Great Depression & New Deal Study Guide

Herbert Hoover

29th President during the beginning of the Great Depression, believed in Rugged Individualism

Rugged Individualism

The belief that people should rely on themselves, charities, and local governments rather than federal government aid

Why did Hoover oppose federal direct relief?

He believed it would weaken self-reliance and the American spirit

What did Hoover ask businesses to do?

Not cut wages or production

Reconstruction Finance Corporation (RFC)

Government loans to businesses and banks intended to help the economy recover

Why was the RFC criticized?

People needed immediate help, but the money went to businesses and banks first

Great Depression

A period from 1929-1940 when the economy severely declined and millions were unemployed

Overproduction

Factories produced more goods than consumers could buy

Unequal Distribution of Wealth

The rich earned much more money while workers' wages did not increase enough

Overextension of Credit

People bought too many goods on installment plans and accumulated debt

Economic Troubles Abroad

Europe bought fewer American goods, hurting trade

Hawley-Smoot Tariff

The highest tariff in U.S. history that reduced international trade

Andrew Mellon's Tax Policies

Wealthy people and corporations paid less tax while poorer Americans carried more of the tax burden

Fear and Panic

People lost trust in banks and businesses and stopped spending money

Over-Speculation

Buying stocks hoping prices would rise quickly

Government Policies Cause of Depression

Not enough money circulated in the economy after the stock market crash

8 Causes of the Great Depression

Overproduction, Unequal Distribution of Wealth, Overextension of Credit, Economic Troubles Abroad, Andrew Mellon's Tax Policies, Fear and Panic, Over-Speculation, Government Policies

Speculation

Buying stocks expecting their value to rise so they can be sold for profit

Buying on Margin

Purchasing stocks with borrowed money while paying only a small portion upfront

Margin Call

When brokers demand immediate repayment of loans used to buy stocks

Black Tuesday

the stock market officially crashed. October 29, 1929

What happened on Black Tuesday?

Investors rushed to sell stocks, causing the stock market to crash

Why was Black Tuesday devastating?

Millions of dollars disappeared, investors panicked, and confidence in the economy collapsed

How did banks suffer from the crash?

Many banks had invested depositors' money in stocks and lost it

Bonus Army

World War I veterans who wanted their bonus payments early

Why did the Bonus Army go to Washington D.C.?

To ask Congress for immediate payment of their bonuses

How did Hoover respond to the Bonus Army?

He ordered the army to remove them

Who removed the Bonus Army?

General Douglas MacArthur

How was the Bonus Army removed?

Troops, tanks, cavalry, bayonets, and tear gas were used

Why did the Bonus Army incident hurt Hoover?

Many Americans thought veterans were treated unfairly

Direct Relief

Assistance given directly to people in need

Private Direct Relief Example

Salvation Army providing food

Government Direct Relief Example

Government-created jobs

Who strongly supported direct relief?

Franklin D. Roosevelt

Franklin D. Roosevelt (FDR)

32nd President who created the New Deal and expanded federal government involvement

What disease did FDR have?

Polio

FDR Famous Quote

"The only thing we have to fear is fear itself."

What promise did FDR make?

A New Deal for the American people

FDR's approach compared to Hoover's

More federal government involvement in helping people and the economy

New Deal

FDR's collection of programs designed to fight the Great Depression

3 Rs of the New Deal

Relief, Recovery, and Reform

Relief

Immediate help for unemployed and struggling Americans

Recovery

Programs designed to restart the economy

Reform

Laws created to prevent future economic disasters

Who did the New Deal help?

The unemployed, farmers, elderly people, workers, and struggling families

Was the New Deal effective?

It provided relief, restored confidence, and created jobs, though it did not completely end the Depression

Which R includes job creation?

Relief

Which R includes new laws?

Reform

Which R focuses on improving the economy?

Recovery

Fireside Chats

Radio broadcasts in which FDR spoke directly to Americans

Why did FDR use Fireside Chats?

To explain government programs and restore public confidence

Effect of Fireside Chats

They increased trust in the government and reassured Americans

Bold Experimentation

FDR's willingness to try many different solutions to solve the Depression

Positive of Bold Experimentation

New ideas created jobs and helped struggling Americans

Negative of Bold Experimentation

Critics argued some programs gave the federal government too much power and were risky

Hundred Days

The first three months of FDR's presidency

Why were the Hundred Days important?

Congress passed many New Deal laws and programs very quickly

What happened during the Hundred Days?

Major legislation was passed to provide relief, recovery, and reform

Hoover vs FDR: Relief

Hoover preferred local charities and local governments

FDR supported federal relief programs

Hoover vs FDR: Government Role

Hoover favored limited government

FDR favored active government involvement

Hoover vs FDR: Economic Programs

Hoover used the RFC

FDR created the New Deal

Hoover vs FDR: Philosophy

Hoover believed in Rugged Individualism

FDR believed the federal government should help Americans directly