Unit 7 America Between the Wars

part 2

The Great Depression

• stock market– the place where shares of companies are bought

and sold.– Stock = shares in a company

• inflation– when prices go up and the general purchasing

power of a dollar goes down.

Election of 1928

• Al Smith– He was a four-time governor of NY. – the Democratic candidate for President in 1928– He lost votes because he was Catholic, and was against

prohibition.• Herbert Hoover– Head of the Food Administration during WW I,– Secretary of Commerce under Harding– Republican Presidential candidate in 1928. He won the

election

Causes of the Great Depression

• buying on margin– Buying stock by only paying for 10% and

borrowing the rest using the stock as collateral.– If the value of the stock dropped below a certain

level, then the stock was reclaimed by the lender.• overproduction of goods outran consumption. • over-expansion of credit system• Europe never recovered from wwi• nature-dust bowl drought in midwest

Hoover’s Presidency

• Hoover only served one term because the Great Depression started on his watch and he did little to stop it.

• Black Tuesday– October 29, 1929. – The day that the Stock market crashed.– the beginning of the Great Depression in the United States.

• great depression– Term for the massive economic decline in the United States

from 1929 to the early 1940s.– During this time unemployment rose from 3% to 25%.

Hoover’s Presidency

• Supply-side economics– Also known as Trickle down economics– Economic theory that reducing taxes will allow more

money for consumers to spend in an economy.– It is what Herbert Hoover practiced in an attempt to

correct the Great Depression.• Hawley-Smoot Tariff– Extremely high tariff act passed under Hoover that

killed international trade and deepened the Great Depression.

Hoover’s Presidency

• Reconstruction Finance Corporation (RFC)– Hoover-sponsored federal agency that provided loans

to hard-pressed banks and businesses after 1932.– It was ultimately too little, too late to earn Hoover re-

election.• Hoovervilles– Shantytowns set up by those who lost their homes

during the Great Depression. – They were named after the president whom many

blamed for their financial distress.

Hoover’s Presidency cont.

• Adjusted Compensation Act– It promised every former soldier a bonus that due in 20

years. – It was to make up for lost wages during WW I.

• Bonus March– Term for over 20,000 unemployed veterans who went to

Washington, D.C. to demand their bonus checks early from the Adjusted compensation act.

– Also known as the Bonus Expeditionary Force.– They were eventually forced to leave.

Election of 1932

• election of 1932– Democrats nominated Franklin D. Roosevelt– Republicans nominated Herbert Hoover again– Hoover was so disliked by Americans and blamed for the

Depression that Roosevelt won in a landslide.• Franklin D. Roosevelt

– Former New York governor – roused the nation to action against the depression with his

New Deal legislation and frequent "fireside chat" radio broadcasts.

– He won the Presidency in 1932 and 1936.

FDR’s Presidency

• Brain Trust– The term for FDR's most trusted advisors that he

leaned on heavily for economic advice.• Frances Perkins– Roosevelt's secretary of labor– America's first female cabinet member

FDR’s Presidency

• Banking Holiday– Roosevelt-declared closing of all U.S. financial

institutions on March 6-10, 1933– in order to stop the problem of runs on banks and

prepare reforms• Keynesian economics– Named after British economist John Maynard Keynes– it states that governments should defect spend to

stimulate a struggling economy.– It is what FDR practiced

FDR’s Presidency

• New Deal– The term used to describe FDR's whole reform

program that he used to combat the Great Depression.

• Three R's of the New Deal– relief, recovery, and reform

• Hundred Days Congress– The term for the special session of congress called by

FDR during his first 100 days in office as President – most of his New Deal reforms were passed.

• dust bowl– A massive drought in the midwest caused by a

combination of overproduction and lack of rain.– The soil was leeched of all nutrients and was no longer

capable of producing crops. – Many lost all that they owned and moved west to

California.• John Steinbeck– Writer whose best-selling novel, The Grapes of Wrath– portrayed the suffering of dust bowl "Okies" in the Thirties

New Deal - Recovery

• Agricultural Adjustment Association (AAA)– New Deal farm agency that attempted to raise

prices– payedfarmers to reduce their production of crops

and animals.– The idea was to create scarcity to drive prices back

up.– It was considered a recovery program.– This was the birth of the modern farm subsidy

program.

New Deal - Relief• Civilian Conservation Corporation (CCC)– The early New Deal relief agency – that worked to solve the problems of unemployment and

conservation– employing youth in reforestation and other socially

beneficial tasks.– 2 million were employed in this program.

• Works Progress Administration (WPA)– Large federal employment relief program,– established in 1935 under Harry Hopkins– provided jobs in many fields including Art, construction,

and history. – 8.5 million people were employed

New Deal - Reform

• Security and Exchange Commission (SEC)– New Deal reform agency – established to provide a public watchdog against

deception and fraud in stock trading• Federal Deposit Insurance Incorporation (FDIC)– created by the Glass-Stegall Banking act,– it provided reform for the banking industry.– It set up insurance on bank deposits to prevent

losing money if a bank went under.

New Deal Cont.

• Social Security Act– New Deal program that had components of all three

R's. – It financed old-age pensions, unemployment

insurance and other forms of income assistance.– It was a rejection of Social Darwinism.

• Tennessee Valley Authority (TVA)– New Deal Federal agency that produced low-cost

electrical power for rural areas of the Tennessee River Valley.

Critics of the New Deal

• Huey P. Long "Kingfish”– Louisiana senator and popular mass agitator who promised to

make "every man a king" at the expense of the wealthy. – He was a strong critic of FDR. – He proposed a "share the wealth" program. – He was assassinated.

• Father Coughlin• Nine Old Men• Court Packing Plan

– Roosevelt's scheme for gaining Supreme Court approval of New Deal legislation by adding three more justices to the Supreme Court.

– It was rejected.