Notes

Driving Ideas:

  1. What were the causes of the Stock Market Crash and the Great Depression?
  2. What impact did the Stock Market Crash and Great Depression have on the country, world and lives of people?
  3. What did the US Government do to help alleviate the problems the Great Depression brought to our country?

January 13

Consumerism: the belief that people should spend as much money as they can to help the economy

Buying on credit: buy now, pay later

Allowed people to buy big items that were expensive

Republican Philosophy of Harding, Coolidge, Hoover – the three Republican presidents of the 1920s

Laissez-faire: the government should stay out of business

Rugged individualism:one that believes that it is up to you, don’t depend on things from others

Trickle-down theory: the government was going to give tax breaks to the wealthy and large businesses and this would eventually help lower class people, they would make more money and be able to hire more people

Stock: share part of a company

Stock market: where you buy and sell stock

Dow Jones Industrial Average: the 30 largest companies in the US – 3M, ATT, Cisco, Walt Disney, IBM, McDonalds, Nike, Microsoft, Verizon, Walmart, Visa, Coke

Buying on margin: buying stocks on credit, allowed middle and lower class people to get in the stock market

Watered stock: overpriced stock

Stock pooling:a group of rich men get together and buy a lot of stock for really cheap then sell it to the average people for high prices

Speculation-with stocks: someone that researches stock then buys and sells quickly for a profit

Income inequality:the major gap between the rich and the poor

Federal Reserve Board:created in 1913 under President Woodrow Wilson, its major goal was to stop banking panics (runs), broke the country into 12 districts each with a Federal Reserve Bank, made to be a bank for banks

Powers:

  • Banker’s bank-stop bank runs
  • Controls the amount of money in circulation - control inflation and deflation

Iowa Federal Reserve in Chicago

January 16

Causes of the Stock Market Crash-1929

Only 5% of the population were in the stock market.

  • Stock prices were grossly inflated, did not have real value-watered stock prices
  • Over speculation during the 1920s
  • Led to watered stock
  • “Buying on margin”
  • Led to people being in debt and watered stock prices
  • Overproduction of goods- companies buying more goods than were selling
  • Uneven distribution of wealth- most people weren’t buying anymore because they were in debt, companies weren’t making money
  • Too much borrowing from banks- people borrowing to buy stock, caused watered stock
  • Federal Reserve increased interest rates- people stopped borrowing money to buy things
  • Lack of government regulation- allowed stock pooling to happen, insider trading, rich people made money while the middle class suffered

Effects of the Stock Market Crash

  • Investors and businesses lose millions $$$
  • Thousands of banks fail- savings are wiped out: banks invested money in the stock market, lost it when the stock market crashed and many people lost their savings
  • Businesses cut production – lay off workers
  • Unemployment rises – people quit spending money
  • Great Depression sets in
  • Depression spreads throughout the world

Causes of the Great Depression

  • Overproduction of goods- caused deflation
  • Under consumption of goods by consumers- people were not buying enough
  • Agricultural slump due to overproduction- prices went down because of overproduction
  • High protective tariff policies of the 1920’s- designed to get Americans to buy American products, denied trading between countries, nobody was buying in the US
  • Taxes benefiting the rich – rich got richer, poor got poorer- trickle-down theory
  • Stock market crash

Effects of the Great Depression

  • New Deal programs start - makes the US gov’t much larger, got more involved- Franklin Roosevelt’s plan to get the US out of the depression
  • Deficit spending starts- gov’t spending more money than is being made, causing national debt
  • The New Deal creates many organizations that are still around today – social security, welfare
  • Fascist, military and communist dictators come to power throughout the world- caused WWII

The Vicious Cycle of the Great Depression

  • Companies lose $$ so they lay people off
  • Unemployment rate goes up and less people buy goods as income has dropped
  • Companies profits fall so they have to lay more people off or close
  • Cycle repeats itself

January 26

Herbert Hoover Background

  • Born in Westbranch, Iowa
  • Both mother and father died
  • Was not a good student in high school
  • Attended Stanford University the first year it opened
  • Became a miner/engineer after college
  • During WWI, helped Belgians get food
  • Was head of food administration in the US, provide food for troops
  • Secretary of Commerce, got him more famous
  • Won 1928 presidential election
  • Hoover’s Platform In Election:
  • Efficiency in gov’t
  • Republican record of prosperity
  • Pro-business
  • Promised to improve conditions for farmers
  • Reform immigration laws
  • Maintain America’s isolationist foreign policy
  • Supported Prohibition- an “experiment noble in purpose”

Hoover’s Fight against the Great Depression

  • Generally believed to have done nothing – not true
  • Encouraged people to be patient
  • Federal Farm Board
  • Stabilize prices and to promote the sale of agricultural products
  • Norris-La Guardia Act
  • Strengthened labor unions
  • Hoover Moratorium
  • One year halt on German war payments to France
  • One year halt on war payments from Great Britain and France to the US
  • Mexican Repatriation
  • Mexican immigrants were encouraged/forced to go back to Mexico
  • Revenue Act of 1932
  • Increased taxes so US gov’t had $$
  • Hawley-Smoot Tariff
  • Raised tariffs to record levels

Reconstruction Finance Corporation (RFC) – 1932

  • Give loans to banks, state and local govt’s, and business’ to create projects/jobs for people
  • Gave states loans for emergency relief needs
  • Started under Hoover
  • Not as successful as Hoover had hoped
  • Dissolved in 1946 under WWII
  • Built the Hayden Planetarium

Bonus Expeditionary Force

Made of WWI Veterans, petitioning to give them their pension early. When denied, people protested. Hoover sent the US military to get them out, made him seem uncaring.

Impact of the Stock Market Crash and Great Depression

Hoovervilles- shantytowns for the poor named after Hoover, blaming him for their troubles

Breadlines- lines of people waiting for food from the government

Hoboes Hopping Freight Trains- people, mostly teenagers, that went from town to town looking for jobs

Apple vendors- people often sold apples for a couple cents to pay for food

FDR Background

  • Born into a very wealthy family
  • Married 5th cousin
  • Went to Harvard
  • 1910 was elected in the New York State Senate
  • Was Assistant Secretary of the Navy during WWI
  • Ran for VP in 1920 but lost, before getting polio
  • Got polio in 1920
  • Became the governor of New York in 1928
  • Went up against Hoover in 1932
  • Promised the New Deal
  • Served almost 4 terms, died a month in the 4th term
  • Died of a stroke

FDR’s New Deal Programs

  • Got elected in 1932
  • Promised change
  • Started his New Deal Programs
  • Relief, Reform and Recovery – the three R’s for the New Deal
  • Relief for the needy – social security, welfare checks
  • Financial reform – bank holiday, fixing the banks
  • Economic recovery – everything together would fix the economy

Opponents of FDR

  • Some say FDR went too far, spent too much money $$
  • Republicans
  • What were some of the reasons the New Deal was challenged?
  • Created a very powerful president that led Congress, this was a violation of checks and balances
  • It was a radical departure from Laissez Faire ideals. Created “big government”
  • Some acts appeared interfering and unconstitutional
  • Heavy debt burden – the United States was engaged in deficit spending and this was unhealthy for the economy in the long run
  • Others say he didn’t do enough, he needed to do more
  • Democrats, socialists
  • Father Charles Coughlin:
  • Called for a guaranteed income ($200 a month)
  • Wanted government to take over the banks
  • Blamed Jews for Great Depression
  • Francis Townsend
  • Argued that FDR wasn’t doing enough to help the elderly
  • His ideas eventually led to Social Security
  • Senator Huey Long
  • “Share our Wealth” --> “Every man a king”
  • Tax a lot of the rich’s money and give it to the poor
  • Shot and killed by Carl Weiss in 1935, could have been an opponent against FDR in an election

NEW DEAL PROGRAMS:

Young People

Civilian Conservation Corps (CCC)

  • Passed in 1933 during the “One Hundred Day”
  • CCC members worked 40 hours a week and were paid $30 a month, with the requirement that $25 of that be sent home to family
  • Members lived in camps, wore uniforms, lived under military discipline
  • The U.S. Army operated the camps
  • The CCC was limited to young men age 18 to 25 whose father were on relief
  • They planted trees, fought forest fires, stopped soil erosion
  • Helped construct military bases during WWII
  • Funding stopped in 1942
  • The slogan of the CCC was “We can take it!”

National Youth Administration (NYA)

  • Established in 1935 and was a part of the WPA
  • Pushed heavily by Eleanor Roosevelt (ER)
  • Served 327,000 high school and college youth, who were paid $6 to $40 a month for “work study” project at their schools
  • It allowed thousands of young people to stay in school
  • Another 155,000 boys and girls from relief families were paid $10 to $25 a month for part-time work that included job training
  • Unlike the CCC, it included young women
  • The youth normally lived at home, and worked on construction or repair projects

Unemployed

Federal Emergency Relief Act (FERA)

  • Enacted in 1933
  • Main function was to create the Federal Emergency Relief Administration (FERA)
  • FERA distributed more than 20 million dollars in direct aid to the unemployed
  • This in turn would help the unemployed to find new jobs
  • FERA had three primary objectives:
  • Direct relief measures
  • Provide work for employable people
  • Provide many different types of relief programs

Public Works Administration (PWA)

  • Established in 1933
  • Created as many jobs as possible in many different varieties
  • Great example of FDR’s “priming the pump” – to jumpstart (prime) the economy you have to spend a lot of money
  • Between July 1933 and March 1939 the PWA funded the construction of more than 34,000 projects including airports, dams, aircraft carriers, bridges
  • Was responsible for 70% of the new schools and 33% of the hospitals built between 1933-1939
  • Made Triborough bridges, Grand Coulee Dam

Civil Works Administration (CWA)

  • Established in 1933 to create jobs for millions of the unemployed
  • The CWA created construction jobs, mainly improving or constructing buildings and bridges
  • In just one year, the CWA cost the government over $800,000 and was cancelled
  • So much was spent on this administration because it hired 4 million people and was mostly concerned with paying high wages

Works Progress Administration (WPA)

  • Established in 1935
  • Largest and most comprehensive New Deal Agency
  • The WPA was a “make work” program that provided jobs and income to the unemployed during the Great Depression
  • WPA projects primarily employed unskilled workers in construction projects across the nation
  • Federal Project No. 1 was developed to give artistic and professional work to the unemployed who qualified
  • Gave work to artists and musicians
  • Built the Golden Gate Bridge

Camp David: Vacation spot for the President

Labor Unions/Factory Workers

National Industrial Recovery Act (NIRA) and National Recovery Administration (NRA)

  • Established “codes of fair competition” aimed at supporting prices and wages and stimulating economic recovery from the Great Depression
  • The law created the NRA to enforce codes
  • The administration tried to make voluntary agreements dealing with hours of work, rates of pay, and the fixing of prices
  • Firms which voluntary complied could display the Blue Eagle
  • The NIRA also helped create jobs for unemployed workers (building schools)
  • Section 7A guaranteed workers the right to unionize
  • Declared unconstitutional by Supreme Court (1935)
  • Seen as a failure

National Labor Relation Act/Board (NLRA(B)

  • Established in 1935 through passage of the National Labor Relation Act (Wagner Act)
  • Conducts election for unions
  • Stresses collective bargaining
  • Investigates and fixes unfair labor practices
  • Governed by a five-person board whose members are appointed by the President

Fair Labor Standards Act (FLSA)

  • Established a national minimum wage – 40 cents/hour
  • Established the 40 hour work week
  • Guaranteed time and a half for overtime in certain jobs
  • Prohibited most child labor
  • Still exists today

Farmers

Agricultural Adjustment Act (AAA)

  • Established in 1933
  • Restricted production during the New Deal by paying farmer to reduce the amount of crops planted
  • Its purpose was to reduce crop surplus so prices would go up
  • The farmers were paid by the federal government for leaving some of their land untilled
  • The Act created a new agency, the Agricultural Adjustment Administration to carry out law
  • The AAA oversaw a large-scale destruction of existing crops and livestock in an attempt to reduce surpluses
  • For example, six million pigs and 220,000 sows were slaughtered in the AAA’s effort to raise prices
  • Cotton farmers plowed under a quarter of their crop
  • Due to the nature of the Great Depression, many United States citizens saw the AAA as cruel
  • While people in the cities were starving, the federal government was destroying crops and livestock in the country
  • Farm prices more than doubled (1933-35)
  • The AAA was declared unconstitutional by the Supreme Court in 1936 because it taxed on group (food processors) to pay another
  • The second AAA was passed in1938
  • The second AAA was funded from general taxation, and therefore acceptable to the Supreme Court

Soil Conservation and Domestic Allotment Act

  • Allowed the government to pay farmers to reduce production so as to “conserve soil” and prevent erosion
  • It was a piece of legislation passed in response to the Supreme Court’s declaration that the AAA was unconstitutional
  • Educated farmers on how to use their lands without damaging them
  • Took immediate action to contain the dust bowl’s effects by planting trees and native grass
  • Three years after the act was adopted, soil erosion had dropped 65%

Rural Electrification Administration (REA)

  • Brought electricity to farms

Farm Security Administration (FSA)

  • Granted small farmers and tenant farmers money to purchase farms
  • The dust Bowl forced a lot of farmers off their farms
  • Many farmers bought tractors with money from the AAA thus forcing tenant farmers off the land
  • The FSA provided relief to those people

Homeowners

Home Owner’s Loan Corporation (HOLC)

  • The typical home loan in 1930 required a 50% down payment and had to be paid off within 5-7 years at an interest rate of 6 to 8 percent
  • Buyers paid the entire interest charge at the end of the payback period in a single balloon payment
  • Often they had to take out a second mortgage, at rates of up to 18%, just to cover this final payment
  • The HOLC was established in 1933 to refinance homes to prevent foreclosure
  • It was usually used to extend loans from shorter, expensive payments of the 15 years to the lower payments of the 30 year loans
  • Was racist, helped white people and pushed black and Hispanics away

Federal Housing Administration (FHA)

  • The FHA was created in 1934
  • Insured loans made by banks and other private lenders for home building and home buying
  • The goals of this organization are to improve housing standards and conditions and to provide an adequate home financing system
  • In 1965, the FHA became part of the Department of Housing and Urban Development (HUD) and is still around today

United States Housing Authority (USHA)

  • Created in 1937
  • It was designed to lend money to the states or communities for low-cost home construction
  • Homes were designed for low-income and homeless people
  • The USHA was absorbed by the National Housing Agency in 1942

Elderly

Social Security Administration (SSA)

  • Established in 1935
  • Provides retirement, disability, and survivors’ benefits
  • To qualify for these benefits, most American workers pay Social Security taxes on their earnings
  • Futures benefits are based on employees’ contributions
  • Each person is given a Social Security number

Music/Art

WPA

  • The WPA helped artists and musicians
  • It presented 225,000 concerts and produced almost 475,000 works of art
  • Federal Project No. 1 (Federal One) of the WPA was developed to give artistic and professional work to the unemployed who qualified
  • It consisted of the Federal Art Project (FAP), Federal Music Project (FMP), Federal Theater Project (FTP), and the FWP

Banks

Emergency Banking Relief Act (EBRA)

  • FDR passed the act five days after taking office - March, 1933
  • Passed in response to the thousands of banks that closed down
  • Passed four days after FDR announced the Bank Holiday, which closed banks down temporarily
  • The EBRA would close down the bank, reorganize it and then reopen the bank when it was stable
  • Provided insurance to people’s money in the banks
  • When banks reopened on March 13, 1933, many people put their money back into the banks
  • Within a couple of weeks, more than half of the money that people withdrew from banks was put back into banks
  • Generally ended the bank runs that was common place form 1929-1933

Federal Deposit Insurance Corporation (FDIC)