Chapter 18/19 - The Great Depression/New Deal (1929-1941)

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How was everyone trying to get rich?

By buying stock.

What did a steep rise in stock prices lead to?

It led to many people investing heavily in the stock market.

What does buying stock "on margin" mean?

It means that investors borrowed money to buy the stock.

What happened on Tuesday October 29, 1929 as a result of selling more stock?

The stock market crashed.

What happened as the nation fell into a severe economic crisis known as the Great Depression?

Business slowed and we produced less goods and services.

What were 3 signs of weaknesses even before the stock market crashed?

• Farm income had shrunk throughout the decade.
• Factories were turning out more goods than people good buy.
• There was a growing gap between rich people and everyone else.

What was the borrowed money that fueled the economy in the 1920s bad in the long run?

• Small banks suffered when farmers defaulted, or failed to meet loan payments.
• Large banks owned stock and suffered huge losses.
• Thousands of banks closed, causing people to lose money.

Why did foreign countries purchase less US goods?

That's because we raised tariffs and bought less foreign goods. Foreign countries responded by raising their own tariffs, therefore buying less US goods.

What other issues did Americans face besides becoming unemployed?

• They lost their homes and their belongings.
• Many had no way to buy food or other necessities.

Hoover thought the economic crisis was temporary, so he reacted by…

• Urging business leaders to not cut wages or factory input.
• Urging voluntary action by citizens and local governments.

When Hoover agreed to come federal spending, why was it too late?

• The state and local gov'ts were already out of money for public works.
• The RFC was unwilling to make risky loans and didn't use much of its available funds.

What kinds of conflict arise from the Bonus Army's march to D.C?

• Police were sent to break up the veterans' camp, and 2 people died.
• Hoover called in US Army Troops, who burned down the camps of the veterans and their families.

Bull Market

The market condition when prices continue to rise.

What was it called when businesses produced too much?

Surplus

What did the firing of workers in response to the over production of goods lead to?

A national unemployment.

Why did "buy now, pay later" become an issue?

Because of over-production and unemployment.

• people are unable to pay back loans.

What did bankers during the 1920s make to businesses and individuals?

Unwise loans

Since many people used the money to invest in stocks, what would happen if the businesses failed, or if the value of the stocks went down?

The people who had borrowed the money would not be able to repay the loans.

What would happen to your money if other borrowers couldn't pay back their loans?

The money the banks had loaned would be "lost".

Speculators

People who made high-risk investments in the hope of making money.

What's "buying on margin"?

Borrowing most of the money needed to invest.

What are 3 things that happened days before the stock market crashed on Oct 29, 1929?

• Stock prices reached a high point.
• Stock prices dropped sharply, after a period of decline.
• People panicked and sold their stocks to avoid going bankrupt.

What is 10/29/29 also known as?

Black Tuesday

What happened to your money if you invested it in the stock market & to the banks that lent people and businesses money to invest in the stock market?

You both lost the money.

What's the term for the thing that takes place when many depositors decide to withdraw their money at the same time, usually out of fear that the bank will collapse?

A Bank Run

What is a Hooverville?

A long whole shantytown that blamed Hoover for the terrible situation.

What did soup kitchens and bread lines do?

They offered free or low-cost food for people.

Which minority group suffered at a higher rate than other Americans?

African Americans

Who made very little money selling their fruits and vegetables, and had their income fall to their lowest levels?

Farmers

What did Hoover believe would keep the economy moving?

Rugged individualism

What did Hoover believe about the government during the Great Depression?

That it should not step in to help individuals, and that they should help themselves.

• He believed in volunteering.

What did Hoover request Congress to set up in 1932 to make loans to businesses?

The Reconstruction Finance Corp

Who set up camps in Washington DC to demand early payment of a benefit they were owed?

Unemployed WW1 veterans

When the bonus marchers refused to leave, what did Hoover do that made it clear that he would not be reelected?

He called out the US military to break up the camps. They used tanks and tear gas, causing a baby to get killed, a child blinded, and some veterans injured.

5 qualities that made Roosevelt an effective leader

• Insanely competitive
• Like for being around people
• Confidence and optimism
• His reputation and famous surname
• Perseverance from polio

Details:

• People saw energy and optimism in FDR that gave them hope despite the tough economic times.
• People were amazed at his serenity and confidence.
• He won the electoral vote in all but 6 states.

The Americans' love for Roosevelt helped him win the presidential election of 1932.

Details:

• He ordered all banks to close for 4 days.
• Congress passed the Emergency Banking Relief Act to help banks reorganize and reopen.
• He used fireside chats to inform the public on the improved safety of banks.

Roosevelt started off by helping restore the nation's banks to fix the economy.

Details:

• The New Deal affected banking, the stock market, the industry, and agriculture.
• The New Deal affected relief for the poor.
• The New Deal affected the conservation of resources.

Roosevelt began the New Deal to end the depression, and it ended up changing the face of the US dramatically.

Details:

• FDR created the CCC, which employed about 3 million young people.
• The CCC worked on projects that helped the public.
• FERA gave money to the states to provide food and assistance to the needy.

Roosevelt's agencies provided help to people in many ways.

Details:

• In the AAA's first year, farmers grew more food that they could sell, driving prices down and hurting farmers.
• The AAA paid farmers to destroy crops, milk, and livestock.
• New Dealers claimed that this action was necessary to bring up prices.

The AAA encouraged farmers to throw away good food.

Details:

• They had built dams along the Tennessee and other rivers.
• The dams helped control terrible floods common to the region, like the 1937 spring rains.
• The dams used the power of flowing water to generate electricity, allowing thousands of farms and homes to get electricity for the first time.

The TVA proved to be a great success in many ways.

Details:

• The NIRA created the NRA, which pushed businesses to set a minimum wage and abolish child labor.
• The NIRA had established the PWA, which had led to the hiring of many people to build roads, shipyards, hospitals, etc.
• Many PWA projects are still in use today.

Congress had passed the NIRA to boost the economy by helping businesses regulate itself.

Details:

• FDR created the FDIC, which guaranteed that up to $2,500 placed in an insured banks wouldn't be lost of the bank failed.
• Congress passed a law regulating stocks and bonds.
• Congress formed the SEC, which helped punish dishonest dealers of stocks.

Roosevelt created agencies to avoid future banking crises and to rebuild confidence in the stock market.

Who was the first First Lady to give lectures, radio broadcasts, write a daily newspaper column, and speak out on behalf of African Americans?

Eleanor Roosevelt

What was Roosevelt's New Deal and what 3 things was it meant to do?

• Programs meant to help the country by getting the government involved in the economy.
• Relief, recovery, reform

What was the 1st step in the New Deal and why?

• Bank Holiday
• Because many banks had failed, wiping out families' savings, and because people lost confidence in the banks.

What was the second step of the New Deal and what did FDR do in the first 100 days of his administration?

• Alphabet soup
• He passed tons of legislation.

CCC - Civilian Conservation Corps

18-25 year old guys get jobs and send money home to their families.

AAA - Agricultural Adjustment Administration

Government pays farmers not to farm.

• Meant to cause prices to rise and halt overproduction.

TVA - Tennessee Valley Authority

Government runs a hydroelectric power plant.

• Provides cheap power and fertilizer to the poor region.

FERA - Federal Emergency Relief Program

Gave direct relief to those who needed it.

• Beginning of a welfare program.

WPA - Works Progress Administration

Provided as many as 10 million jobs for men, women, and youths in building projects, and professions like artists, writers, and teachers.

• The most ambitious works program of the New Deal

New Deal programs such as the CCC and the WPA were primarily intended to help…

the unemployed.

FDIC - Federal Deposit Insurance Corp.

Insurance for the money you put in banks.

• Protected people's savings

SEC - Securities and Exchange Commision

Watchdog agency for the stock market.

What did FDR set up in his second New Deal?

Social Security

What was FDR's greatest mistake?

Packing the Supreme Court

• Increasing the number of Supreme Court Justices from 9 to 15.

Why did FDR pack the Supreme Court?

Because they kept declaring his programs unconstitutional.

Results of packing the Supreme Court:

• Public and Congress grew angry.
• FDR taking too much power.
• Messed up checks and balances.

Why did some people support the New Deal?

• It restored optimism and hope to Americans.
• It provided necessary relief to many.
• It made the government more responsible to the needs of the people.

Why did some people oppose the New Deal?

• It left people too dependent on the government.
• It gave the Federal Government too much power.
• It created government debt (National debt), meaning the government paid out more money than it collected, called deficit spending.

Pro-New Deal people thought it…

• restored faith in the National Government.
• allowed the government to take a more active role in the economy.
• created many New Deal bridges, dams, tunnels, hospitals, and public buildings that still exist today.

Anti-New Deal people thought it…

• created more National Debt
• didn't end the Depression, WWII did.
• increased the power of the Federal Government.