Module 9: The Great Depression

Deflation

A decrease in the general price level of goods and services.

The Dow Jones Industrial Average

A measure based on the stock prices of 30 representative large firms (at the time) trading on the New York Stock Exchange

The Great Depression

The period from 1929 through the 1930s in which the economy plummeted and unemployment skyrocketed

Relief

Cash payments or food that the government provides to the poor.

Herbert Hoover

The President during the first part of The Great Depression who believed that the government could play a limited role in helping to solve problems

Bonus Army

10-20,000 WWI veterans and their families who arrived in Washington, DC in 1932 to support a bill that would pay a bonus to them who had not been compensated adequately for their wartime service

Superficial Prosperity of the 1920s:

Much of the prosperity was superficial because many people were living beyond their means.

Speculation

The rising stock prices did not reflect the actual worth of companies.

Black Tuesday

The day when the stock market crashed.

Impact on Europe

The Great Depression in America compounded problems in Europe because Americans were unable to buy European goods.

Hoover's Actions

Hoover signed into law the Federal Home Loan Bank Act to help people keep their homes and farms.

Unsustainable Spending

Spending and consumption of the 1920s were unsustainable because people were borrowing money to buy things. Sooner or later, no one will lend to you when you already owe a lot.

Investments of 1929

People were "betting" on the stock market and real estate

Buying Stock "on Margin

Borrowing money to purchase stock.

Deflation vs. Inflation

Deflation (falling prices) is worse than inflation (rising prices) because it makes businesses cut expenses, which means laying off employees. Ex-workers have no money to buy anything, so demand falls.

Hoover's Explanation

Hoover blamed World War I for the Depression

Unemployment:

By early 1932, more than 10 million were unemployed, about 20% of the work force (even worse in urban areas and among minority populations).

Franklin Delano Roosevelt (FDR)

Created The New Deal and had a “can-do” attitude, expanding the government’s role in the nation’s economy and in citizens’ lives.

New Deal

Policies focused on three general goals: relief for the needy, economic recovery, and financial reform

Eleanor Roosevelt

The first lady and niece of Teddy Roosevelt who was a social reformer that combined her deep humanitarian impulse with great political skills.

Social Security Act

Had three components: old-age insurance for retirees 65 or older and their spouses, unemployment compensation, and aid to families with dependent children and people with disabilities

Glass-Steagall Act of 1933

Established the Federal Deposit Insurance Corporation (FDIC) to reassure people that their money was safe in the bank.

Criticism from Conservatives

Conservatives felt the New Deal laws gave the federal government too much power

Eleanor Roosevelt's Role

Advocated for people who were typically underrepresented.

Works Progress Administration (WPA)

Created as many jobs as possible for as many people as possible quickly.

Frances Perkins

The first female cabinet member.

Mary McLeod Bethune

Organized a group of African Americans to advise the president on racial issues.

Worker Rights:

The New Deal's protection of worker rights led to a significant increase in union membership.

Popular Movies

Gave people a break from the hardships of the Great Depression

Greatest Impact

The power of the federal government expanded significantly.

Causes of the Great Depression

·         tariffs and war debt policies that reduced the foreign market for American goods

·         a crisis in the farm sector (Dust Bowl 1930)

·         the availability of easy credit

·         an unequal distribution of income

Herbert Hoover’s Philosophy (Election of 1928)

-He believed that a focus on individual achievement—instead of a central government that controlled most aspects of the economy—made the United States great.

-“rugged individualism”

-He believed that handouts would weaken people’s self-respect and “moral fiber.” 

Impact of the New Deal

• the extent to which it expanded the power of the federal government

• New Deal reforms gave the government—and particularly the president—a more active role in shaping the economy