New Deal Quiz 1

Herbert Hoover

• Republican

• President 1929 - 1933

Franklin Roosevelt/FDR

• Democrat

• President 1933 - 1945 (served for terms)

Great Depression

• 1929 - early 1940s

• Longest and most severe economic downturn in modern history

• Largely caused by overproduction, underconsumption, bank panics, tariffs, farm crisis, credit, deflationary cycle, and the gold standard

• Millions of Americans were unemployed and went hugry

Hoovervilles

• Makeshift shantytowns built by homeless people across the United States during the Great Depression

• Named after President Herbert Hoover, who was widely blamed for failing to stop the economic collapse

• Appeared heavily from 1930 until the early 1940s when WWII production ended the Depression

Stock Market Crash of 1929

• Massive economic collapse that was one of the factors leading to the Great Depression

• Black Tuesday

• 1920s unsustainable credit consumption, most stocks were bought with borrowed money (margin buying)

• Also caused by agricultural struggles and high debt

Bank runs/panic

• 1930-31

• Most banks lend out more money than they actually have on hand

• This system works until financial desperation

• Stock market crash triggered panic that depositors money was not safe; rushed to take out of the banks, which were overwhelmed and failed (~9000)

Gold Standard

• Meaning: system where a country links the value of its paper money directly to a fixed amount of physical gold

• Restricted money supplies and forced severe deflation, worsening the GD

• As bank failures and market crashes hit in 1929–1931, the public hoarded gold… banks could not expand the money supply to provide relief, so prices collapsed

Smoot-Harley Tariff

• 1930 U.S. law passed by Hoover

• Raised taxes on foreign imports

• Remembered as a great mistake of the Depression; lawmakers had wanted to force consumers to buy domestic but instead foreign countries responded with their own high tariffs and international trade collapsed

Pres. Hoover’s policies

• Hoover believed that direct federal relief ("handouts") would make people dependent on the government and destroy American character

• Mostly relied on private charities and volunteer efforts to combat poverty and the depression

• Forced deportation of hundreds of thousands of Mexican immigrants, as well as Mexican-American children who were citizens

• “No one is starving”

FDR's policies

• Launched the New Deal → federal government intervention focused on relief, recovery, and reform

• Declared a Bank Holiday to stop wave of bank failing immediately after taking office

• 100 days: Emergency Banking Act, CCC, FDIC (Glass-Steagall Baking Act)

• Fireside chats

• Focused on creating jobs for the public in order to reduce unemployment (i.e. building schools, industry, etc) - Grand Coulee Dam

“Laissez-faire” economic policy

• “Leave it alone”

• Advocates for minimal government intervention, regulation, and taxation in business and market affairs

• Declined after the Great Depression when unmanaged markets led to severe inequality and economic collapse

Party changes

1800s:

• R is the antislavery party; Black voters and politicians 

• D is the party of the white South and white supremacy

1900s:

• R - big business

• D - immigrants and outsiders

Both: a lot of variation depending on location

Two concepts of liberty

• Negative freedom: no obstacles or restraints (freedom from)

  • ex. freedom of speech/religion

• Positive freedom: ability to act and have an effect

  • participation in democratic process (protest, persuasion, voting, campaigning, civil disobedience)

Bipartisan

Both major parties agree

Triangle Factory Fire

• 1911

• Led to reforms designed to protect workers and implement labor rights

Progressive movement

• Top-down reform movement (change driven by people at the highest levels of government/society)

  • ex. secret ballot, Prohibition

• Progressive Era: 1890s - 1910s

Theodore Roosevelt

• FDR’s 5th cousin

• President 1901-1909

• Republican and Progressive

Fiorello La Guardia

• Mayor of NYC at the same time as FDR is president

• Republican and aligned with FDR

WW1

• 1914-1918

  • U.S. got involved in 1917

Collective bargaining

Unionized workers negotiate with with employers as a group

Overproduction + underconsumption

• High distribution of income → reduced American purchasing power (ability to buy goods)

• Wealthy can only buy so much

• Prices lowered, companies lay workers off, now can buy even less → deflationary cycle

Farm crisis

• Mass overproduction as farmers worked overtime during WW1. Many bought expensive machinery in order to be able to produce more

• Farmers were left in debt they could not pay off

• Supply did not meet demand, causing prices to drastically drop

• 1930s drought and Dust Bowl

Relief, recovery, reform

• 3 R’s

• Relief: short-term

• Recovery: medium-term

• Reform: long-term

Relief

• Stopped immediate economic downturning and gave the unemployed jobs

• Federal Emergency Relief Administration (FERA): Gave cash grants to state and local agencies to help the unemployed.

• Civilian Conservation Corps (CCC): Hired young men for outdoor work like planting trees and building flood controls.

Recovery

• Recovering the ecomomy by pumping federal money into the system to restart demand and and industry

• Agricultural Adjustment Administration (AAA): Paid farmers to limit production, which reduced surpluses and raised crop prices.

• Public Works Administration (PWA): Reduced unemployment by paying workers to build large public works like schools and dams.

Reform

• Reform programs created permanent changes/regulations to ensure a GD would never happen again

• Federal Deposit Insurance Corporation (FDIC): Protected personal bank accounts and insured deposits against bank failures.

• Social Security Administration (SSA): Established a safety net providing support for the elderly, disabled, and unemployed

Keynes

• British economist

• “Collaborated” with FDR, shared similar ideas - government regulations, creating new jobs

• Keynesian economics: gov. intervention is necessary to stabilize the economy + spending drives economic activity