AMH 2020 (American History: Reconstruction-Present) - Module 7 (Great Depression & New Deal)

How did WWI affect the U.S. economy of the 1920s?

It left behind debts and reparations, created a fragile international financial system reliant on U.S. loans, and fueled temporary industrial growth but agricultural decline. Economic boom from war efforts, but led to overproduction especially in the agricultural sector. U.S. prosperity looked strong but was fragile and uneven.

Were all sectors of the U.S. economy prosperous during the 1920s? Why or why not?

No. Industries like autos and appliances grew, but larger sectors like agriculture and mining struggled with overproduction, falling prices, and reduced demand, which left them weak prior to the crash.

What was Black Tuesday?

October 29, 1929 stock market crash when prices collapsed, signaling economic crisis. It triggered panic, destroyed paper wealth, and signaled the economy’s deeper weaknesses.

Did the stock market crash cause the Great Depression?

Not by itself. It revealed underlying problems. The crash turned a slowdown into a prolonged depression by destroying confidence and drying up investment.

Causes of the Great Depression?

• income inequality

• overproduction of goods

• dependence on “buying on credit” (especially by the poor) due to unequal wealth distribution

• stock speculation and buying on margin

• fragile banks

• weak global trade

• gold standard limiting flexibility

• reliance on U.S. loans abroad. 

How did WWI contribute to the Depression?

Created massive debts and reparations; U.S. became the world’s creditor. Europe’s recovery depended on U.S. loans, so when U.S. banks failed, the whole system collapsed. → Effect: Spread the Depression internationally

Why did the international financial system collapse?

Germany borrowed from U.S. banks → paid reparations to Britain/France → they repaid U.S. debts. When U.S. loans dried up, the cycle broke. → Effect: Default, trade collapse, and global banking crises.

How did countries react to the Depression, making it worse?

Governments cut spending, hoarded gold, and raised tariffs (like Smoot-Hawley). Other nations retaliated. → Effect: Global trade fell by 2/3, deepening unemployment everywhere.

How did Hoover respond to the Great Depression?

Relied on voluntarism, urging businesses and charities to help, but they lacked resources. Created the RFC to loan money to banks and corporations, but opposed direct aid to individuals. → Effect: His limited response failed to stop mass unemployment and homelessness, fueling public anger.

What was the RFC (Reconstruction Finance Corporation)?

A 1932 agency under Hoover that loaned money to banks, railroads, and corporations. → Provided some stability but did not directly help ordinary Americans, so it was seen as too little, too late.

What was the Bonus Army and why did it matter?

In 1932, WWI veterans marched on Washington for early bonus payments. Hoover ordered the army to remove them, leading to violence and burning of their camps. → Hoover looked heartless and lost remaining public support.

What were Hoovervilles?

Shantytowns built by homeless Americans, named sarcastically after Hoover. → Symbolized Hoover’s failure to address widespread suffering.

How did FDR respond to the Great Depression (in general)?

He launched the New Deal: federal jobs programs, banking reform, farm/industry recovery, housing support, and welfare. → Restored hope, reduced suffering, and expanded government’s role in the economy.

Did FDR pass legislation himself?

No, Congress had to pass laws, but FDR set the agenda. In his first 100 days, Congress approved nearly all his proposals. → Showed government could act quickly and boldly.

What was the Bank Holiday (1933)?

A Temporary closure of all banks. → Stopped bank runs, allowing inspection and safe reopening to restore confidence.

What was the Emergency Banking Act (1933)?

Allowed federal inspection of banks, reopening only those that were sound. → Restored public trust; people redeposited more money than they withdrew.

How did Fireside Chats help?

Radio addresses where FDR explained policies in plain language. → Reassured Americans, rebuilt confidence in government and banks.

What was the Glass-Steagall Act (1933)?

Law that created the FDIC and separated commercial from investment banks. → Stabilized the banking system and protected savings.

What were some major New Deal programs?

• CCC [Civillian Conservation Corps] (jobs for young men)

• WPA/PWA/CWA (infrastructure and arts)

• TVA [Tennessee Valley Authority] (rural electrification)

• AAA [Agricultural Adjustment Act] (farm supports)

• NRA (industry codes)

• FHA (mortgages)

• Effect — Gave jobs, built infrastructure, and expanded government responsibility.

What did a business have to do to display the NRA’s Blue Eagle?

Follow NRA codes: set fair wages, limited hours, ended child labor, and allowed unions. → Symbolized cooperation with the recovery effort

What did “red revolution” mean in this context?

Fear of communist uprisings due to poverty and unrest. → Pushed U.S. leaders to strengthen democracy and the middle class to avoid radical politics.

What is a property-owning democracy and why did the U.S. want it?

A society where most families could afford and own homes. The US wanted it to avoid the adoption of communist ideals amongst the working class → Expanded the middle class via FHA, stabilized the economy, and discouraged extremism.

How did the U.S. try to create a property-owning democracy?

FHA insured long-term, low-interest mortgages. Made homeownership affordable for many Americans.

What is redlining?

FHA practice of labeling minority neighborhoods as “high-risk” and denying loans. → Excluded Black Americans, reinforced segregation, and created long-term racial wealth gaps.

How did the U.S. remain democratic during the Depression?

New Deal reforms gave relief and hope, avoided extremes, preserved transparency through institutions like the National Archives. → Prevented the U.S. from turning to fascism or communism like other nations.

What is the National Archives, and why was it important?

A federal agency created in 1934 to preserve government records. → Effect: Showed commitment to openness and accountability, hallmarks of democracy.

What signs show a country is no longer democratic?

 Suppression of records, censorship, one-party rule, silencing opposition.

Herbert Hoover

31st president (1929–1933). His voluntarism and RFC response was seen as ineffective; blamed for worsening Depression.

Election of 1928

Hoover (R) vs. Al Smith (D). Hoover’s win symbolized confidence before the crash, but his presidency was overwhelmed by the Depression.

Associationalism

Hoover believed voluntary cooperation between businesses, charities, and government would solve the crisis.

Agricultural struggles

falling crop prices, farmers going into debt, and foreclosures

Urban vs. Rural divide

while cities enjoyed consumer goods, rural areas lagged behind and never had the same prosperity.

Psychological impact of the Depression 

despair, unemployment, and migration broke people’s sense of security.

NRA’s failure

declared unconstitutional in 1935 (Schechter v. U.S.)

Opposition to the New Deal

The Right: believed FDR’s policies entailed too much government intervention

The Left: not enough aid

Huey Long

AKA “The Kingfish”. Populist Senator from Louisiana; believed the New Deal didn’t do enough to close the wealth gap. Wanted to "cap” fortunes at a few million, heavily tax the rich, and guarantee every family a home, car, and source of income (wealth distribution). Assassinated in 1935 for his radical, “communist” beliefs.

Father Charles Coughlin

Catholic priest with a huge national radio audience. Said New Deal wasn’t helping enough, demanding monetary reforms and stronger banks. Later became pro-fascist and antisemitic, destroying his credibility. 

Second New Deal (1935–36)

• WPA: millions of jobs + arts support

• Wagner Act: right to join unions and bargain collectively

• Social Security Act: safety net system w/ pensions for elderedly, uneployed, disabled, and dependent (safety net)