Chapter 22-23 History Test

Bonus Army

A 1932 incident further damaged Hoover's image That spring about 15,000 World War I vets arrived in Washington to support a proposed bill. The Patman Bill would have authorized Congress to pay a bonus to WWI vets immediately. The bonus was scheduled to be paid in 1945 --- The Army vets wanted it now. Hoover called the Bonus marchers, "Communists and criminals" On June 17, 1932 the Senate voted down the Putnam Bill. Hoover told the Bonus marchers to go home- most did. 2,000 refused to leave. Hoover sent a force of 1,000 soldiers under the command of General Douglas MacArthur and his aide Dwight Eisenhower.

Court Packing

A move by President Franklin D. Roosevelt to increase the size of the Supreme Court and then bring in several new justices who would change the balance of opinion on the Court.

Dust Bowl/causes

A severe drought gripped the Great Plains in the early 1930s. Wind scattered the topsoil, exposing sand and grit. The resulting dust traveled hundreds of miles. One storm in 1934 picked up millions of tons of dust from the Plains an carried it to the East Coast. Kansas, Oklahoma, Texas, New Mexico, and Colorado were the hardest hit regions during the Dust Bowl. Many farmers migrated to California and other Pacific Coast states.

Hoovervilles

Before long whole shantytowns (sometimes called Hoovervilles in mock reference to the president) sprung up

Buying on the margain

Buying on margin means that a person purchases a stock by using a bit of his or her own money and borrowing the rest. It is similar to buying on credit. For example, to purchase a $100 stock the buyer might put up $20 and borrow $80 to make up the entire price. Investors worked with investment brokers to borrow money and then buy a stock. Investment brokers got their loan money from banks; brokers and banks alike believed that the stock market was on a permanent upward climb.

Several New Deal Agencies including the CCC, WPA, FDIC, SEC, Social Security

Congress passed the Emergency Relief Act, which authorized the Treasury Department to inspect the nation's banks Next, FDR passed the Glass-Steagall Act which established the Federal Deposit Insurance Corporation The FDIC insured account holders up to $5,000 and set strict standards for banks to follow (today = $100,000) Federal Securities Act: Required stock info to be accurate and truthful Agricultural Adjustment Act: (AAA) Raised crop prices by lowering production Tennessee Valley Authority: (TVA) Focused on direct relief to hard hit area- created ambitious dam projects CCC - Civilian Conservation Corps put young men to work. Men ages 18 to 25 worked building roads, parks, planting trees (200 million trees in Dust Bowl areas). By 1942 three million men worked for the CCC. PWA - Public Works Administration was part of the NIRA (National Industrial Recovery Act) CWA - Civil Works Administration built 40,000 schools and provided salaries for 50,000 teachers in rural America FHA - Federal Housing Administration provided home loans, home mortgages and repairs FERA - Federal Emergency Relief Agency provided $500 million in direct relief to the neediest Americans

Hoover

Herbert Hoover took office in 1929, the year the U.S. economy plummeted into the Great Depression. Although his predecessors' policies undoubtedly contributed to the crisis, Hoover bore much of the blame in the minds of the American people. As the Depression deepened, Hoover failed to recognize the severity of the situation or leverage the power of the federal government to squarely address it. As a result, Hoover was soundly defeated in the 1932 presidential election by Democrat Franklin D. Roosevelt (1882-1945).

Rugged Individualism

Hoover was not quick to react to the depression He believed in "rugged individualism" - the idea that people succeed through their own efforts. People should take care of themselves, not depend on governmental hand-outs. He said people should "pull themselves up by their bootstraps".

Direct Relief: Soup Lines

One of the common features of urban areas during the era were soup kitchens and bread lines. Soup kitchens and bread lines offered free or low-cost food for people.

Installment Buying

People bought things with the provision that they could make small payments over time and eventually pay for it. The overall price would be much higher than if they purchased in one payment but the had the use of the item while they continued to pay for it. When people lost their jobs they could no longer make payments and the property was repossessed by the store or company that set up the installment plan. When people can't repay loans it contributes to the the economic recession/depression. People today still do this with many large purchases like cars and homes. Seems like the banks haven't learned from history but are repeating it.

FDR Inaugural Address

President Roosevelt takes control of a nation reeling from the Depression. The speech is less notable for its specific proposals—FDR had elaborated on these in his Commonwealth Club Address—than for its ambitious reach over the political landscape. Roosevelt asks for wartime executive powers to deal with the crisis and for Americans to bow with military discipline to his authority. He blames the bankers for the depression and says that they will pay for it. He skillfully adressses the nations problems.

Role of Federal government

President Roosevelt's New Deal made government responsible for helping people in many ways. These ways ranged from guaranteeing that they would not lose money they had deposited in banks (FDIC) to ensuring that they would have money to live on after they retired (Social Security). In general, the New Deal brought on a new role for government, one in which the government did a great deal more to help individuals financially.

welfare

Prior to the Great Depression, the United States Congress supported various programs to assist the poor. One of these, a Civil War Pension Program was passed in 1862 and provided aid to Civil War Veterans and their families.When the Great Depression hit, many families suffered. It is estimated that one-fourth of the labor force was unemployed during the worst part of the depression. With many families suffering financial difficulties, the government stepped in to solve the problem and that is where the history of welfare as we know it really began. Under President Franklin D. Roosevelt, the Social Security Act was enacted in 1935. The act, which was amended in 1939, established a number of programs designed to provide aid to various segments of the population. Unemployment compensation and AFDC (originally Aid to Dependent Children) are two of the programs that still exist today. A number of government agencies were created to oversee the welfare programs. Some of the agencies that deal with welfare in the United States are the Department of Health and Human Services (HHS), the Department of Housing and Urban Development (HUD), the Department of Labor, the Department of Agriculture, and the Department of Education.

Relief, Recovery and reform with and an example of each

Relief - Immediate action taken to halt the economies deterioration. Ex. Emergency Banking Act Recovery - "Pump - Priming" Temporary programs to restart the flow of consumer demand. Ex. AAA Reform - Permanent programs to avoid another depression and insure citizens against economic disasters. Ex. SEC

Difference between hoover and FDR

Roosevelt was willing to do much more than Hoover to combat the Depression. He was willing to have the government get much more involved in the economy. Hoover did more than any previous president, but Roosevelt did much, much more than Hoover. Second, Roosevelt did more to try to boost the morale of the people. Roosevelt tried to convince people that things would get better and that the government would be there to help. Hoover did not do nearly as much to try to improve public morale. Though Hoover did do more than he is given credit for, his approach to the problems of the Great Depression was not nearly as aggressive as Roosevelt's.

The Federal Reserve

The Federal Reserve, established in 1913 as the nation's central bank, could possibly have controlled the wild speculation in the stock market and prevented the crash, but the bulls of Wall Street (investors who wanted to drive prices up) overpowered it. The Federal Reserve controlled the loaning of money to banks by raising and lowering interest rates. (Interest is what a borrower pays a lender for the use of the money.) If the Federal Reserve loaned $1,000 to a bank at 5 percent yearly interest, then the bank would have to pay the Federal Reserve $50 yearly in interest for use of that $1,000 loan. If the Federal Reserve raised the interest rate to 10 percent, then on $1,000 the bank would have to pay $100 yearly in interest. Raising the interest rate caused banks to borrow less from the Federal Reserve, because the money was more costly. In the spring of 1929 several prominent financial experts warned against the widespread speculation in stocks. They knew the price of stocks had been driven up by margin buying, until prices were well above any real value based on the company's profits and overall worth. They called for the Federal Reserve to raise interest rates so banks would not borrow as much.

Banks, bank failures, bank runs

The brokers could not pay the bank interest on their loans, much less pay back the loan money. Thus by mid 1929 the banks had set themselves up for a big fall. With little banking supervision many one-office banks had opened in rural areas, using only a small amount of startup money (sometimes as little as six thousand dollars). Banks that were not damaged by the struggling agricultural industry aggressively competed with one another for deposits. To win deposits from businesses and individuals, banks offered to pay higher and higher interest rates. To cover the expense of high interest rates paid out to customers, banks needed to make more income from the interest they charged on loans. Therefore, they made loans easy to obtain, readily lending money for business activities, real estate, and investments in stocks and bonds. Banks assumed the economic boom of the 1920s would go on forever. By the end of the decade individuals and businesses would be unable to keep up with their payments on these loans. Without the funds from loan repayments, many banks were forced to close their doors.

Rhode Island's hurricane of 1938/ Relationship to Great Depression

The dreadful hurricane made many jobs for those unemployed but left many casualties.

Multiplyer Effect

The multiplier effect is the expansion of a country's money supply that results from banks being able to lend. The size of the multiplier effect depends on the percentage of deposits that banks are required to hold as reserves. In other words, it is money used to create more money and is calculated by dividing total bank deposits by the reserve requirement.

Supermajority

Voters adopted the supermajority budget requirement during the Great Depression. It applied only when the budget grew by more than 5% over the previous year. It was a type of soft and permeable spending cap.

Republican Presidents

While the 20's is often seen as a time of great prosperity, it was a bit deceptive. Problems lie under the surface that would not be dealt with by the conservative administrations of Warren G. Harding, Calvin Coolidge and Herbert Hoover. Purchasing dropped internationally as well. Since Europe was in a depression people there weren't buying as much as businesses had estimated. Then the Fordney-McCumber Tariff and the Hawley-Smoot Tariff raised tariff levels to as much as 40%. Europe which was already in debt and angered at US foreign actions responded with high tariffs of their own. As a result, international trade came to a standstill.

Unequal Distribution of Wealth

concentration of wealth in the hands of a few, the top 0.1 percent of American families had a combined income equal to the total income of the bottom 42 percent of the population. Between 1920 and 1929 the disposable income (money beyond what is needed for necessities) per person rose by 9 percent for most Americans, but the top 1 percent of the population saw a 75 percent increase. The distribution of wealth was even greater than it was for income: The top 2.3 percent of families with incomes of over $10,000 held 66 percent of all savings. In 1929 just prior to the stock market crash, of Americans were not able to save anything after necessities were purchased. The gap between the rich and poor had to do with wages.

Speculation

speculation means buying stocks with the assumption that they can always be sold at a profit By the mid-1920s only 2 percent of Americans were purchasing stock. But as manufacturing continued to expand, stock prices climbed upward and investors made money By the late 1920s nearly everyone saved to buy a share of stock. It appeared to be an especially safe way to make easy money. However, investors were not protected from misleading information about stocks. It was difficult for investors to know exactly what they were buying. Companies told the public that they were doing well, but the public had no means of confirming that the companies' financial reports were reliable.