CH 9 & 10 – The Great Depression

Herbert Hoover
President in 1928 – Republican
444 electoral votes

Herbert Hoover
Prohibition Supporter.
“2 cars in every garage”

Al Smith
Catholic, Irish, Democratic candidate.
Wanted to ban prohibition.

stock market
system for buying and selling

bull market
long periods of rising stock prices

1929 stock owners
3 million or 10% of Americans

margin
Buying stocks with only a small cash down payment.
Broker holds stock as collateral.

installment
To make an initial small down payment and pay the rest in monthly payments.

margin call
Broker demands the investor to repay the loan at once

speculation
Risk taking, for quick $.
Bidding up stock prices higher than their actual value.

stock market crash
October 1929, market running out of investors => sell off begins => prices fall

Black Thursday
Oct 24, 1929 – market plummets further, throwing many people into debt.

Black Tuesday
Steepest dive in stock market, $10-15 Billion losses.

November 1929
$30 Billion was lost; over 1/3rd the value of all stocks
(equal to the total of all 1929 wages put together)

Bank Panic
Many banks experience runs at the same time

Smoot-Hawley Tariff
A law that established the highest protective tariff in U.S. history, worsening the depression in America and abroad.

Federal Reserve
Board kept interest rates low and made risky loans, contributing to the Depression. Then raised rates at the wrong time, economy spirals downward

bailiffs
Court officials who would eject non-paying tenants from their homes and pile their belongings in the street.

shantytowns
a shack built on unused or public land when homeless people lived

Hoovervilles
Name given to shanty town communities, blaming the president.

Soup kitchens
“Bread lines” run by charities to give poor people a meal

Dust Bowl
storms of dirt caused by drought and poor farming practices in the midwest

Okies
Migrants from Oklahoma who moved West to California, where they also found hard times

Grapes of Wrath
Written by John Steinbeck about the Dust Bowl

Reconstruction Finance Corporation (RFC)
Hoover requested Congress to provide funds so the US gov. could lend to borrows such as banks, railroads, farmers to help them.

National Credit Corporation (NCC)
Hoover persuaded some New York bankers to give $ to this organization to help other troubled banks survive.

public works
government-financed building projects

Relief
$ given directly to poor families

Emergency Relief and Construction Act
Gave $1.5 billion to public works and $3 million to loans, but still too late to reverse the “collapse”

foreclosed
to take back possession of a home from the someone and make them leave (evicted) because they can no longer can pay their mortgage.

Bonus Army
15,000 veterans who marched in Washington DC and Hoover refused to meet them

Franklin D. Roosevelt
1. Governor of New York.
2. Elected President in 1932
3. Democrat

New Deal
Roosevelt’s program & policies for ending the Depression

Bank Holidays
the closing of remaining banks so that runs on them for gold conversions could not put them out of business

Hundred Days
During this time congress passed 15 acts (later called the New Deal) to help the economic crisis.

Emergency Banking and Relief Act
When Roosevelt took office he declared a bank holiday and then called Congress into a special session on March 9, 1933 to help restore confidence in the US banks.

Fireside Chats
Talks on the radio by Roosevelt who told the American people that their $ would now be safe in US banks. People started deposited $ again.

Glass-Steagall Banking Act
Separated ‘commercial’ banking from ‘investment banking’ so commercial banks would not risk their depositors’ $ on the stock market.

Securities & Exchange Commission
An independent agency set up by Congress to regulate the stock market and prevent fraud.

Federal Deposit Insurance Corporation (FDIC)
Provides gov. insurance for deposits up to a certain amount which increased public confidence in the banking system

Agricultural Adjustment Act (AAA)
Cotton and hogs were destroyed so prices would rise for poor farmers. Farmers received a billion $ in support payments. The farm surplus dropped and prices did rise.

National Industrial Recovery Act (NIRA)
1. Suspended Antitrust laws.
2. Voluntary rules for industry known as CODES of fair competition. (wages, shifts, hours, unions)
3. Used public opinion to pressure companies into going along

National Recovery Administration (NRA)
Ran the NIRA, under the leadership of Hugh Johnson

Home Owners Loan Corporation (HOLC)
Bought the mortgages of many (⅕) employed homeowners who were behind on their payments and restructured the loans with longer terms of repayment and lower rates.

Farm Credit Association (FCA)
Lent more money to farmers than the banks did .

Civilian Conservation Corps (CCC)
-Committed to preservation of nature by hiring unemployed young men for the forest service to plant trees, fight fires, build reservoirs.
-1,500 camps of these men. 3 million were hired for $30 a month.

Federal Emergency Relief Administration (FERA)
Channeled money to state and local agencies to fund their relief projects.

Harry Hopkins
Lead FERA, PWA, CWA, WPA

Henry Morganthau
Treasury Secretary who favored balancing the budget and cutting spending.

Public Works Administration (PWA)
– Series of construction projects.
– Workers built: Highways, dams, sewers, schools
– At Hoover Dam they insisted contractors hire African Americans.

Civilian Works Administration (CWA)
Hired workers directly on the federal gov payroll to build airports, roads, schools, parks, playgrounds, playing fields, but very costly

Tennessee Valley Authority (TVA)
A dam building project that produced the most visible benefits – 20 dams, built factories, reforested millions of acres, strung thousands of miles of electricity, and employed 40,000 workers

deficit spending
borrowing money to pay for expenses

American Liberty League
Organized opposition by business leaders of the New Deal who wanted to “teach the necessity of respect for the rights of person and property.”

Huey Long
– Democratic Gov of Louisiana who championed
the downtrodden.
– organized “Share Our Wealth Clubs”
– was powerful and corrupt

Dr. Francis Townsend
Former public health official, proposed a plan to give all over 60 yrs old a pension of $200 a month. This would increase spending, remove people from the labor force so the unemployed could be hired.

Father Coughlin
– felt New Deal reforms were too weak, wanted heavy taxes on the wealthy
– organized the National Union for Social Justice
– praised fascism, made anti-Semetic remarks
– supported Huey Long

Works Progress Administration (WPA)
1. Part of the Second New Deal
2. “Federal Number One” gave work to artists, musicians, writers, theatre people who created murals
2. $11 billion spent on highways, roads, public bldgs, parks, bridges, airports.

Schechter vs. US
Supreme Court ruled that chicken slaughterhouse workers were not involved in interstate commerce, so their wages and hours could not be regulated by federal NIRA code.

Wagner Act
National Labor Relations Act, it guaranteed workers the right to organize unions without interference from employers, to bargain collectively, and to have disputes solved by binding arbitration

National Labor Relations Board (NLRB)
Consists of 5 members appointed by United States president and approved by the senate. 5 year term and received assistance from 33 regional directors. Organized factory elections and certified successful unions

binding arbitration
where a neutral party or group will listen to both sides and decide how to solve the issues

Committee for Industrial Organization (CIO)
Set out to organize industrial unions, or unions that include all workers in a particular industry, skilled and unskilled. Led by John Lewis of the united mine workers.

Sit down strikes
Workers sat down in their factories and refused to work in protest of management actions. Workers at other plants followed suit or carried out traditional strikes

Social Security Act
To provide some security for the elderly and for unemployed workers, Workers paid premiums while working to receive a monthly retirement benefit when they stopped working at 65. Helped many but at first it left out farm and domestic workers, many African Americans

First Lady Eleanor Roosevelt
Helped bring about the change in the African American and women’s vote, housing for the poor

The New Deal Coalition
Increase in the role of the federal government in providing a safety net for Americans. Reforms in housing, farming, and labor.

Francis Perkins
Secretary of Labor, first woman appointed to a cabinet Post

Alfred Landon
Republicans nominated him, Governor of Kansas, he favored some New Deal policies, but declared that it was time “to unshackle initiative and free the spirits of American enterprise.”

court-packing
Roosevelt’s attempt to get a majority of justices on the Supreme Court who would support his New Deal programs

Roosevelt Recession
late 1937, unemployment surged after recovery earlier in the year. Roosevelt belt he needed to balance the budget so he cut spending. And Social Security began, removing $2 million from the economy. 2 million people lost their jobs.

John Maynard Keynes
British economist, felt government should spend heavily during a recession, even if it ran a deficit, in order to jump start the economy

National Housing Act
1937. US Housing Authority received 500$ million to subsidize loans for builders who would build low cost housing in the slums.

Farm Securities Administration
Gave loans to tenants so they could purchase farms

Fair Labor Standards Act
Provided more protection for workers, abolished child labor & established a 40-hour workweek.

NLRB vs. Jones and Laughlin
Court ruled that the Federal gov. had the Constitutional authority under the Interstate commerce clause, to regulate production within a state.

Wickward vs. Filburn
Court ruled that the Federal gov. had the Constitutional authority, to regulate consumption within a states.

Broker State
A mediating role by the federal gov. to work out conflicts among different economic groups’ interests to keep it balanced.

What were the key causes of the Great Depression?
1. Surplus of goods due to mass production
2. Low interest rates

Safety net
safeguards and relief programs that protected Americans from economic disaster.

What were the key causes of the Great Depression?
1. high tariffs
2. low wages for farmers & vast skilled working class.

What role did WWI and the Versailles Treaty play in making the world economy unstable in the 1920′?
Millions of immigrants came to the US looking for work. Economies were depleted by the cost of war.

Ideology behind Hoover’s approach to solving the economic problems brought about by the Great Depression?
Presented an optimistic outlook to encourage the public, but began relief efforts too late.

Key reasons why Roosevelt won the election of 1932?
1. The New Deal
2. Hoover’s failures to do anything effective

Why did Hoover’s approach fail to end the Depression?
He refused to support massive government spending because he thought it would delay economic recovery. Too little too late.

Who did Roosevelt blame for the Depression in his Inaugural address?
Republican leaders

What is the Inaugural address famous for?
1. Roosevelt’s pledge for a “new deal” and “…the only thing we have to fear is fear itself…”

Describe the 3 main goals of the New Deal
1.fixing banks and stock market 2. managing farms and industry 3.Providing debt relief and providing relief programs.

Why did Roosevelt push for the 2nd New Deal?
Political pressure from the left and the right that he had not yet done enough, also, in order to win re-election

Were the New Deals successful in restoring the American economy?
Despite criticisms, the New Deals helped many Americans by increasing the role of the federal government

What was the overall effect of the court packing battle?
Serious political mistake for Roosevelt, it seemed he was interfering with separation of powers and the Court’s independence. The Court Packing Plan/bill was not even brought to a vote

Why did Roosevelt threaten to “pack the court”?
Popular opinion supported his programs, but the Supreme Court was striking down New Deal programs. Roosevelt wanted Congress to pass a bill to add a 10th judge if judges did not resign by age 70…and he planned to appoint others as judges left, to create a court sympathetic to the New Deal

Why did Roosevelt stop initiating new laws to fix the economic woes by the late 1930’s?
He decided to balance the budget and cut spending. He worried that the American people would become too dependent on government spending

Hoover blanket
Newspapers used to keep warm while sleeping outdoors

What ended the Great Depression?
World War 2, Government spending on the War, Post War reduction in government programs, and increase in consumer spending after the war.

Hoover flag
Empty pockets turned inside out

Dust Bowl effect
Without $ from crops lost to the drought, many farmers lost their farms because they could not pay their bank loans. Penniless, they moved West.

Relief
A program opposed by Hoover, who thought it should be done by state and local gov, NOT the federal gov.

Bonus Army
Police fired into this crowd and killed 2 veterans, tear gas killed a baby and forced the veterans to run, and public was angry and turned against Hoover.

Franklin D. Roosevelt
1. First acceptance speech made at a National convention
2. Won in a landslide

Emergency Banking and Relief Act
The Act set up a survey of the nation’s banks and issued licenses to those that were sound.

Agricultural Adjustment Act (AAA)
Based on the idea that the price of farm goods were low because farmers grew too much food.

Agricultural Adjustment Act (AAA)
Criticism of the Act because bigger farms did well but poor tenant farmers, many of them African Americans, became homeless when farms were taken out of production

National Recovery Administration (NRA)
– Symbol: blue eagle
– Slogan: “We do our part.”

National Industrial Recovery Act (NIRA)
– Problems: price fixing, employers disliked unions, higher wages meant higher prices
– Supreme Court declared the NRA unconstitutional, 1935

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