Goal 9.01: Elaborate on the cycle of economic boom and bust in the 1920's and 1930's.

  1. Warren G. ______(1865 – 1923)
  2. 29th President (1921-3)
  3. Elected on a campaign of a “Return to Normalcy” – a return to isolationism, less social reform, and increased economic growth
  4. Harding was an honest man, but put too much trust in his friends and political allies, giving them positions in his cabinet
  5. The ______Gang
  6. Harding’s corrupt friends from back home
  7. They abused their positions by accepting bribes, illegally selling government property
  8. Harding was deeply embarrassed by the actions of his friends
  9. Most notorious member was Secretary of the Interior Albert B. ______
  10. The ______Scandal
  11. Fall had secretly leased federal lands to private oil companies in return cash bribes
  12. When the scandal broke, Fall became the first cabinet member to go to prison and Harding’s reputation was ruined
  13. Harding died in office from a massive heart attack, possibly brought on by the stress of scandals
  14. Calvin ______(1872 – 1933)
  15. 30th President (1923-9); became President upon Harding’s death
  16. Known as “______” for his terse, serious manner
  17. “The business of the American people is business”: Coolidge supported businesses and a ______approach to the economy
  18. Andrew ______(1855 – 1937) & the Mellon Program
  19. Sec. of Treasury to 3 Presidents
  20. His program included applying business principles to managing the federal budget
  21. Believed that economic growth required:
  22. balancing the federal ______
  23. reducing the federal ______
  24. cutting ______
  25. Economic Boom
  26. Rise in the standard of living during the 1920s led to increased sales of consumer goods which in turn created more jobs
  27. Mechanization of factories led to greater efficiency and a drop in prices for manufactured goods, encouraged ______(purchase of non-essential and luxury items)
  28. Consumer Credit
  29. For the first time, individuals began to regularly borrow money and go into debt to purchase consumer goods (cars, appliances, radios, etc.) because credit became easy to come by and carried no social stigma
  30. People began to use ______(making monthly payments) to buy expensive items
  31. Growth of the Middle Class
  32. As corporations began to expand and have specialized departments such as sales, marketing, accounting, engineering, and management, the number of people living at the middle-class level grew tremendously
  33. ______
  34. Companies began allowing workers to buy shares of stock, participate in profit sharing, and receive benefits such as medical care and pensions
  35. This led to increased spending among the working class and less reliance on ______, since they no longer seemed necessary
  36. Farmers in Crisis
  37. Technological advances such as pesticides and ______led to both higher crop yields and increased debt for farmers
  38. Increased crop yields led to a drop in crop prices
  39. Government efforts to help farmers were repeatedly vetoed by Pres. Coolidge, who believed in laissez-faire
  40. Election of 1928
  41. Coolidge decided to not run for re-election, instead supporting his Sec. of Commerce Herbert Hoover as the Republican nominee
  42. Democrats ran NY Gov. Alfred E. ______, the first Catholic to run for President
  43. Republicans took credit for the booming economy while Democrats were hurt by strong anti-Catholic sentiment among many nativist groups
  44. Hoover won in a landslide
  45. Herbert ______(1874 – 1964)
  46. 31st President (1929-33)
  47. Took office at a time of unparalleled prosperity and optimism, but by the end of his presidency, the US was at the bottom of its deepest economic depression in history
  48. Economic Bust
  49. Stock ______
  50. A long period of growth in the stock market convinced millions of Americans to take a risk and invest in stocks
  51. Investors began buying “______” – borrowing the money to buy stocks, believing those stocks would grow in value and allow them to easily repay the loans; but, if prices dropped, they panicked and sold quickly to avoid taking large losses
  52. ______
  53. In late October, 1929 stock prices began to slip, triggering a mass sell-off as investors panicked
  54. On Tuesday, Oct. 29 the bottom fell out – the market lost $15 billion in a single day
  55. The market continued to plunge for the next 3 years and didn’t recover until WWII – a period known as the ______
  56. Banking Collapse
  57. Banks had made numerous loans to stock speculators and had also invested heavily themselves in the stock market
  58. When the market collapsed, banks lost big and had to stop lending
  59. With credit restricted, the economy went into a ______
  60. Many banks could not absorb their losses and closed; people who had deposited their money in these banks lost everything – this caused further panic and people began to withdraw their money from banks
  61. The ______Tariff (or Tariff Act of 1930)
  62. Government passed the 2nd highest tariff in US history in an attempt to protect US industry, but the tariff badly hurt the sale of US goods overseas as foreign nations raised their tariffs
  63. This worsened the US economic situation
  64. Rugged Individualism vs. Direct Relief
  65. US had long believed in ______, the idea that it was up to the individual to take care of himself
  66. As the economy collapsed and unemployment soared, people began to support the idea of ______– the government should act to help those who could no longer help themselves