Great Depression Study Guide

What is a broker state?

"In taking on this mediating role, the New Deal established what some have called the broker state, in which the government works out conflicts among different interests. This broker role has continued under the administrations of both parties ever since."

How did the social security act change the role of the government?

"It was the first example of what came to be called "entitlement" programs. An entitlement program is not simply a form of welfare or relief. It is a payment from the government that American are entitled to receive, in part because they have paid into the system regularly with deductions from their pay checks, and in part because the law imposes a requirement on the government to make the payments."

What problems occurred at banks?

-Banks loaned billions of dollars to stock speculators, and many of them also invested money from depositors into the market as well - stock market crashed, the banks lost all of their money on investments and speculators could not pay their loans -banks that failed also caused all customers even ones without stock market investments lost all of their savings.

List the causes of the Great Depression

-Speculation and buying on margin -overproduction -consumer credit/debt -Loans to speculators and not foreign countries -Low interest-rates/then high-interest rates

How did overproduction contribute to the Great Depression?

-a surplus of supply. However, many Americans were unable to afford the goods that were being mass-produced. Most workers' wages were only raised about eight percent, so they still could not afford the products on the market. There was an uneven distribution of wealth

What acts/programs were made under the first new deal? list them

-emergency banking relief act -Securities act -Glass-Steagall act -FDIC -SEC -HOLC -FCA -AAA -NIRA and NRA -CCC -FERA and PWA -CWA

Why did reparation happen?

-immigrants began to move back to their native land. Sometimes the reparation was made by choice, especially since there were so few jobs to have. ---However, sometimes the reparation was forced by the federal government. The government started reparation drives that sent poor immigrants back to their native countries. Immigrants who violated the law were deported, and in the Southwest, Mexicans with American citizenship were forced to Mexico.

What kind of criticism did the new deal and Roosevelt receive?

-still well over ten million jobless people left in the United States. The total income of the United States was also only half of what it used to be in 1929. -Right-wing: thought that the federal government had too much power over states because of the New Deal. When Roosevelt started deficit by spending in 1934, the right-wing began to oppose his ideas even more -Left-wing: believed the New Deal was not doing enough for the United States and its people. These people wanted there to be more federal government involvement in the economy to help change the wealth from the rich to the middle-class and poor.

Black Tuesday

About a week later on October 29, a day that later became known as Black Tuesday, the prices on the stock market took the biggest plummet it had ever. On one day, over sixteen million shares of stocks were sold, and the value of how much the industrial companies were worth dropped ten percent. In mid-November, stock prices had dropped by over one-third, resulting in the loss of around thirty billion dollars.

What was the Court Packing Plan?

After Roosevelt was reelected, he attempted to change the political balance in the Supreme Court. Roosevelt sent a bill to Congress that increased the amount of Supreme Court justices and allowed the president to appoint an extra justice. This could only happen if the current justice had served ten years has turned seventy and not retired within six months. At the time if the bill passed, Roosevelt would have been able to appoint six new justices.

Why did men join the bonus army?

After the first war a one thousand dollar bonus for each veteran was enacted by Congress to be given out in the year 1945. However, in 1929, Wright Patman, a congressman from Texas wrote a bill that would distribute the money early. In May 1932, veterans from Oregan marched to Washington D.C. to lobby for the early payment and passage of the legislation.

What was the Democratic Party coalition?

As the 1936 election approached, there were millions of voters that had jobs, mortgages, and bank accounts, all thanks to the New Deal. The Democratic Party began to change a s African Americans began to vote Democratic for Roosevelt. Eleanor Roosevelt convinced women and African Americans to vote for her husband while she toured the country. The Democratic Party coalition came to be that included African Americans, farmers, immigrants, progressives, workers, and people in the intellectual field.

What caused the downturn of 1937?

At the beginning of 1937, it seemed as though the economy was beginning to recover. The industrial output was close to being at levels it was at before the Depression, and people began to believe that the worst of the Depression was over. However, Roosevelt was concerned about a rise in debt, so he asked that there be a significant cut in the WPA and PWA. He ended up cutting spending at the same time the first of the Social Security payroll taxes were taking two billion dollars from the economy. This left two million people unemployed by the end of 1937.

What problems did loans cause?

Banks began to only loan money to speculators and stopped lending to european countries. there was a decrease in foreign companies buying American goods. To encourage overseas trade, President Hoover wanted to lower tariffs.

What problem did buying on a margin cause?

Buying stocks on a margin: people began to make only small cash-down payments. Allowed for quick profits when the stock markets were still rising, issues occurred when prices fell. In able to protect a loan, brokers would issue a margin call that forced investors to repay their loans immediately.

What was FDR's belief on government intervention?

Drastically changed the role of the goverment in the economy. the new deal was seen as radical because of the role that it established for the federal government.

What did Roosevelt want to do when he came into office?

Experiment! Roosevelt's agenda was not clear, but he and his advisers had the energy and ideas on how to end the Depression that the Hoover administration had lacked. Roosevelt felt that the country needed "experimentation" and should try something to end the crisis. He sent many bills to Congress from March 9 to June 16, 1933, in a time known as the Hundred Days. In this short time, fifteen acts were passed by Congress meant to solve the crisis of the economy. The acts and programs became known as the New Deal.

What caused the dust bowl?

Homestead Act encouraged people to move out into the Great Plains. New farming machinery and the government's urge to produce more crops caused an increase in farming. The new technology and widespread farming disturbed the topsoil in the great plains. This topsoil used to be kept down by thick prairie grass but now rested on the top. As the crop prices fell, farmers stopped growing as much food and left the disturbed topsoil where it was. Then geographic factors set in as there was a drought that turned the soil to dust and then high winds that swept the dust up into the air.

What were public works projects?

Hoover began to increase the funding for building projects that were government-financed. Resulted in new construction jobs, but they could only afford a small number of people out of the millions that were without jobs. For the government to create enough new jobs, it would take massive amounts of spending, a path that Hoover did not want to take. Public works projects had to be funded somehow, which raised problems as well. Raising the taxes would cause people to have less money, which hurt businesses. Keeping the taxes low meant that the government would spend more money than it would be collecting.

What was hoover's beliefs on government intervention?

Hoover did not believe in government intervention-wanted a balanced budget. limited the government intervention and promoted him to be very careful for what he was doing. "Rugged individualism"

What were the last of the new deal reforms?

National housing act and fair labor standards act

Black Thursday

October 24, 1929, is the day that became known as Blak Thursday as the stock market crashed even further. Just three days earlier on Monday, the stock market took a plunge and many people had to pay their margin calls, and customers quickly put their stocks for sale. Black Thursday caused many people including the comedian, Groucho Marx, to become broke in just one day.

How did people "escape" the hard times of the depression?

Over 60 million Americans began to go to the movies every single week Each day, tens of millions of Americans, tuned into their radios. They would listen to comedians and stories , soap operas, and music FDR fireside chats

How did consumer credit contribute to the great depression?

People began to buy too much on credit and could not afford what they were buying in the long run. Some buyers had to stop making purchases so that they could pay off their other debts.

LONG ANSWER QUESTION

President Hebert Hoover and President Franklin Roosevelt had completely different philosophies and ideas when it came to guiding the nation through the Great Depression. Hoover, the president at the beginning of the Depression was of the Republic Party and became president in 1929. This was the same year that the stock market crashed, yet on Friday, October 29, 1929, the day after Black Thursday, Hoover made the announcement that the worst effects of the crash could be over in the next sixty days. Hoover firmly believed in the idea of "rugged individualism" meaning that Americans should take care of themselves and not have the government interfere. He believed that people would be able to succeed on their own without the government's support and that this was what would pull the economy out of the Depression. In 1922, Hoover even wrote a book about why the system of American individualism was the best economic, political, and social system. He did not think that the federal government should provide relief to people, but instead, he believed that local governments and private charities should take this role. Eventually, to provide jobs for the unemployed, Hoover funded and created public works projects that constructed dams, roads, and similar projects. While these projects gave some people jobs, they did not make a dent in the millions of unemployed people. For the government to create massive amounts of new jobs, it would take a huge amount of spending, which Hoover did not want to do. The Republican party was blamed for not fixing the problem of the Depression, causing the party to lose its seats in Congress, paving way for Franklin Roosevelt. As soon as President Franklin Roosevelt entered office, he worked towards experimentation to help make progress in getting through the Depression. In just the first one hundred days of his presidency, Roosevelt and Congress passed fifteen bills of the first New Deal to help end the Depression. Franklin Roosevelt proved to be an extremely active president compared to Hoover who believed that the American people could end the problem themselves. The main goals of Roosevelt's New Deal were to provide direct federal relief to people, recover the economy, and reform the economy so a similar crisis could be avoided. The Glass-Stegall Act was an example of how the role of the government changed and began to control banks and the economy. This act made it so that commercial and stock speculation banking were separate things, something that the federal government had never controlled or made rules about before. Roosevelt's ideas about government intervention were seen as unconstitutional by the Supreme Court, but many acts and programs such as social security provided direct relief to many Americans across the United States. He also set up the Civilian Conservation Corps which directly provided jobs to young men from the ages of eighteen to twenty-five and got paid monthly. Proving that he was a president that cared about the people, Roosevelt spoke to the American public nearly every night over the radio during his "Fireside chats." Roosevelt's philosophy and the New Deal were a huge step towards ending the Depression. Although the two presidents seem as though they were complete opposites, they did share some similarities. Hoover signed the Emergency Relief and Construction Act in July 1932. It gave 1.5 billion dollars to public works, and three hundred million to states for direct relief. This act was extremely similar to Roosevelt's programs in the New Deal such as the federal emergency relief administration. These two acts from the different presidents are similar because they both provided direct relief to states. Most importantly, both presidents wanted to end the Depression and pull the country out of the economic crisis that it was in.

How did the new deal era come to an end?

Republicans won seats in Congress and joined conservative Southern Democrats to block any further New Deal legislation.

What was the outcome of the 1936 election?

Roosevelt won over sixty percent of the popular vote over Alfred Landon

Who was opposed to the court packing plan and why?

Southern Democrats that thought that the new justices would end segregation. Many African Americans feared the new justices would be against civil rights. A large portion of Americans believed that the president would have too much power if the court-packing plan went through.

What did the AAA do?

The Agricultural Adjustment Act or AAA was passed by Congress to help farmers in America. Because farmers were growing too much food, the prices were low, so the act paid farmers to not raise specific kinds of livestock, crops, or to produce dairy. This caused farmers to withdraw millions of acres from planting and they received over a billion dollars for support. Although the program was able to meet its goal, rising food prices during the Depression caused lots of criticism. Many farmers did not benefit from it, and many African American tenant farmers lost

What was the CCC?

The Civilian Conservation Corps or CCC was the most successful and praised program of the New Deal. The CCC was a work relief program that gave young men of the ages of eighteen to twenty-five to come and work under the direction of the forestry service. These men would plant trees, fight forest fires and build reservoirs. They lived in camps and made thirty dollars a month, however, twenty-five of those dollars had to be sent directly to their families. These workers came home after about six months to a year, and many recruits even learned how to read in write. When the CCC shut down in 1942, three million young men had been sent to work there, including Native Americans, and veterans.

What was the emergency banking act?

The Emergency Banking Relief Act was passed just a week after Roosevelt entered the office. It required federal examiners to check banks in the United States and give Treasury Department licenses to financially stable banks. During his first "fireside chat" Roosevelt said that banks would open the next day on March 13. There were far more deposits than withdrawals, and then the banking crisis came to an end. Roosevelt used the powers that were granted in the Emergency Banking Relief Act to stop using the dollar on the gold standard. Gold could no longer be used to make payments after a law was passed by Congress. Caused inflation-what Roosevelt wanted

How did the new deal change the government's role?

The creation of the New Deal completely changed the role and relationship between the American public and the federal government as the government played a larger role in the economy than ever before. The state government and federal government relationship began to change as well. Before the Depression, the state governments had been the ones to regulate things, but now the federal government was in charge of regulating things such as minimum wage. The state government began to receive funding from the federal government so that they could afford state programs and provide aid.

Explain the fair labor standards act

The final major part of the New Deal reform was known as the Fair Labor Standards Act. This act abolished child labor, cut the workweek down to forty-four hours, and set the first-ever federal minimum wage of twenty-five cents an hour.

What was the gold standard?

The gold standard set the value of one ounce of gold being equal to a certain number of dollars that was set. In order for the value of a dollar to be reduced, the United States would no longer exchange dollars for gold. The fear of the gold standard being taken away caused many Americans to take their money out of the banks and have it converted to gold before it lost its money. The huge number of people drawing their money out of banks caused banks to collapse, and by March 1933, over four thousand banks had collapsed, and millions of saving accounts were wiped out completely.

How did Roosevelt create a safety net?

The programs that Roosevelt established created a safety net of safeguards and relief programs that were focused on protecting people from economic crises. Help during times of crisis and prevent future crisis

Bull Market

The stock market boomed during 1920s Long period of time when the stock market prices rise. Bull market encouraged many people to buy and invest in stocks.

What happened to the people that lived in the Great Plains?

There were some farmers in the Great Plains that were able to keep and afford their land, but many were not. Those who mortgaged their land had to give up their land to the banks. Without hardly any money to their name, families began to migrate out west. Many people headed to California, and many of the migrants were from Oklahoma.

Hebert Hoover

Told americans during his presidency that everything was going to be okay but did not do anything to stop it or prevent it. FDR easily won the election against him.Hoover wanted to encourage overseas trade by lowering tariffs. The Government until FDR believed that the American Economy could fix itself.

Who joined the bonus army?

Veterans from across the country joined the bonus army to lobby for the passage of legislation. Then, the veterans camped in "Hoovervilles" in Washington D.C. until the group's number reached 15,000.

What problem arose regarding interest-rate?

When the Board did not raise interest rates, banks were encouraged to make risky loans. Low-interest rates also caused businesses to think that the economy was continuing to grow. This caused overproduction even when sales were decreasing. Another huge mistake was made when the Federal Reserve Board raised interest rates which resulted in tightened credit.

What was the clash between the bonus army and the government?

While President Hoover acknowledged the veteran's right to petition the government, he refused to meet their requests. Senate voted down the bonus bill, and veterans outside the Capitol were disappointed. Many marchers began to return home while others stayed around, living in camps and vacant buildings. By the end of July, Hoover ordered that the buildings be cleared of veterans. The police began to try, but one panicked and fired into a crowd, killing two veterans. Then, the secretary of war wanted to send in army troops. General Douglas MacArthur did not listen to Hoover when he asked to only clear the buildings, but do not touch the camps. Almost seven hundred soldiers were sent to clear the camps, burning them down and gassing the veterans. The troops began to assault the veterans that were in front of the Capitol.

what was the outcome of the court packing plan?

a conservative judge resigned, which allowed Roosevelt to appoint a justice in favor of the New Deal. Although the Court-Packing plan changed the Supreme Court's view of the New Deal, It hurt Roosevelt's reputation.

Schechter vs. Poultry Corp

authority of the National Recovery Administration was taken away by the Supreme Court in 1935. This was after the Schechter brothers were convicted for violating the poultry code of the NRA. The Court ended up ruling that the Constitution did not allow Congress to give its powers to the executive branch. This meant that the codes of the NRA were considered unconstitutional. President Roosevelt began to worry that the Supreme Court would finish off the rest of the New Deal.

What problem did speculation cause?

buyers began to stop taking companies' profits into account before buying and instead used speculation. These buyers would speculate, or bet on the event that the stock market would continue to rise, allowing them to make money faster. "Rampant speculation led to falsely high stock prices, and when the stock market began to tumble in the months leading up to the October 1929 crash, speculative investors couldn't make their margin calls, and a massive sell-off began."

What was the Wagner Act?

gave workers the right to start a union and established the National Labor Relations Board in the process. The act created a process called binding arbitration when unhappy members of the union were allowed to send their complaints to an unbiased party that listened to both sides of the problem. This act helped to create a large increase in labor activity.

Explain the national housing act

he National Housing Act was passed which created the United States Housing Authority. The organization received five hundred million dollars in order to subsidize loans to builders that would construct low-cost housing for the poor.

What is a Hooverville?

homeless people began to put together shacks on public land that was not being used. These little towns became known as Hoovervilles, named after President Hoover, who was greatly blamed for the Depression.

Why was the Social Security Act created?

provide financial security for older American citizens and for the jobless or low income. Roosevelt saw the bill as an insurance measure. Under this bill, workers would receive the right to get benefits from the government because they paid specific taxes to the federal government. It also gave welfare payments to people in need such as those with disabilities or mothers that had dependent children. The main point of it was to create a monthly retirement benefit that people would collect once they reached retirement age.

What happened to sales?

slowdown in retail sales that slowed down the economy as well. A decrease in radio sales resulted in a decrease in orders for copper wire, wood cabinets, and glass radio tubes as well. This resulted in copper miners, lumberjacks, and glassworkers losing their jobs. Without a salary, people could not afford new products, reducing sales even more. Families typically had little to no savings,

What were Keynesian economics?

the idea that to give a jump-start and boost to the economy, the government should spend heavily.

Who was opposed to the Social Security Act and why?

the money for it was coming from payroll taxes that were imposed on workers and employers. Later, Congress went on to borrow money from Social Security so they could pay for new programs without having to raise payroll taxes.

Was the first New Deal Successful?

while the First New Deal did not fully restore the prosperity of the nation, it showed that Roosevelt was willing to experiment and make bold decisions in an effort to find a solution to the Depression. The New Deal resulted in banks reopening, and people being able to keep their homes and farms, and employment increasing. Most important, Roosevelt's ability to take action gave Americans across the nation hope and faith in the future of the country.