Great Depression This depression of the 1930's lasted far longer, caused more business failures and unemployment, and affected more people - both of the middle class and the working class - than any other preceding period of hard times.
Black Thursday - October 24 There was an unprecedented volume of selling on Wall Street, and stock prices plunged. The next day hoping to stave off disaster, a group of bankers bought millions of dollars of stocks in an effort to stabilize prices. The strategy worked only on Friday
Black Tuesday - October 29 On Monday, the selling frenzy continued. The next day, the bottom fell out, as millions of panicky investors ordered their brokers to sell, when there were practically no buyers to be found
Dow Jones Index It fell from its September high of 381 to 198. Three years later, stock prices would finally hit bottom at 41, less then one-ninth of their peak.
Causes of the Great Depression -Uneven distribution of income
-Stock market speculation
-Excessive use of credit
-Overproduction of consumer goods
-Weak farm economy
-Government policies
-Global economic problems
Uneven distribution of income Wages had risen relatively little compared to the large increases in productivity and corporate profits. Economic success was not shared by all, as the top 5 percent of the richest Americans recieved over 33 percent of all income
Stock Market Speculation People were speculating that the price of the stock would go up and that they could sell it for a quick profit. Many bought stocks on margin.
Buying on marginIt allowed people to borrow most of the cost of the stock, making down payments as low as 10 percent. Investors depended that the price of the stock would increase so that they could repay the loan
Excessive use of CreditA belief of both consumers and business that the economic boom was permanent led to increased installment buying.
Overproduction of consumer goods Business growth aided by increased productivity and use of credit, had produced a volume of goods that workers with stagnant wages could not continue to purchase
Weak Farm Economy Farmers suffered from overproduction, high debt, and low prices since the end of World War I. Severe weather and a long drought during the depression added to their difficulties
Government Policies Government did little to control or regulate businesses. Congress enacted high tariffs which protected US industries but hurt farmers and international trade.
Global Economic Problems Nations had become more interdependent because of international banking, manufacturing, and trade. Europe had never completely recovered from World War I, but the US insisted that all of its wartime loans to European nations be repaid in full. At the same time, the tariff policies of the US greatly reduced the sale of European goods in America.
Effects of the Great Depression -The US Gross National Product dropped from $104 billion to $56 billion in four years
-Nation's income declined by over 50%
-20% of all banks closed, wiping out 10 million savings accounts.
-Unemployment rates increased
-Republican domination of government was at an end
-The power of the federal government increased greatly
-Povertyand homelessness increased
-Mortgage foreclosures and evictions became commonplace
The US Gross National Product The value of all the goods and services produced by the nation in one year
Herbert Hoover President at the time of the Stock Market Crash. He thought that prosperity would soon return
Hawley-Smoot Tariff It set tax increases ranging from 31 percent to 49 percent on foreign imports. Its purpose was to satisfy US business leaders who thought a higher tariff would protect their markets from foreign competition
Debt Moratorium Suspension on the payment of international debts
Farm Board It was authorized to help farmers stabilize prices by temporarily holding surplus grain and cotton in storage.
Reconstruction Finance Corporation It was created by Congress as a measure for propping up faltering railraods, banks, life insurance companies, and other financial institutions. Hoover thought that emergency loans would stabilize key business and the benefits would "trickle down" to smaller businesses and ultimately bring recovery.
Farm Holiday Association It attempted to reverse the drop in prices by stopping the entire crop of grain harvested in 1932 from reaching the market. The effort collapsed after some violence
Bonus March A thousand unemployed WWI veterans marches to DC to demand immediately payment of the bonuses promised to them at a later date(1945). Army, led by General Douglas MacArthur broke up the march
Franklin D. Roosevelt He was nominated as the Democratic candidate in the presidential election of 1932. Speaker of the House John Nance Garner of Texas was nominated for vice president. As a candidate, he promised a "new deal" for the American people, the repeal of Prohibition, aid for the unemployed and cuts in government spending
20th Amendment Also known as the lame-duck amendment, this amendment shortened the period between the presidential election and inauguration.
Eleanor Roosevelt She was the most active first lady in history, writing a newspaper column, giving speeches, and traveling the country. She served as the president's social conscience and influenced him to support minorities
Brain Trust For advice on economic matters, Roosevelt turned to a group of university professors that included Rexford Tugwell, Raymond Moley, and Adolph A. Berle Jr.
Frances Perkin Roosevelt's secretary of labor who was the first woman to ever serve in a president's cabinet
First Hundred Days During this brief period, Congress passed into law every request of President Roosevelt
Bank Holiday After this ,banks would be reopened after allowing enough time for the government to reorganize them on a sound basis
21st Amendment Repeal of Prohibition
Fireside chats Roosevelt spoke on the radio to the American people
Emergency Banking Relief Act It authorized the government to examine finances of banks closed during the bank holiday and reopen those judged to be sound
Federal Deposit Insurance Corporation It guaranteed individual bank deposits up to $5000
Home Owners Loan CorporationIt provided refinancing of small homes to prevent foreclosures
Farm Credit Administration It provided low-interest farm loans and mortgages to prevent foreclosures on the property of indebted farmers
Federal Emergency Relief Administration Directed by Harry Hopkins, it offered grants of federal money to states and local gov't that were operating soup kitchens and other forms of relief for the jobless and homeless
Public Works Administration Directed by Secretary of the Interior Harold Ickes, it allotted money to state and local governments for building roads, bridges, dams, and other public works
Civilian Conservation Corp It employed young men on projects on federal lands and paid their families small monthly sums
Tennessee Valley Authority It hired thousands of people in the Tennessee Valley, to build dams, operate electric power plants, control flooding, and erosion, and manufacture fertilizer.
National Recovery Administration Directed by Hugh Johnson, it was an attempt to guarantee reasonable profits for business and fair wages and hours for labor
Schechter vs. US Supreme Court declared the NRA unconstitutional
Agricultural Adjustment Administration It encouraged farmers to reduce production by offering to pay government subsidies for ever acre they plowed
Butler vs. US Supreme Court ruled AAA unconstitutional
Civil Works Administration It was added to the PWA for creating jobs
Securities and Exchange CommissionIt was created to regulate the stock market
Federal Housing Administration It insured bank loans for building new houses and repairing old ones
Works Progress Administration Directed by Hopkins, it worked to provide people with jobs
National Youth Administration This part of the WPA provided part-time jobs to help young people stay in high school and college or until they could get a job with a private employer
Resettlement Administration Directed by Rexford Tugwell(part of Brain Trust), it provided loans to sharecroppers, tenants, and small farmers. It also established federal camps where migrant workers could find decent housing
National Labor Relations/Wagner Act It guaranteed a worker's right to join a union and a union's right to bargain collectively. It outlawed business practices that were unfair to labor.
National Labor Relations Board It was empowered to enforce the law and make sure that workers' rights were protected. Created by Wagner Act
Rural Electrification Administration It provided loans for electrical cooperatives to supply power in rural areas
Social Security It created a federal insurance program based upon the automatic collection of taxes from employees and employers throughout people's working careers. It would then be used to make monthly payments to retired people over 65.
Alf Landon Republican nominee in the election of 1936
American Liberty League Led by Republicans Al Smith and John W. Davis, its purposed was to stop the New Deal from "subverting" the US economic and political system
Father Charles Coughlin He founded the National Union for Social Justice, which called for issuing inflated currency and nationalizing all banks. His attacks on the New Deal were anti-Semitic and Fascist
Dr. Francis Townsend He proposed a simple plan for guaranteeing a secure income. He proposed that a 2% federal sales tax be used to create a special fund from which every retired person over 60 would receive $200 a month which they would have to spend within 30 days thus stimulating the economy
Huey Long He proposed a "Share Our Wealth" program that promised a minimum annual income of $5000 for every American family to be paid for by taxing the wealthy
Court packing planThe president would be authorized to appoint to the Supreme Court an adJditional justice for each current justice over 70.5
John L. Lewis Leader of the Congress of Industrial Organizations. President of the United Mine Workers Union
Congress of Industrial Organizations This labor union concentrated on organizing unskilled workers in the automobile, steel, and southern textile industries
Fair Labor Standards Act It established a minimum wage, a maximum workweek, and child labor restrictions
US v. Darby This court case upheld the child-labor provisions of the Fair Labor Standard Act
John Maynard Keynes British economist
Keynesian Economics "Priming the pump", Deficit Spending
John Steinbeck A novelist that wrote about their hardships in his classic study of economic heartbreak, The Grapes of Wrath
The Grapes of Wrath A book by John Steinbeck about the hardships of the Okies
Marian Anderson African American singer
Mary McLeod Bethune One of the African Americans that was appointed to middle-level positions in federal government. She was a leader of efforts for improving education and economic opportunities for women
Fair Employment Practices Committee It was set up to assist minorities in gaining jobs in defense industries.
A. Phillip Randolph Head of Railroad Porters Union who threatened a march on Washington D.C. to demand equal job opportunities for African Americans.
Indian Reorganization Act It returned lands to the control of tribes and supported the preservation of Native American cultures
Dawes Act Encouraged Native Americans to be independent farmers.