Untitled Flashcards Set

Ch. 31/32 Great Depression and the New Deal 

Test Study Guide

Format: 

Multiple Choice

Cartoon Analysis (Multiple Choice)

Matching

• name of program and primary R (reform, relief, recovery)

• cause and effect of Great Depression and what program was put in place to address it

Vocabulary:

• Rampant

  • Flourishing or spreading unchecked

• Reluctant

  • Unwilling and hesitant 

• Disparity

  • A difference in level of treatment, especially one that is seen as unfair 

• Plight

  • A dangerous, difficult, or otherwise unfortunate situation

• Malnutrition

  • lack of proper nutrition

• Nationalization

  •  the transfer of a major branch of industry or commerce from private to state ownership or control.

• Privatization

  • occurs when a government-owned business, operation, or property becomes owned by a private, non-government party 

• Destitute

  • without the basic necessities of life., not having 

• Coercive

  • relating to or using force or threats.

• Apathy

  • lack of interest, enthusiasm, or concern.

Events/Terms:

• Election of 1928: Candidates and Issues

  • Herbert Hoover - “The Great Engineer”

    • Rags to riches ideal

    • Iowa orphan

    • “Great Humanitarian” - head of Food Administration

    • Secretary of Commerce

    • Never held elected public office

    • Campaign promise - A chicken in every pot and a car in every garage 

  • Al Smith

    • NY governor

    • “The sidewalks of NY” - theme song

    • Associated with Tammany Hall (corruption)

    • Child of immigrants

    • Opposed prohibition → “Alcohol Al”

    • Catholic

    • “Would be granting the Pope the right to dictate to this govt. what it should do”

  • Results:

    • Hoover - 444 EC/58%

    • Smith - 87 EC/40%

• Business deregulation of 1920s

  • During the 1920s, the economy was booming immensely, industry was flourishing, and there was a shift towards a more industry-friendly environment.

  • In addition, the economic policy of Laissez-Faire was enacted

    • This refers to the government not having much control interference over the businesses affairs.

    • There was also less government involvement in banking and stocks.

  • In addition, stock market speculation and trade was popularized, and so was buying on credit.

    • These practices were left unchecked, allowing for corruption and allowing for industries and banks to just mess up and harm the citizens.

  • Essentially, there was: LESS CONSUMER PROTECTION and LESS GOVERNMENT REGULATION

• Causes of the Great Depression

  • Unequal Distribution of Wealth

    • Rich get richer, poor get poorer

    • Income rose for rich by 75%

    • Other Americans income rose 9%

    • 70% of Americans earned less than $2,500 per year (min amount for standard living)

  • Buying on Credit

    • BUY NOW PAY LATER

      • 4 out of 5 cars

      • 2 out of 3 radios

    • Business encouraged Americans to pile up large consumer debt

    • Americans had hard time paying back debt —> cut back on spending 

  • Overproduction in Farming Sector/Crisis in Farming Sector

    • Had large supply of crops and livestock

    • Little demand after WW1 for large supply

    • Prices declined by 40% farmers owed money for loans (equipment and land)

    • Farmers owed money for loans (equipment and land)

    • Weren’t making enough to pay back loans - $240/year

      • Banks foreclosed on farms

      • Rural banks began to fail

    • Congress tropic to help farmers with McGarry - Hagen bill

      • Price supports - govt would buy surplus wheat, corn, cotton, and tobacco at guaranteed prices and sell them on the world market

        • President Coolidge vetoed the bill 2x

  • Consumer Industry

    • Farmers buying less —> they have very little money

    • Americans buying less —> rising prices, stagnant wages, unbalanced distribution of income, over buying on credit

    • production expanded much faster than wages —> ever-widening gap between poor and rich

  • Tariff Policies

    • 1930 - Hawley-Smoot Tariff Act passed

      • Designed to protect American farmers and manufacturers from foreign competition

    • Had opposite effect —> other countries now couldn’t earn US currency to buy US goods

    • Result

      • unemployment worse

      • Raised their tariffs

      • World trade fell 40%

• Causes of Stock Market Crash

  • Overspeculation

    • Prices rose far above the stocks actual value

    • Between 1924 - 1929 values of stocks on NYSE increased 400%

    • Dow Jones - high 381 points

    • “Bull Market”

    • By 1929 - 4 million Ameircans (3%) owned stocks 

  • Buying on Margin

    • Paying a small percentage of stocks price as a down payment and borrowing the rest 

    • People invested money they did not have → prices rose 

    • Margin calls 

  • Stock Pooling

    • Group of wealthy investors buy large blocks of certain stock and then traded shares back and forth driving up prices

    • Members dump shares and pocket profits

    • Price of stock goes down → outsiders lose money 

• Financial Collapse → Bank and Business Failures

  • Bank Failures:

    • Americans rush to the banks to get money out → money isn't there → its invested in stock market (life savings lost)

    • 1929 - 600 banks close

    • 1933 - 11,000 out of 60,000 banks fail

  • Business Failures:

    • 90,000 businesses went bankrupt which lead to unemployment 

• Unemployment Rates

  • Unemployment increased from 3% (1.6 million) to 25% (13 million)

  • Workers who still had jobs took pay cuts and reduced hours

    • Underemployed 

• Hoover’s response to the Depression

  • Disbands the Bonus Army 

• Rugged Individualism

  • Hoover opposed any form of federal welfare or direct relief to the needy

  • “We should use the powers of govt. to cushion the situation”

  • Handouts would weaken peoples self respect and moral fiber

  • Individuals, charities, and local organizations should aid the less fortunate 

• Social Effects of the Depression 

• Bonus Army

  • Bonus expeditionary force

  • Spring of 1932 - 10,000-20,000 WWI veterans arrived in Washington D.C. 

  • Led by Walter Waters

  • Came to support passage of the Pathan Bill 

    • Authorized the government to pay a bonus to WWI veterans who were not compensated adequately for their service

    • Bonus approved in 1924 to be paid out in 1945 in the form of cash and a life insurance

    • Congressman Patman believed $500 should be paid NOW!!

• Dust Bowl→ Migration 

  • Was a drought that began in the early 1930s and it weakened the Great Plains

    • Using the tractors on the farm land exhausted the land which left nothing to hold the soil and it started to blow away

    • Kansas, Oklahoma, Texas, New Mexico, and Colorado

  • Farmers had to pack up and go to Route 66 California which caused a migration to CA

• Election of 1932 - Results

  • Republican - Herbert Hoover

    • Little chance of winning

  • Democrat - Franklin Delano Roosevelt

    • Two term governor of NY

    • “Can-do” attitude

  • Roosevelt victorious

    • 23 million votes (472 electoral college) to Hoover’s 16 million (59 electoral college)

  • Democrats won majority in Senate and House

  • Significance: FDR controls the White House & Dems control where legislation starts and end, there is not gonna be challenges from a congress that is a different party

    • Only states that voted for Hoover included those that had low unemployment rates (Pennsylvania, New Hampshire, Vermont, Maine)

• New Deal - Goals (3Rs)

  • Relief

    • Ease suffering of the needy

      • Examples:

        • Employment programs

        • Public works projects

        • Direct handouts

  • Recovery

    • Lay the foundation for economic growth

    • Pump $ onto the economy as well as aid individuals

    • Examples:

      • Rural electrification

      • Housing

      • Agricultural subsidies

      • Business 

  • Reform

    • Helps prevent future economic crises (remain present forever)

    • Examples

      • Stock market 

      • Banks

      • Labor and labor unions 

• Fireside chats - Subjects and Topics

  • march 12th - 1st fireside chat (radio tal;is)

  • Roosevelt explained why the nation's welfare depended on public support of the govt. and banking system

• Criticisms of the New Deal

  • Liberal critics

    • New deal did not go far enough

  • Conservative critics

    • Too much control over agriculture and industry

    • Targeted AAA and NRA

    • Interfere with workings and free market economy

    • Business people didn't like the new deal because it wasn’t helping them 

• Election of 1936

  • Republican - Alfred M. Landon

  • Democrat - FDR (60.8%) —> more votes than last election

  • Union party - William Lemke

    • Supported by Dr. Townsend and Father Coughlin

    • Results: FDR carried every state buy Maine and Vermont

    • Black voters switched to the Democrats 

• Court Packing

  • 3 - justices viewed New Deal sympathetically

  • 4 - anti-new dealers

  • 2 - in middle

  • AAA vote was 3:6

  • Roosevelt proposed in February 1937 a court reform bill to reorganize the judiciary 

    • Would allow FDR to appoint 6 new justices = total 15

      • If the member reached the age of 70

• Roosevelt Recession

  • June 1937 - cut back relief programs

  • Stock prices plummeted

  • Unemployment rose by 2 million

  • Keynesian advisors argued for more govt. spending

  • Conservatives advocated cut backs

  • In April 1938 - FDR committed to deficit spending 

• 1938 midterm elections

  • Republicans picked up 7 seats in the Senate and 80 in the House

  • January 1939 - Roosevelt signaled a halt to New Deal reforms 

• Legacy of the New Deal 

  • Welfare State

    • Extensions on of the power of the federal government

      • Extensive and permanent involvement

        • Federal housing administration - insures mortgage loans

        • Agricultural adjustment agency - pays farm subsidies

        • Tennessee valley authority - provides electricity

        • Securities and exchange commission - regulates the stock market 

    • Extension of the power of the president

      • Most loved & most hated

      • “Imperial presidency” - strong executive leadership

    • Deficit spending

      • Spending more money than the government raises in taxes

      • First to use deficit spending to stimulate the economy

      • Keynesian economics - John Maynard Keynes

      • 1944 national debt - $260 million (war)

    • Federal welfare program

      • New deal established the welfare state

      • State is responsible for the economic security of its people

      • Social security act - elderly, disabled, and unemployed 

    • Greater concern for workers

      • National labor relations act - 1935

      • Gave workers the right to join unions and to bargain with their employers (union membership increases 5x)

      • Fair Labor Standards Act - 1938

    • Conservative Gains

      • Soil conservation, built dams to prevent flooding, reclaimed grasslands 

    • Renewal of faith in democracy

      • Did not abandon democracy in wake of an economic crisis 

People:

• Al Smith

  • 1928 democratic presidential nominee

  • NY governor

  • “The sidewalks of NY” - theme song

  • Associated with Tammany Hall (corruption)

  • Child of immigrants

  • Opposed prohibition → “Alcohol Al”

  • Catholic

  • “Would be granting the Pope the right to dictate to this govt. what it should do” 

• Herbert Hoover

  • 1928 democratic presidential nominee

  • Rags to riches ideal

  • Iowa orphan

  • “Great Humanitarian” - head of Food Administration

  • Secretary of Commerce

  • Never held elected public office

  • Campaign promise - A chicken in every pot and a car in every garage 

• Franklin Delano Roosevelt - Background

  • Member of NY State Senate

  • Assistant secretary of the Navy under President Woodrow Wilson

  • 1933 president

  • Promised to provide a “new deal for the American people”

  • His new deal focused on 3 goals

    • Relief for the needy

    • Economy recovery

    • Financial reform

  • Persuaded congress to repeal prohibition 

• American Liberty League

  • 1934 - conservative democrats

  • Strong business connection (anti-business, new deal threat to their business)

  • Opposed measures that violated respect for rights of individuals and property

  • 125,000 members

  • Supported the Republicans in 1936

  • League labeled Roosevelt’s Agricultural Adjustment Administration “a trend toward Fascist control of agriculture”

  • Social security was said to “mark the end of democracy”

  • Faded away and disbanded in 1940

• Father Charles Coughlin

  • Roman Catholic priest

  • Suburb of Detroit broadcasted radio sermons (political, economic, and religious ideas)

  • Favored expansion of the money supply

  • Audience —> 40-45 million people at most (govt. control)

  • Los support with increasing Anti-semitism 

• Dr. Francis Townsend

  • Physical and health officer in Long Beach, CA

  • Wanted more help for poor and elderly

  • Devised pension plan that would provide monthly benefits for aged

    • $200

    • Over 60

    • Had to be spent within 60 days

      • (Average salary was $100)

• Huey Long

  • Louisiana Senator

  • Proposed nationwide social program called “Share-our-Wealth)

  • “Every Man a King” —> promised something for everyone

  • Guaranteed $2,000 to every family (income cap at $1.8 million)

  • 1935 - 7.5 million members of Share-Our-Wealth clubs

  • Assassinated by lone gunman 

• African Americans and the New Deal

  • Rise in lynchings

  • Disenfranchisement (losing the right to vote)

  • Unemployment - 50% (26% - 50%)

  • Infant mortality - 50% greater than 

  • Life expectancy - 12 years shorter

  • 1% black students earned college degrees 

  • Roosevelt had black cabinet, reluctant to pass legislation specifically dealing with giving African Americans greater opportunities and rights (racial equality)

    • Feared southern democrats would not vote for him —> will lose some of his political capital to get other legislations passed 

• John Maynard Keynes

  • British economist

  • Unbalanced budget

  • Deficit spending —> stimulate consumption and investment

  • FDR reluctant supporter 

Acts/Agencies:

• Reconstruction Finance Corporation

  • Designed to provide indirect required by assisting insurance companies, banks, agricultural organizations, railroads, and even hard pressed state & local govts.

• Federal Deposit Insurance Corporation

  • June 16th 1933

  • Purpose

    • Provided federal insurance for bank accounts of $5000

    • Act made it illegal for banks to speculate in the stock market 

  • Results

    • Stabilized the baking system by reassuring people that their money was safe

    • Still exists today

    • Insures accounts up to $250,0000

  • Reform

• Security and Exchange Commission

  • May 27, 1933

  • June 6, 1934

  • Purpose

    • Securities act

      • Required all firms that issued stock to provide investors and accurate information about finances 

    • Securities and exchange act

      • 5 members appointed by the president monitored corporations to make sure they provided proper information 

  • Results

    • Still in effect today

  • Reform

• Federal Emergency Relief Administration

  • May 12th 1933

  • Purpose

    • Funded with $500 million to provide direct relief

    • Direct grants to states

    • Targeted ages, unemployed, and ill

    • Rest given to work relief programs 

  • Results

    • Supported 4-5 million households with $20 or $30 a month

    • Deficit spending 

  • Relief

• Civil Works Administration

  • November 9th, 1933

  • Purpose

    • Harry Hopkins

    • Took over functions of FERA

    • Built roads, parks, schools, and airports

    • Cleaned wasteland and helped fix up run-down neighborhoods

  • Results

    • Placed 4 million people in CWA jobs

    • Made about $15 week 

    • Critics complained they were “make-work” jobs

    • Boosted morale of unemployed people

    • Terminated in 1934

  • Relief

• Civilian Conservation Corps

  • March 31th, 1933

  • Purpose

    • Young men (18-25) → build railroads, develop parks, plant trees, help soil erosion

    • “Tree army”

  • Results

    • By Aug → 300,000 young men at work

    • By 1942 - 3 million young men in CCC

    • $30/ month; free food, uniforms, and lodgings

    • Average weight gain 8-14 lbs.

    • Built 46,000 bridges, 2 billion trees 

  • Relief

• Tennessee Valley Authority

  • May 18, 1933

  • Purpose

    • Effort to revive economy of Tennessee River Valley → widespread poverty

    • Renovated 5 old dams, created 20 new ones

    • Produced and sold cheap electrical power, controlled floods, replanted forests, practiced soil conservation

  • Results

    • TVA provides irrigation, flood control na electricity for 7 states

    • TVA is biggest utility firm in the country

    • Criticized as “creeping socialism”

    • Government ownership of industry violated free enterprise

  • Reform and Recovery

• Agricultural Adjustment Act

  • May 12, 1933

  • Purpose

    • Sought to raise crops by lowering production

    • Paid farmers to plow under and slaughter

    • “Domestic allotment” - agreed not to plant on portion of their fields 

  • Criticisms/Outcome:

    • Public outrage over wastefulness

    • Within two years farm income jumped by more than 50%

    • 40 million acres of land taken out of cultivation

    • Sharecroppers and tenant farmer suffered

    • Declared unconstitutional 

    • Rewritten in 1938

  • Recovery and Relief

• National Recovery Administration

  • June 16, 1933

  • Purpose

    • “We Do Our Part” - blue eagle (Philadelphia Eagles)

    • Established codes of fair practices, set prices, wages, and standards

    • Limited production

    • Section 7a - right to unionize

  • Criticisms/Outcome:

    • Codes did not cover agricultural or domestic workers

    • Codes complex and difficult to enforce

    • Codes created by industry leaders and served interest of corporations

    • Critics called it the “National Run Around” and version of Mussolini’s corporate facism

    • Declared unconstitutional due to restriction of competition - 1935

    • Recovery 

• Works Progress Administration

  • 1935

  • Purpose

    • Hired workers to build and repair road and to build schools, airports, adn post offices

  • Results

    • Funded teh

      • Federal theater project

      • Federal writers project

      • Federal art project

      • Federal music project

  • Relief 

• National Labor Relations Act

  • July 1935

  • Purpose

    • Reaffirmed right of labor to unionize

    • Collective bargaining 

    • Continues to hear testimony about unfair labor practices by employers - NLRB

  • Results

    • Provides protection for workers that were unemployed to make sure that they stay protected

    • Challenged and is appealed in the supreme court 

  • Reform

• Social Security Act

  • August 1935

  • Purpose

    • Old age insurance

    • Unemployment compensation

    • Aid to families and disabled

  • Results

    • Did not cover agricultural workers, domestics, self employed persons

    • Health insurance not included

• Indian Reorganization Act 

  • 1934 

  • Moved away from policy of assimilation 

  • Restored some reservation lands for tribal ownership (to live communally)

  • Given permission to elect tribal councils

  • relief 

• Fair Labor Standards Act

  • June 1938

  • Abolished child labor, minimum wage of 25 cents, maximum work week of 44 hours

  • reform