this is david schoumacher.aptioning made possible by the annenberg/cpb project captioning performed by the national captioning institute, inc. captions copyright 1986 educational film center ♪ programs call 1-800-learner and visit us at www.learner.org. annenberg media ♪ nenberg media ♪ for information about this and other annenberg media programs call 1-800-learner and visit us at www.learner.org. annenberg media ♪ one of its major banks the knickerbocker trust, closes. one man commits suicide. the banking system nearly collapses. what is it about banking that could lead to such a calami? inhe 192 the banking system helped spread prosperity.

i'm david schoumacher.oning made possible by the annenberg/cpb project america's businessmen and women know how dependent they are on a friendly bank for their success and the growth of their communities. america's banking system has provided that success and growth for more than a century. although most banks are healthy and long-lived historically we have faced bank failures. while we can accept other businesses failing with a shrug a bank closing is another matter, as we learn in our story. new york early in the century, financial capital of america. it was money that kept new york moving and growing, money that built its elevated trains and skyscrapers. most of the money that built new york came from the banks, from the powerful national firms on wall street to the more modest like the knickerbocker trust which served the city's neighborhoods. working-class families kept their savings in the knickerbocker. storekeepers dropped off daily receipts there and borrowed there to buy merchandise. wealthy matro

i'm david schoumacher. 20 years after world war ii brought self-confidence to american political economics. the lessons of depression and war convinced economists and politicians alike that the government could promote prosperity by manipulating taxes and spending. these continuing adjustments are called fiscal policy. for the two decades after world war ii each new administration asked itself how fiscal policy could be used to control the economy. our story begins in 1944. americans had vivid memories of the great depression. they remembered 1/4 of the work force without jobs factories closed families hungry. and they remembered an inspirational leader who showed them that the government cared. it was the war not the new deal that ended the depression. by 1944, 12 million people were in uniform. 66 million more had jobs supporting the mightiest war machine ever known. amidst this world conflict senator harry truman said, "war is hell but peace might be worse." working with truman was senate staff aide bert

i'm david schoumacher.se computer tapes at the bureau of economic analysis in washington document 50 years of america's economic growth. they provide access to the accounting system known as gnp. when the united states faced its worst economic crisis, the great depression no such measuring tool existed until this report went to the senate. copies of national income, 1929-1932 are scarce today but back in 1934 it was very popular. 4,500 copies were sold in 8 months. the report was made by a team from the department of commerce when congress demanded more information. what was the great depression costing the american economy? led in part by the auto industry the economy grew rapidly in the 1920s generating more jobs more income, and more free time. as long as the factories were humming there was little concern about how well the nation was doing economically. but when the bottom dropped out in 1929, congress wanted to find out how bad things actually were. as lawmakers passed new deal programs to end the dep

i'm david schoumacher.m or bust? why is the economy so unstable? factories sit idle or stagger along because nobody has any money to spend. workers sit home without any money to spend hoping the economy gets better so they can work again. it's a pattern that repeats itself over and over again. few people worried about trying to explain economic fluctuations during the 19th century. americans were too busy building railroads expanding commerce overseas, or creating new industry. the years after the civil war saw a continuing expansion of the american economy. although this prosperity was interrupted by periodic slumps few people seemed to worry. didn't the economy always bounce back? on the eve of world war i, economists had no theory to explain recurring downturns. why not? we asked some economic historians. the bubbles, the panics, the convulsions, revulsions, crises, gluts, they were noticed back in the 1810s, but the idea of a cycle-- good times and then bad times-- took a long time until it reached the