to each house or each business and they are so far apart in rural areas and so scattered that that made it really hard to make money you put up all the lines all the poles to get to one house right and so it has to be sort of a non often basis it has to be sort of supported by something other than the profit motive in this case the power of the federal government now what this does is build capacity for economic growth factories can be constructed where there's electricity parks can be built recreational facilities for whitewater rafting and hiking and camping can be constructed that brings resources into the region it establishes flood control because hydroelectric dams help to control flooding all of these things are part of the Tennessee Valley Authority the Tennessee Valley Authority still exists right and we're going to see it become a model for expanding access to electricity later in the New Deal so what was the philosophy Lusaka Cabezas for the New Deal hopefully you guys are able to sort of figure this out as we've kind of discussed what's happening in the United States in the first hundred days politically what we see is that the philosophical basis of the New Deal is essentially progressive right this idea of government activism to address problems in society right and definitely what we see is a political philosophy that puts greater authority on the role of the federal government in this era right so more powerful federal government more government activism which is a progressive response to the crisis it is a rejection of traditional laissez-faire economic policy and even the economic policies of the 1920s economically we see those same traduced those same conditions right that same philosophical basis progressivism government activism greater authority for the federal government to take economic action directly in the economy and importantly economically the New Deal rejects most traditional economic theories regarding monetary and fiscal policy so traditionally even progressives in the early 1900's Wilson or Teddy Roosevelt would have argued that the federal government needs to operate on a balanced budget and fiscal policy needs to be restricted spending needs to be restricted in times of economic crisis FDR and the New Deal are going to adopt an entirely new economic philosophy called Keynesian economics and in Keynesian economics the argument is going to be exactly the opposite so I want you guys to come back to that idea we introduced yesterday of a huge hole in the economy right so if you imagine the economy being a sheet of paper and a huge hole has been cut in it right Keynesian economics basically argues that that hole in the economy is like a dry well so the image that I have on our slide here is an old-fashioned pump well so if you've ever seen a movie or seen a TV show where somebody goes outside to a pump and they wrench the handle up and down to get the water flowing in a pump and a well that's dug into the ground what you'll notice if you pay attention is that if the well is dry in other words there's a big hole in the economy there's no money circulating the well is not working water has to be poured into the top of the pump in order to get the pump flowing again right back in the day when people actually use this kind of water pump pouring water into the pump to get it started was known as priming the pump pri em ing priming so priming the pump meant you had to put water in in order to get water to come out of the pump if we translate that image into the economy right the dry pump represents the huge hole in the economy the money is not flowing and so the idea would be money has to be put into the economy to get the economy flowing again right so Keynesian economics requires government the federal government to put the money into the economy to get the economy flowing if you want to make a connection to the crisis with the coronavirus basically that's what this two trillion dollar stimulus package that Congress passed would be doing right putting trillions of dollars into the economy because the economy has stopped functioning a part of this crisis or functioning the same way in order to get the economy flowing again as the Krait as we get through the crisis right so kind of think about that in those modern terms and the Great Depression the economy had grown to a halt the circular flow was not happening so the idea was the federal government would spend money to get the economy flowing this means the government would support doing something that governments had generally avoided which is deficit spending right spending money that the government does not yet have or possibly going into debt the idea behind that was not that the debt would be permanent but that once the economy was flowing again people would be able to pay taxes businesses would be able to pay taxes the federal government could collect revenue and pay off that debt and so FDR in the New Deal adopt this Keynesian economic philosophy to respond to the Great Depression in addition the United States will go off the gold standard hugely controversial at first remember a gold standard had been something that business and industry had always supported as a way to ensure their control over for the economic growth of the country FDR in the New Deal go off the gold standard mainly because this will allow the government to inflate the money supply and control the flow of money so this gives the federal government more control over monetary flow right raising and lowering interest rates as a way to encourage economic growth so we also go off the gold standard in the first hundred days and we have never gone back right governments around the world transitioned to a money supply based on currency and monetary policy as opposed to the gold standard so did the first hundred days work by and large most historians answer that question with a yes right if you look at any measure after 1933 you see improvement in the economy so here we see unemployment rate right 1933 FDR becomes president we see the height of unemployment in the United States and from there the trend is down with it being virtually non-existent onc to world war two right you notice this blip right here we'll talk about this this is sometimes called the Roosevelt recession there's this sort of a period in here where there's a reversal in unemployment and it goes up slightly again but again the overall trend is down and we'll talk about what happens in that particular era here is gross national product again its lowest level in 1933 and then the trend is upward to the beginning of World War two and here we see Bank suspensions right the high point in 1933 and then that dramatic drop with the passage of the emergency Banking Act and the glass-steagall Act and then of course down to nothing after World War two so this is some of the data that we can look at some of the quantitative data that historians look at to measure the success of the first hundred days as we continue looking at the New Deal we will look at responses to the first hundred days arguments that it went far enough arguments it didn't go far enough arguments about what else should be done and the expansion of the New Deal beyond 1933