Depression Flashcards
(60 cards)
What were the main causes of the Depression? (6)
A. Americans are “living on Credit”
B. Stock Market speculation (Gambling) Crash = panic
C. American Industrial base is old, run down
D. Farm Overproduction due to past demands from Europe
E. Black Tuesday and the following Bank Runs
F. Unequal distribution of wealth
What was the Income Gap?
A. A gap continues to widen between the rich and poor.
B. 1920’s: wealthiest 1%, income grows by 75%.
C. 1920’s: half the nation’s families earned less than $1,500 per year.
Black Tuesday
A. The bottom falls out of the stock market
B. Americans frantically attempted to sell off their stock before
prices plunged even lower
C. A record 16 million shares are dumped
Bank Runs
A. Massive numbers of Americans panic, and proceed to withdraw their savings from banks.
B. Bank runs force banks to close because they could not cover their customers withdrawals.
Cause: Market Crash
Effects
Banks close - 6000 by 1933
GNP cut in half - $104B to 59B - causes 85,000 companies to go bankrupt
Unemployment up for 3% to 25% (1.6M to 13M)
President Herbert Hoover
1928-’32
A. Believes in “Laissez Faire” economics: Government hands off
B. Asks employers not to cut wages and labor leaders not to strike
C. Public Works: Hoover Dam
D. Reconstruction Finance Corporation: “Trickle Down” economics
Laissez Faire Economics
Government hands off
Hoover Dam
Trickle Down Economics
Examples of Hoover being blamed for suffering
“Hoovervilles”
“Hoover Flags” - empty pockets turned inside out
“Hoover Blankets” - newspaper/cardboard boxes
1932 Presidential Election
Republican Hoover vs. Democrat, Roosevelt.
Roosevelt wins in a landslide victory
The “Long Wait” - 4 mo - election to inauguration
Bonus Army – WWI Veterans who want early bonus. Hoover uses
National Guard
Franklin D Roosevelt
Secretary of the Navy
Polio cripples him at age 37, he will spend most of his presidency in
wheelchair.
The New Deal
FDR’s 1st inaugural address
Tone of confidence Fireside Chats
A program designed to alleviate the problems of the Great Depression
Comes from a speech during Roosevelt’s campaign in which he promised “a new deal for the American people.
What were the goals of the New Deal
- Relief for the needy, unemployed, hungry, and poor
- Economic development to end depression
- Financial reform to change the banking system
New Deal Employment Programs
A. Civilian Conservation Corps (CCC): Provided jobs for single males on conservation projects.
B. Federal Emergency Relief Act (FERA)
C. Civil Works Administration (CWA) – construction jobs
D. Public Works Administration (PWA) – construction jobs
E. Works Progress Administration (WPA) - Artists
F. National Youth Administration
New Deal BUSINESS Programs
Emergency Banking Relief Act (EBRA) – Closes banks for a week
B. Federal Deposit Insurance Corporation (FDIC): Protected Bank deposits ($5,000)
C. National Recovery Administration (NRA) – Industrial recovery
D. Securities and Exchange Commission- (SEC); Eliminated dishonest practices
New Deal Farm Relief and Rural
Development programs
A. Agriculture Adjustment Act (AAA): Aided farmers and regulated crop production.
B. Tennessee Valley Authority – Built dams for hydro power
C. Rural Electrification Administration (REA)
New Deal Housing programs
Home Owners Loan Corporation (HOLC): lent money to low at low interest to homeowners who could not meet mortgage
payments.
B. Federal Housing Administration (FHA) – Low Interest loans
C. United States Housing Authority (USHA)
New Deal Labor Relations
A. National Labor Relations Act: defined “unfair labor practices”.
B. Fair Labor Standards Act: established the minimum wage and the maximum number of hours in a workweek.
New Deal Retirement Programs
Social Security Act: provided a pension for retired workers and their spouses and aided people with disabilities.
The federal government takes a specified amount from each
paycheck in order to provide money to America’s retired workers.
What did critics of the New Deal say?
A. Many Programs declared unconstitutional. AAA, NRA
B. FDR tries to pack the court
C. Father Coughlin – Accuses FDR of being a socialist
“living on credit”
Credit= an arrangement in which consumers agreed to buy now and pay later for purchases (usually monthly payments) that include interest charges.
Faced with debt consumers cut back on spending. (can’t spend what you don’t have!)
Hidden disparities of the 20s
Foreign competition hurts the textiles, steel, and railroad industries (= 0 profit.)
Farmers overproduce and flood the market causing a decrease in prices.
Alternative energy sources such as natural gas and hydro-electric power hurt the Coal and lumbering industries.
Glass-Steagall Banking Act of 1933
Separated commercial banking from investment banking and created the Federal Deposit Insurance Corporation
