The Great Depression Slide #2

1. step 1 - dealt with the banking crisis - BANKING HOLIDAY- banks shut down and subject to government inspection, allowed to open when "healthy"- people's confidence returned. They redeposited, allowing banks to invest in the economy

2. step 2 - stock market reform- Security Exchange Commission est. to police the NYSE (first chairman. was Joseph P. Kennedy)- practice of buying on margin was regulated

3. step 3 - to put more money in circulation, FDR went off the GOLD STANDARD (government could print more money than Fort Knox gold reserves would allow)- with more money in circulation, wages and prices increased

4. unlike Hoover, FDR believed the government legislation/involvement was crucial to stimulate the economy.

5. AGRUCULTURAL ADJUSTMENT ACT (AAA)

5.1. passed in 1933 to aid formers- its objective was to restore farmers' purchasing power and to restore the family farm - AAA had farmers cut back on crop production by paying them equivalent SUBSIDIES (paid not to produce)

5.2. 1) food production down when millions were starving

5.3. Black sharecroppers were hurt: white landowners paid not to farm so they got rid of Black tenant formers

5.4. in 1935, AAA was declared unconstitutional by courts (too much control over individual states), so it was revised and introduced as new legislation