Relief from the Great Depression (College Board AP® US History)

Summary

The Great Depression, which began with the stock market crash of 1929, devastated the US economy. President Herbert Hoover made little progress in recovering from the Great Depression. However, Franklin D. Roosevelt won a landslide election, promising relief, recovery, and reform. He became president in 1933 and began the process of helping the American people.

Timeline

1930 – Hawley-Smoot Tariff

1932 – Franklin D. Roosevelt elected president

1933 – Glass-Steagall Act

1933-1939 – New Deal legislation

Hawley-Smoot Tariff & the New Deal

Hawley-Smoot Tariff (1930)

• The Hawley-Smoot Tariff was a US law that imposed one of the highest tariffs on imported goods in history

• It was designed to increase the US economy during the early days of the Great Depression

  • It aimed to protect American industries and increase the domestic economy, by reducing foreign competition

• The legislation backfired, as other nations retaliated with their own tariffs

  • This severely reduced international trade and increased the global economic depression

The New Deal (1933–39)

• President Franklin D. Roosevelt won the election in 1932 with a landslide victory

• Roosevelt introduced the New Deal, a set of policies designed to address the effects of the Great Depression

• In the first 100 days of Roosevelt’s administration, Congress was called into a special session to start the process of creating legislation that would bring relief to the American public

• A total of 15 significant bills were passed during this special session, addressing issues such as:

  • financial reform

  • job creation

  • agricultural relief

• The New Deal focused on the “3 Rs” and became known as “alphabet agencies”

  • Relief

  • Recovery

  • Reform

Relief

• The New Deal created jobs for millions of Americans through government programs, including:

  • Public Works Administration (PWA)

    • This funded large-scale infrastructure projects and provided jobs for workers to build dams, roads, bridges 

  • Works Progress Administration (WPA)

    • Hired workers to build infrastructure such as airports and dams and paid artists such as musicians, visual artists, and actors so they could continue to bring culture to their communities

  • Tennessee Valley Authority (TVA)

    • Created jobs for workers to build dams and power plants in the Tennessee Valley as well as work on flood prevention projects

  • Civilian Conservation Corps (CCC)

    • Provided jobs for young men to work in national parks and forests to earn money to send home

Recovery

• Bank Holiday

  • Roosevelt temporarily closed banks to restore public confidence and ensure they were financially stable before reopening

• National Industrial Recovery Administration (NRA) 

  • Set minimum wages, maximum hours, and fair labor standards to stabilize the economy

  • Allowed businesses to coordinate on setting prices and wages

Reform

• These actions aimed to prevent future depressions

  • Federal Deposit Insurance Corporation (FDIC)

    • Federal government-insured deposits of bank customers to ensure that customers’ bank deposits were protected

    • Helped to rebuild trust in the banking system

  • Social Security Act (SSA)

    • Introduced a federal pension program for workers who contribute to the fund while employed

    • Included financial assistance for disabled people and the unemployed

  • Glass-Steagall Act (1933)

    • Separated commercial banks (for savings and loans) from investment banking (for stocks and bonds) to prevent risky financial practices 

Results of the New Deal Programs

• The US became a “limited welfare state” 

  • The government took on more responsibility for the welfare of its citizens, such as:

    • health

    • housing

    • working conditions

    • education

  • There was a significant shift from the previous laissez-faire approach

• Rise of big government 

  • The New Deal increased the size and scope of the federal government through its active intervention in the economy and the creation of numerous agencies

• Mixed economic outcomes

  • The New Deal provided jobs and immediate relief

  • Full economic recovery did not occur until World War II

• Political legacy

  • The New Deal increased the Democratic Party’s popularity, especially among:

    • working-class Americans

    • minority groups

    • rural populations

  • Sparked debates about the role of government in economic and social issues