USHH Unit 7 - Great Depression/New Deal

Credit

agreement where a borrower receives something of value (money, goods, or services) immediately from a lender, with the promise to repay the debt, typically with interest, at a later date; enables consumption and investment by converting future income into present purchasing power.

“American Plan”

a workplace free of both government regulation and unions (except “company unions” controlled by management) embraced by employers

1929/Black Tuesday

October 29, 1929: stock market collapse. Massive bank failures, reduced purchasing, and high international tariffs; start of the Great Depression.

Herbert Hoover

(1874-1964) 31st US president. By 1933, the unemployment rate had risen to 25%, about one-third of farmers had lost their land, and 9,000 of its 25,000 banks had gone out of business. He was unwilling to intervene heavily in the economy and signed the Smoot-Hawley Tariff Act in 1930, which worsened the GD.

Hoovervilles

makeshift towns built by millions of homeless Americans during the GD, named derisively after President Herbert Hoover, who was blamed for the economic crisis and insufficient relief efforts.

Smoot-Hawley Tariff

(1930) law signed by President Herbert Hoover that raised import duties on over 20,000 goods by 40% to 60%. Designed to protect American farmers and manufacturers from foreign competition during the onset of the GD but instead triggered retaliatory tariffs from other nations, severely reducing global trade and deepening the economic downturn (worsened GD with a trade war)

Bonus Army

(1932) 10-25k WWI veterans and families marched on DC and demanded early payment of promised bonus certificates to survive the GD. Followed a violent eviction ordered by President Hoover and severely damaged his reputation, paving the way for FDR’s New Deal.

First New Deal

(1933-1934) initial, rapid legislative response by FDR to the GD, focused on the 3 Rs: relief, recovery, reform. Concentrated in the “Hundred Days” (March-June 1933), established key agencies like the FDIC (Federal Deposit Insurance Corporation), Civilian Conservation Corps (CCC), and National Recovery Administration (NRA) to stabilize the banking system, provide jobs, and boost industrial/agricultural prices.

Hundred Days

(1933) first three months of FDR’s presidency, rapid passage of 15 laws he hoped would promote economic recovery, creation of agencies like the National Recovery Administration (NRA), Agricultural Adjustment Act (AAA), and Civilian Conservation Corps (CCC).

“Brains trust”

group of academic advisers (including Raymond Moley, Rexford Tugwell, and Adolf Berle) assembled by FDR during his 1932 presidential campaign to provide policy guidance, combat the GD, and help shape New Deal programs. Asserted that big businesses were inevitable and that the government should regulate rather than get rid of them, and they believed that the fundamental problem with the American economy was underconsumption (people were not buying enough goods and services to keep the economy running smoothly)

New Deal coalition

dominant, diverse American political alliance, aimed to secure electoral support for FDR’s New Deal programs, which aimed at the 3 R’s to combat the GD. United working-class voters, labor unions, ethnic/religious minorities (Catholics, Jews), Southern whites under FDR’s pro-government economic policies, Black voters (who shifted from Republican to Democratic)

Dustbowl

(1930s) environmental/agricultural disaster in the Southern Great Plains/Canada; extreme drought, poor farming practices, stripped native prairie grasses, high winds turned dry, exposed soil/“black blizzards.” Displaced 1+ million farmers in OK, TX, KA, CO, ruined agriculture, and prompted federal conservation efforts

Congress of Industrial Organizations (CIO)

(1935) sought to mobilize all workers in a given industry (e.g. steel manufacturing), aimed to form unions, large supporter of FDR’s New Deal, famously used “sit-down strikes” where workers halt production but sit inside.

industrial democracy

workers have a direct, often legally mandated, voice in decision-making and management within their workplaces. During the New Deal, the shift towards empowering workers/fostering collective bargaining to curb corporate power marked a transition from industrial authoritarianism to a more balanced and regulated economy. Key legislation (Wagner Act and NIRA) secured rights to organize unions, set wage/hour standards, and created an “economic constitutional order” designed to protect workers and stimulate economic recovery

sit-down strike

workers stop working but remain at their workstations inside the employer's premises, preventing production and the use of replacement workers (e.g. General Motors in Michigan)

Upton Sinclair and EPIC

(1934) won democratic nomination for governor in 1934 as head of the End Poverty in California movement, called for the state to use idle factories and land in efforts that would provide jobs for the unemployed. Lost election after being subjected to a “negative” media campaign (circulated false newsreels of unemployed men supporting him and a fake endorsement from the Communist Party)

Huey Long/Share Our Wealth Movement

(1934) won election for Louisiana governor in 1928, became a Senator in 1930; used his power to build roads, schools, and hospitals and increased oil companies’ tax burden. “Every Man a King” was the slogan for his movement, which advocated for the confiscation of most of the wealth of the richest Americans to finance an immediate grant of $5000 and a guaranteed job + annual income for all citizens

Father Coughlin

attracted millions of listeners with weekly broadcasts attacking Wall Street bankers and greedy capitalists and called for government ownership of key industries to fight the GD. Strong supporter of FDR → very critical for what he considered the failure of the New Deal to promote social justice

Francis Townsend

won widespread support for his plan by which the government would make a monthly payment of $200 to older Americans with the requirement that they spend it immediately, which he argued would boost the economy.

Second New Deal

FDR launched in 1935, placing emphasis on economic security (Americans would be protected against unemployment and poverty)

welfare state

originated in Britain in WWII, refers to a system of income assistance, health coverage, and social services for all citizens. Social Security Act launched the American version of the welfare state.

US v. Butler

(1936) struck down the Agricultural Adjustment Act. The Act's processing tax on agricultural commodities violated the Tenth Amendment (powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people) by regulating local agricultural production, a power reserved to the states.

Court-packing

(1937) failed legislative initiative proposed adding a new justice for every sitting member over age 70 (6 of 9). Aimed at overcoming judicial opposition to New Deal programs/shifting the balance of power on a Court that FDR feared might invalidate Social Security/Wagner Act and other Second New Deal measures. “Switch in time that saved nine”; damaged FDR politically (marked a decline in ND momentum)

Fair Labor Standards Act (FLSA)

(1938) established first federal minimum wage, 40h work week, overtime pay, recordkeeping, child labor restrictions; final major ND reform

“Roosevelt recession”

(1937-1938) sharp economic downturn during the GD. FDR administration attempted to balance the federal budget (slashing spending) while the Federal Reserve doubled reserve requirements for banks to combat perceived inflation (reduced money supply). Additionally, the first Social Security payroll taxes removed money from circulation. Industrial production plummeted by 32-40%, 4+ million people lost their jobs, stocks plunged nearly 50%. To recover, FDR initiated a new $3.75 billion spending program in April 1938, which helped end the downturn by June 1938

Keynesian economics

promoted large-scale government spending to stimulate the economy during downturns (even at the cost of a budget deficit), increasingly embraced by FDR → public spending became the government’s major tool for combatting unemployment and stimulating economic growth

Welfare (state)

a system of income assistance, health coverage, and social services for all citizens. After the New Deal, the government assumed the responsibility for protecting Americans against economic/personal misfortune

Redlining

denying financial services to specific groups of people. Home Owners' Loan Corporation (HOLC) and Federal Housing Administration (FHA) mapped city neighborhoods based on risk, marking predominantly Black and immigrant areas in red as “hazardous” for mortgage lending; enforced segregation, restricted access to capital for minorities, created a massive, lasting racial wealth gap by denying generational homeownership opportunities

Emergency Banking Act

(1933) FDR declared a “bank holiday” and called Congress into special session to provide funds to strengthen/reinforce threatened institutions. Allowed the Federal Reserve to issue additional currency to solvent banks to meet liquidity needs. Expanded presidential powers (ability to restrict banking operations and regulate gold/silver)

Glass-Steagall Act

(1933) barred commercial banks from becoming involved in the buying and selling of stocks, separated commercial banking (taking deposits, making loans) from investment banking (securities underwriting and trading). Prevented many irresponsible practiced that contributed to the GD until its repeal in the 1990s.

Federal Deposit Insurance Corporation (FDIC)

(1933) restore trust in US banking system, prevent bank runs (people withdrawing all their money at once) by guaranteeing bank deposits (up to $250,000 per debtor; the government pays you back if your bank fails so there’s no reason to panic and withdraw money; safety net), thereby stabilizing the financial system and ensuring depositors did not lose their money

National Industrial Recovery Act (NIRA)

(1933) authorized the President to regulate industry, establish fair wages/prices, and initiate public works. Created the National Recovery Administration (NRA) to manage industry-wide codes and the Public Works Administration (PWA) to reduce unemployment

National Recovery Administration (NRA)

(1933) formed by the NIRA; established industry codes that set standards for output, prices, and wages/working conditions (symbolized by a “Blue Eagle”). Controversial—large companies dominated and used the NRA to drive prices, limit production, lay off workers, and divide markets among themselves at the expense of smaller competitors

Civilian Conservation Corps (CCC)

(1933-1942) program that sent unemployed young men to work on projects like forest preservation, flood control, and improvement of national parks and wildlife preserves. 3+ million people were involved, and received government wages of $30 per month.

Public Works Administration (PWA)

formed by the NIRA; built roads, schools, hospitals, and other public facilities

Tennessee Valley Authority (TVA)

(1933) built a series of dams to prevent floods and deforestation along the Tennessee River and provide cheap electric power for houses and factories.

Agricultural Adjustment Act (AAA)

(1933) authorized the government to set production quotas for major crops and pay farmers to plant less (to raise plummeting farm prices). Not all farmers benefited; money flowed to property-owning farmers and ignored the large number who worked on others’ land. Most evicted poor tenants and sharecroppers joined the rural exodus to cities or farms of the West Coast.

Home Owners Loan Corporation (HOLC)

(1933) established to prevent widespread foreclosure on urban homes, directly refinanced millions of long-term mortgages issued by private banks. Instituted redlining.

Federal Housing Administration (FHA)

(1934) make homeownership more accessible by protecting lenders against losses from borrower defaults; boosted the housing market and provided affordable financing options for a broader range of Americans.

Federal Communications Commission (FCC)

(1934) oversaw the nation’s broadcast airwaves and telephone communications; centralized authority over radio, telephone, and telegraph, replacing the Federal Radio Commission. Established a regulated, efficient national communications system

Securities and Exchange Commission (SEC)

(1934) aimed to restore investor confidence. Regulated the stock and bond markets, enforced federal securities laws, and ensured transparent financial disclosure by public companies.

Rural Electrification Agency (REA)

(1935) brought electric power to homes that lacked it (80% of farms were still without electricity) in part to enable more Americans to purchase household appliances.

Works Progress Administration (WPA)

(1935) aimed to provide work relief, hiring 3+ million Americans each year until it ended in 1943, constructing thousands of public buildings/bridges/stadiums/pools/plants, 500000+ miles of roads, and 600 airports.

Wagner Act

(1935) aka National Labor Relations Act, guaranteed private-sector employees the right to organize, join unions, and bargain collectively, outlawed “unfair labor practices” (including firings/blacklisting of union organizers)

National Labor Relations Board (NLRB)

formed by the Wagner Act in 1935, aimed to promote peaceful industrial relations by curbing unfair employer practices.

Social Security Act

(1935) created a system of unemployment insurance, old age pensions, and aid to people with disabilities, the elderly poor, and families with dependent children. Embodied FDR’s conviction that the national government was responsible for ensuring the material well-being of ordinary Americans