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What were the main causes of the Great Depression?

Stock market speculation and margin buying, bank failures, economic inequality, overproduction, and environmental disaster from the Dust Bowl.

What is stock speculation?

Buying stocks with the expectation of selling quickly for profit, often leading to artificially inflated prices disconnected from real value.

What was buying on margin?

Purchasing stock with borrowed money (often 90% loans), which magnified both gains and losses and increased financial risk.

What happened on Black Tuesday (October 29, 1929)?

Mass panic selling caused stock prices to collapse, triggering the stock market crash and beginning the Great Depression.

How did the stock market crash lead to bank failures?

Investors couldn’t repay loans, and banks lost money from both unpaid loans and their own investments, causing widespread bank collapses.

What were bank runs?

Panicked withdrawals by depositors fearing bank collapse, which caused banks to run out of money and fail.

How did business failures contribute to the Great Depression?

Businesses lost investments and customers, leading to closures, unemployment, reduced spending, and a cycle of economic decline.

What was the unemployment rate during the Great Depression?

Approximately 25%, an extremely high level indicating severe economic collapse.

How did economic inequality worsen the Great Depression?

Wealth was concentrated at the top, while workers and farmers had little purchasing power, reducing overall demand in the economy.

Why were farmers already struggling before the Great Depression?

Overproduction and falling crop prices had already weakened the agricultural economy before 1929.

What was the Dust Bowl?

A series of severe dust storms (1930–1936) caused by overfarming and drought, which destroyed farmland and displaced thousands of farmers.

How did the Dust Bowl impact Americans?

It forced mass migration (especially to California), worsened poverty, and intensified the economic crisis for farmers.

What was Herbert Hoover’s response to the Great Depression?

He favored limited government intervention and encouraged voluntary cooperation by businesses (enlightened capitalism).

What was the Reconstruction Finance Corporation (RFC)?

A government agency that provided loans to banks and businesses, but not directly to individuals.

Why was Hoover criticized during the Great Depression?

His policies were seen as too passive and ineffective, especially since aid did not directly reach struggling citizens.

What was the Bonus Army March (1932)?

A protest by WWI veterans demanding early payment of bonuses, which Hoover suppressed with military force.

What was the significance of the Bonus Army incident?

It damaged Hoover’s reputation by showing harsh treatment of struggling veterans.

What was the major shift introduced by FDR’s New Deal?

The federal government took active responsibility for economic stability and citizen welfare, ending strict laissez-faire policies.

What were the “3 Rs” of the New Deal?

Relief (immediate aid), Recovery (economic improvement), and Reform (long-term fixes to prevent future crises).

What was the purpose of the bank holiday?

FDR temporarily closed banks to stop panic withdrawals and stabilize the financial system.

What did the Glass-Steagall Act do?

Separated commercial and investment banking and created the FDIC to insure deposits and restore trust.

What is the FDIC?

A federal program that insures bank deposits, preventing bank runs and restoring public confidence.

What was the purpose of the 21st Amendment?

It repealed Prohibition and generated new tax revenue through legal alcohol sales.

What were Fireside Chats?

Radio addresses by FDR that explained policies and reassured Americans, strengthening trust in government.

What were “alphabet soup” agencies?

New Deal programs with acronyms (CCC, TVA, PWA) designed to provide jobs and economic relief.

What did the CCC do?

Provided jobs for young men in environmental conservation projects like planting trees and building parks.

What did the TVA do?

Built dams, controlled flooding, provided electricity, and created jobs in poor regions.

What did the Social Security Act establish?

A system of pensions for the elderly funded by payroll taxes, creating a long-term safety net.

What were criticisms of the New Deal from the left?

Figures like Huey Long and Francis Townsend argued it didn’t go far enough in helping the poor.

Who was Huey Long and what did he propose?

A populist who proposed “Share Our Wealth,” redistributing income to guarantee basic living standards.

What was the long-term impact of the New Deal?

It created a limited welfare state and expanded federal responsibility for economic and social welfare.

What political coalition did the New Deal create?

The New Deal Coalition, including workers, immigrants, African Americans, and Southern whites, which strengthened the Democratic Party.

Did the New Deal end the Great Depression?

No, it improved conditions and reformed the system, but full recovery came with World War II.

Why did World War II end the Great Depression?

Massive government spending on war production created jobs and stimulated economic growth.