The Great Depression & New Deal (7.9-7.10)

https://quizlet.com/197991060/amsco-24-26-flash-cards/

how did the wall street crash cause the great depression?

• Stock prices rose significantly in the 1920s → stocks seen as a symbol and source of wealth.

  • Both the U.S. and global economies were experiencing a prosperous "boom" in the late 1920s.

• Stock prices had been fluctuating for weeks before the crash, but the true panic started on Black Thursday, October 24, 1929.

  • this day = unprecedented volume of selling on Wall Street, leading to plunging stock prices

• The following day, a group of bankers bought millions of dollars of stocks to stabilize prices, which worked for one business day.

• Hwvr, selling frenzy resumed on Monday, and on Black Tuesday, October 29, the stock market crashed as panicked investors sold with few buyers.

name some underlying causes of the great depression

• uneven distribution of income

• stock market speculation

• excessive use of credit

• overproduction of consumer goods

• weak farm economy

• gov’t policies

• global economic probs

how did uneven distribution of income help cause the great depression?

• wages risen relatively little compared to large inc in productivity & corporate profits

how did stock market speculation help cause the great depression?

• ppl speculating that price of stock would go up and they could sell it for quick profits

• buying on margin allowed ppl to borrow most of cost of stock

• investors depended on price of stock inc so they could repay loan

• stock prices dropped → market collapsed → many lost everything they had borrowed & invested

how did excessive use of credit help cause the great depression?

• low interest rates + belief of both consumers and business that economic boom was permanent = inc borrowing & installment buying

how did the overproduction of consumer goods help cause the great depression?

• too many goods that workers w/ stagnant wages couldn’t buy

how did the weak farm economy help cause the great depression?

• prosperity of 1920s never reached farmers

  • suffered from overproduction, high debt, and low prices since end of WWI

• as depression of 1930s cont., severe weather & long drought added to farmers’ difficulties

how did gov’t policies help cause the great depression?

• little control of business

• high tariff protecting US industries but hurting farmers & int’l trade

• Fed Reserve’s tight $ policies as 100s of banks failed

how did global economic problems help cause the great depression?

• Euro never recovered from WWI

• US failed to recognize Euro’s post war probs → insisted on loan repayment in full + kept high tariff policies

• this weakened Euro and since everything is so interdependent, this also contributed to worldwide depression

what were the effects of the great depression?

• U.S. Gross National Product dropped

• Banks closed

• Unemployment skyrocketed

• Crash ended Republican domination of government, leading to dramatic changes in policies and expansion of fed government

• Inc. difficulties for farmers and Afr Amers

• Poverty, homelessness, and family stress inc as ppl searched for work, leading to common mortgage foreclosures and evictions

• crime rate went up

Hoovervilles

• towns where ppl homeless due to Depression lived

• named to mock Prez Hoover

what were hoover’s INITIAL reactions to the depression?

• he felt that prosperity would return if nation took his advice of voluntary action and restraint

  • Urged business not to cut wages or jobs

  • Urged unions not to strike

  • Private charities to provide for the needy

• Did not ask Congress for action

  • afraid that gov’t intervention would destroy ppl’s self reliance

• Gradually changed his mind

  • buttt believed relief should come from state and local gov’ts, but not fed

Hawley-Smoot Tariff (1930)

• 1st of Hoover’s 2 fed policies to combat depression

• Highest in history→ 31-49%

• in retaliation to US, Euro enacted higher tariffs of their own against US goods

• Trade fell by 40%, both national & int’l economies sank further into depression

Debt Moratorium (1931)

• 2nd of Hoover’s 2 fed policies to combat depression

• Suspended Dawes Plan

  • was plan for collecting int’l war debts

• France wouldn’t agree

• int’l economy suffered from loan and bank defaults

• banks scrambling to meet demands of depositors wanting back their money

federal farm board

• 1st of Hoover’s 2 domestic programs to combat depression

• intended to help farmers stabilize prices by temporarily holding surplus grain and cotton in storage

• hwvr, far too modest to handle the continued overproduction of farm goods

reconstruction finance corporation (RFC)

• 2nd of Hoover’s 2 domestic programs to combat depression

• Fed gave $ for failing banks, railroads, insurance companies, etc (major businesses)

• est. on basis of trickle-down economics

  • benefits these companies received would “trickle down” to smaller business & ultimately bring recovery

farm holiday

• farmers banded together to stop banks from foreclosing on farms & evicting ppl from their homes

• attempted to reverse drop in prices by stopping entire crop of grain harvested in 1932 from reaching market

• effort collapsed after some violence

bonus march

• thousands of unemployed WWI veterans marched to DC to demand immediate payment of bonuses promised to them at later date

• Congress voted NO

  • 2,000 veterans stayed 

  • 2 people were shot

    • Hoover ordered troops to break up encampment

    • used tear gas & tanks

• Hoover regarded as heartless & uncaring

election of 1932

• Republicans- Hoover

  • “Rugged Individualism”

  • The economy is recovering

• Democrats- Franklin Delano Roosevelt

  • New York Governor

  • Campaign promised:

    • “New Deal” for the American people

    • Repeal Prohibition

  • Aid for the unemployed

  • Cuts in government spending

• FDR won

  • Dems also won a majority in Congress

Lame Duck Amendment

• Inauguration was in March

  • 4 months of Hoover as ‘Lame Duck,” unable to cope w/ depression

• 20th Amendment (1933)

  • Moved the inauguration to January instead of March, shortening period btwn prez election & inauguration

FDR’s three Rs

• Relief- For those out of work

• Recovery- for business and the economy

• Reform- for economic institutions

bank holiday

• Bank failures continued

• Gov’t closed all banks

  • FDR didn’t want people to take their $ out

  • Gov’t investigated banks

    • If gov’t concluded that bank = solvent, reopened immediately

    • Those that weren’t stayed closed

  • Gov’t says “we fixed the banks, plz use them again”

    • Restore people’s faith in banks 

• Roosevelt addressed the nation

  • First fireside chat

  • Explained the actions of the gov’t

what was the significance of FDR’s fireside chats?

• champion of radio

• Spoke directly to the American people

• Gave Amers personal stake in FDR’s works

  • “This is the problem, here’s how we’re trying to fix it, but we can’t do it without you”

which amendment did FDR reppeal?

prohibition (18th)

the first new deal mostly focused on… (which of the 3 Rs?)

financial recovery and some reform (e.g. CCC, FDIC, TVA, AAA, etc)

the second new deal mostly focused on… (which of the 3 Rs?)

relief and reform (e.g. WPA & SSA)

how did the new deal change the role of government?

• Created a limited welfare state

  • Government regulated economic activity

  • Aided the poor and unemployed

  • Created economic security

• Basis of modern American liberalism

election of 1936

• Republican- Alfred Landon

  • Progressive governor of Kansas

  • Wasteful and radical New Deal

• Democrat- FDR again

  • Widespread support

  • Continuation of the New Deal

• FDR won again

how did some liberals criticize the new deal?

• were esp upset abt first new deal

• new deal focused too much on business and too little for unemployed, poor workers, ethnic minorities, women, & elderly

• Wanted a more radical approach

• Government ownership and regulation

• Government Paternalism

how did some conservatives criticize the new deal?

• most critics were on conservative side

• new deal gave fed gov’t too much pwr

• relief programs & labor laws bordered on socialism/communism

• business leaders were alarmed by…

  • inc regulations

  • second New Deal’s pro-union stance

  • financing of gov’t programs by means of borrowed $

American Liberty League

• made up of Conservative Democrats and Leading Republicans

• believed that New Deal was unconstitutional

• goal was to stop new deal from “subverting” the US economic and political system

what were demagogues, and give examples of them

• Demagogues were…

  • orators who used radio to reach mass audience

• Father Coughlin

  • founded National Union for Social Justice

  • wanted to issue inflated currency and nationalize banks

• Dr. Francis Townsend

  • wanted 2% national sales tax so that ppl over 60 would get $200 a month

    • inspired SSA

• Huey Long

  • “Share Our Wealth”

  • Tax the wealthy to give $5,000 for every family so every Amer fam had promised annual income of $5k

Court Reorganization Plan (1937)

• Conservative Supreme Court + prog prez = clashes

  • Supreme Court had declared two programs unconstitutional (NIRA & AAA)

  • FDR wanted to end obstacles posed by supreme court

• FDR wanted to appoint an additional justice for each current justice over 70 years old (6)

• Both parties were outraged

• Congress pushed back & Plan was defeated

• butttt Supreme Court became more New Deal friendly

Wagner Act (1935)

• replaced labor provisions of NIRA after it was declared unconstitutional

• guaranteed worker’s right to join union & union’s right to bargain collectively

• also outlawed unfair labor practices

how were unions affected by the new deal?

• New Deal gave unions power

• Union membership grew

• American Federation of Labor

  • Est. by Samuel Gompers (see prev notes)

  • Mostly skilled white men

  • Most powerful union

• Congress of Industrial Organizations

  • Unskilled, all races and genders

  • est by John L. Lewis

  • Had 4 million members

  • Joined with the AF of L

  • Led high profile strikes

auto industry strike

• 1937 General Motors

• Sit-down strike for right to unionize

• Company was denied federal troops

• Organizers were beaten

• Formed the United Auto Workers

steel strike

• at Republic Steel in Chicago

• wanted smaller companies to agree for workers to unionize

• Picketing and violence.... 4 were killed

• Police fired into the crowd

• By 1941, most steel workers joined the CIO

what did the fair labor standards act (1938) establish?

• Political victory for organized labor

• Federal minimum wage

• Max amt of time you can work per week: 40 hours

• Restriction on child labor

• United States vs. Darby Lumber 1941

  • Upheld child labor law

• Last major New Deal reform

despite the early 1930s showing the new deal’s positive effects, why was there a recession again in the late 1930s?

• Social Security Tax reduced consumer spending

• Government stopped funding some relief programs

  • Balance the budget and reduce debt

• Keynesian Economics (Deficit Spending)

  • Government money to prime the pump

  • Increase investment and create jobs

  • Federal spending went up in 1938, way above its tax revenue

• FDR had lost political influence

  • Conservative Democrats and Republicans

  • No more “blank check”

• Concerns with foreign affairs

how were women affected by the depression?

• Lost gains they had made during the 1920s

  • Some companies refused to hire women

  • New Deal programs paid them less

  • More women entered workforce, but made less

• Suffered in silence

  • Struggled to clothe and feed children

  • Did not have support like men

  • Froze and starved

• gained some Political Influence

  • e.g. Frances Perkins (US secretary of labor)

how were dust bowl farmers affected by the depression?

• Severe drought engulfed the Great Plains

• Dust Bowl 

  • Loose soil blew away

  • “Black Blizzard”

• Thousands headed to California

• Soil Conservation Service

  • taught & subsidized plains’ farmers to rotate crops and terrace fields

  • Planted trees

• region recovered, by environmental issues remained

okies and arkies

• People fleeing the Dust Bowl from Oklahoma and Arkansas to southern California

how were afr amers affected by the depression?

• Last hired, first fired

• Higher unemployment rate

• Excluded from state and local relief 

• Tension and lynchings

• Black Cabinet

• Federal Council on Negro Affairs

• Fair Employment Practices Committee

  • assisted minorities in gaining jobs in defense industries

  • A. Philip Randolph

marian anderson

• Wanted to sing at special hall, but it was segregated so they wouldn’t let her sing

• FDR let her sing at Capitol

black cabinet

• Group of civil rights advisors that FDR met with to talk abt how the New Deal could be more inclusive of Afr Amers

mary mcleod bethune

• appted to fed position by FDR

• est Federal Council on Negro Affairs

how were native amers affected by the depression?

• Bureau of Indian Affairs 1933

  • CCC and WPA hired some Natives to work on reservations

• Indian Reorganization Act 1934

  • Repealed the Dawes Act, replaced w/ reorg act ^

  • Returned land to tribes

  • Preservation of culture

  • Despite this major reform, critics later accused the New Deal

    of being paternalistic and withholding control from American Indians.

how were mex amers affected by the depression?

• Lost work in Southwest and California

• Not eligible for New Deal programs

• Unable to unionize

• Many returned to Mexico

  • Repatriation - “strongly suggested” that Mex go back to their homeland

• Strawberry Strike

  • Violent

  • Somewhat successful

  • Resulted in Mex unionizing among themselves (w/o white ppl influence)