CHAPTER 14 & 15 - the Great Depression Begins and the New Deal

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CHAPTER 14 & 15 - The Great Depression Begins and The New Deal

1. During the 1920s, the economy boomed. But there were economic problems under the surface. Industries, such as clothing,

- , and mining, were hardly making a . The biggest problems were in . After the war, the demand for food and farmers suffered. Farmers’ incomes went down. Many could not make the payments on their farms. As a result, many farmers lost their land. Congress tried to help farmers by passing . With price supports, the government would not allow food prices to fall below a certain level. Farmers were not the only problem with the economy. Americans were buying less. Many found that were rising faster than their salaries. Many people bought goods on — an arrangement in which consumers agreed to make payments with . But too many Americans were accumulating debt they could not to pay off.

2. Few people recognized the problems with the economy in 1928. People rushed to buy . Many people were engaging in

, buying risky stocks in hopes of a quick profit. To do so, they were , paying just a small down payment and the rest. The problem of buying on margin was that there was no way to pay off the if the stock price

sharply.

3. Stock prices did begin to fall in September 1929. On Tuesday, October 29, 1929, called , prices fell so sharply that people said the market had “ .” People frantically tried to sell their shares which drove prices further. There were no buyers. Many people lost all their savings. By mid-November, $30 billion—more than America had spent in World War I—had been lost.

4. The stock market crash signaled the . This period of bad economic times when many people were out of work lasted from 1929 to 1940. Although the crash did not cause the Depression, it did make it worse. After the crash, many people and took their money out of . Many banks were forced to . When the banks failed, other depositors lost the they had in the banks. The Depression spread around the world. countries were struggling with debts from the . With Americans unable to buy their now, European suffered even more.

5. The Great Depression had several causes:
• Tariffs and war policies that cut down the market for

goods.
• A crisis in the sector.
• The availability of .
• An distribution of income.
These factors led to a falling for consumer goods. The federal government hurt the economy with its policy of

causing businesses and consumers to borrow easily and build up too much .

6. The brought suffering and hardship to many Americans. Those who could not meet their payments were thrown out of their homes. Cities across the country were full of these

people. Some slept in parks and wrapped themselves up in

to keep warm. Others built , where they lived in little shacks they made out of material. Some ate in

, where served meals to the needy. Those who could not afford to buy food stood in to receive food.

7. The Depression hurt people in rural areas, too. Food prices continued to go down as the Depression deepened. earned less and less. Many farm families could not meet their payments. More and more of them lost their . To make matters worse, a long hit the . There was little rain from Texas to North Dakota. Much of this area had been grassland that farmers broke up with their plows in order to grow crops. The soil was now

from over-farming. The that had once held the soil in place was . When powerful winds swept across the Great Plains, the soil simply blew away. This area of blowing soil was called the

. Huge dust storms covered the plains and blew dust as far away as the East Coast. The hardest hit region included parts of Kansas,

, Texas, New Mexico, and Colorado.

8. During the early years of the Great Depression, the federal government did not give — cash or food directly to poor people. Charities and some city governments struggled to
help. But they could not provide enough relief to keep people out of

. The Great Depression caused great suffering. Rates of

and mental illness increased dramatically. Hardship forced young people to give up dreams of .

9. Economic slowdowns occur regularly. Over time, go through cycles. There are times of economic and prosperity. They are followed by when the economy slows down. President

believed that the Great was just another that would end on its own. His advisors thought that it was best to do nothing. The would itself

( - ) . Hoover thought government should help

and workers find solutions to their problems. Hoover also believed in “ ”— the idea that people should succeed through their efforts. He believed people should take care of and each other, and that the should encourage groups to help the needy. He thought that

— not government—should give and shelter to people who were poor or out of .

10. One project that did help was the , a huge dam on the Colorado River. Still, economic difficulties increased, the

turned against . In the 1930 elections, the Democrats gained more seats in Congress. Farmers burned crops and dumped milk rather than sell it for less than it cost them to produce it. People called the

that sprang up “ .” Despite public criticism, Hoover stuck to his principles. Hoover met with bankers,

, and leaders. He urged them to work

to help improve the . He asked employers not to fire workers or to lower their pay. He asked labor leaders not to ask for higher pay or to strike.

11. Hoover did not offer direct aid to the . Hoover used the Boulder Dam project as a model of how the federal government could encourage between private groups. By 1931, the economy had not improved. Congress passed the Federal Home Loan Bank Act. This law lowered rates. Hoover also created the Reconstruction Finance Corporation. The RFC provided
for projects to create .

12. In 1932 when World War I came to the

. These veterans had been promised to make up for their poor wartime . Thousands of veterans and their families came to Washington. This so-called set up tents to live in near the Capitol building. Hoover first sent the veterans . But after the was voted in Congress, Hoover told the veterans to . About 2,000 stayed. Hoover ordered the

to remove them. The sight of U.S. Army troops using

gas on citizens outraged many people.

13. By the end of 1932, Americans were ready for a change. Democratic candidate Franklin Delano Roosevelt—often called — beat Hoover in the presidential election of 1932 by a landslide. Democrats also won large majorities in the and . Roosevelt and his advisors planned programs to end the Depression. These programs became known as the . It had three goals: for the needy, economic , and financial (The 3 R’s). In the first Hundred Days, Congress quickly passed many important laws. These laws the federal role in the nation’s economy. Roosevelt declared a “bank holiday.” He the banks to prevent more bank . Then Congress passed the Emergency Banking Relief Act, which allowed healthy to. This restored public

in banks. So did the Glass-Steagall Act. It established the Federal Deposit Insurance Corporation ( ), which protects the people put in banks.

14. Roosevelt worked to help farmers and other workers. The Agricultural Adjustment Act ( ) helped to raise crop

by lowering production. The New Deal included programs that gave relief through work projects and cash payments. The Civilian Conservation Corps ( ) put young men to work building

and planting trees. The Federal Emergency Relief Administration (

) provided direct relief of , clothing, and to the needy.

15. Roosevelt reluctantly financed the New Deal through

— spending more money than the government

in revenue. Although the New Deal programs many people and helped restore public , some people criticized it. Some liberals said it did not do enough to help the

. Conservative critics said it gave the federal government too much over agriculture and business.

16. The economy in the first two years of Roosevelt’s presidency. But it did not improve much. Still, the New Deal was very

. Democrats increased their in Congress in the midterm elections of 1934. FDR launched a second wave of reforms — sometimes called the . These were programs designed to help people. The president’s wife, Roosevelt, traveled around the country. She reported to the president on the suffering of the poor. She spoke up for women and . The 1936 election was an overwhelming victory for Roosevelt, the Democrats, and the New Deal. It also marked the first time most Americans voted

. And it was the first time that labor supported a single candidate.

17. Things were still tough for in the mid 1930s. The first AAA had helped some farmers before it was struck down by the Supreme Court. Now Congress passed laws to replace the first AAA. One program paid farmers to use measures in managing their land. A new agency called the Works Progress Administration

( ) set out to create jobs as quickly as possible. The WPA used millions of workers to build airports, , libraries, , and hospitals. Some people criticized the WPA as a makework program that created useless just to give people a . But the WPA created works of lasting value. And it gave working people a sense of hope and along with their paychecks. The National Youth Administration ( ) provided aid and part-time jobs to many high school and college . This allowed them to get an

even in tough economic times.

18. The Act was one of the most important achievements of the New Deal. It had three parts:
• Old-age insurance — supplemental plan that provided funds from what workers and employers paid into the system.
• Unemployment compensation — payments to workers who their jobs.

• Aid to the and families with children — this helped people who could not be expected to work.

19. Women made some important during the New Deal.

became the first female cabinet member as secretary of . Perkins helped create the system. Many New Deal agencies did not in hiring. This gave women more opportunities. But some government agencies and many businesses did not hire as many women as men. For example, the Civilian Conservation Corps hired only. And women were almost always paid than men. For instance, the National Recovery Administration set wage levels for women than for men.

20. President Roosevelt gave a number of Americans a voice in government. Mary McLeod Bethune was an educator who became head of the Affairs Office of the National Administration. However, President Roosevelt did not push for full for African Americans. He was afraid of losing the support of

. Mexican received few benefits from New Deal programs. Many were farm workers who were not covered by laws. Some New Deal agencies against them. Native Americans got support from the New Deal. In 1933, Roosevelt made John Collier commissioner on Indian affairs. He was a strong supporter of Native American rights. Roosevelt got votes from Southern

, city people, Americans, and who belonged to unions. These groups of voters formed a coalition that supported FDR. It became known as the .

21. Labor unions made in the 1930s. Divisions emerged between labor . The American Federation of Labor ( ) was made up of mostly , such as plumbers or carpenters. Other unions wanted to represent workers in a

industry, such as the automobile industry. These unions broke away to form the Congress of Industrial Organizations ( ). Labor employed a new kind of strike in the 1930s—a - . In a sit-down strike, workers did not leave their workplace. They remained inside but to work. That prevented factory owners from using strikebreakers or to get the work done.

22. The 1930s were a golden age for the radio and industries in spite of the hard economic times. Movie tickets were not expensive, and films provided an from the problems of life. About two-thirds of Americans went to a movie once a week. showed the democratic spirit of the times. There were radios in nearly percent of American homes. Most American families listened to their favorite radio shows together. The radio offered entertainment. The radio was how many Americans got their .

23. The art and literature of the Depression was more serious and sober than radio and movies. Many artists used to show the hardships of Depression life. New Deal officials believed the were important for the nation. They created several programs to put artists to

. The Federal Arts Project ( ) was part of the WPA. It paid artists to create , murals, and other works of for public places. The Federal Theater Project ( ) was another part of the WPA. It helped support American . The Federal Writers’ Project ( ) funded . John Steinbeck also got help from the FWP. His novel is one of the most famous books about the . It shows the problems faced by Oklahoma who were forced from their during the

.

24. People still disagree over whether the New Deal was good or bad for the country. critics say that the New Deal made the

too and too powerful. They say that it got in the way of free . They feel that government should not be so involved in the economy. critics say that the New Deal did not go far enough. They think it should have done more to change the economy. They think that Roosevelt should have done more to end the differences in between the and the . The New Deal expanded the of the federal government. It did this by putting millions of into the economy, creating federal jobs,