The Great Depression: Review Guide

US History II

Part I- Causes of the Great Depression

Long Term Causes

-Unequal Wealth Distribution

  • Majority of the increase in income of the 1920s was absorbed by the upper class- How can this slow down spending and negatively affect the economy?

-Protectionist Trade Policies

  • Their original purpose/intention
  • How Europe was affected by high tariffs (i.e. Smoot Hawley)
  • The result of these trade policies (i.e. reduction in American exports to Europe, retaliatory policies)

-Farm Failures

  • How were farmers affected by WWI? What actions did they take to increase profit?
  • After WWI, what happened to the price of products?
  • How were farmers negatively affected by this, and how did this in turn affect the rest of the economy? (i.e. failure to pay mortgages, reduced spending)

-Superficial Prosperity/Buying on Credit

  • Review: Installment Plans
  • False wealth/false demand of the 1920s = Overproduction of products
  • Accumulating debt = inability to pay off loans (hurts banks) and reduce spending

Short Term Causes

-Stock Market Crash

  • Increased value of stocks driven up by demand- Problem?
  • Over speculation
  • Margin buying- Receiving a loan to buy a stock, which drove prices UP and created severe debt after stocks lost their value
  • Crash- Period of intense selling at lowered prices (Black Tuesday- Oct. 29, ’29)
  • Loss of trust in financial system  affects banks

-Bank Failures

  • Bank runs- Depositors request $$ from bank, who is unable to repay loan
  • How does a bank function? How many deposits are kept in cash by bank? Invested elsewhere?
  • Federal Reserve System- How did it work? Could it have done more? (see essay) (Review “The Great Depression: An Overview” Article; Graphic Organizer)
  • Decrease in money stock: Others can no longer borrow and make purchases

Economic Indicators

-GDP- Gross Domestic Product

-CPI- Consumer Price Index

  • Inflation- Pros/Cons?
  • Deflation- Pros/Cons?- *Great Depression

-Unemployment Rate- 25%

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Part 2- The Great Depression

Hardships of the Depression

Herbert Hoover

-Past experience

-Philosophy (see campaign speech: “Rugged Individualism”)

-Hoover’s Reassurance- Economic cycles

-Hoover’s policies

  • Boulder (Hoover) Dam
  • Federal Farm Board
  • National Credit Corporation
  • Federal Home Loan Bank Act
  • Reconstruction Finance Corporation- “Trickle Down” Economics
  • **No Direct Relief

-Anti-Hoover Sentiment (i.e. Hoover flags, Hoovervilles, Hoover blankets)

-Mid-term elections (1930)

-Gassing the Bonus Army

  • Patman Bill; Eisenhower and MacArthur

Franklin Delano Roosevelt

-Brain Trust- Group of advisors

-Three Main Goals: Recovery, Relief, Reform

-“The First Hundred Days”

  • National Bank Holiday
  • Emergency Banking Relief Act

-Fireside Chats

The First New Deal (’33-’35) / Second New Deal (’35-’38)
Glass-Steagall Act of 1933
  • FDIC
Federal Securities Act- 1933
Securities and Exchange Commission (SEC)
Prohibition repealed by 21st amendment (1933)
“Alphabet Soup” (See handout and slides):
  • Agricultural Adjustment Act (AAA)
  • Tennessee Valley Authority (TVA)
  • Civilian Conservation Corps (CCC)
  • Public Works Administration (PWA)
  • National Recovery Administration (NRA)
Criticism and Supreme Court Reaction (i.e. NIRA; AAA)
FDR’s response- court packing?! / “Second Hundred Days”
Replacement of AAA
Rural Electrification Act
National Labor Relations Board (case against Laughlin Steel Corps- Constitutional? Why?)
Fair Labor Standards Act
**Social Security Act (Frances Perkins)
Works Progress Administration
National Youth Administration

-**Local Relief Contributions (i.e. Hohokus elementary school)

-Eleanor Roosevelt

-Dorothea Lange

-African American Advances

-Culture during the Great Depression

-Legacies- Expansion of Gov’t Power; Social Security and other federal programs to provide relief that are still intact today

-Effect of WWII on Depression

Enduring Understandings and Core Concepts:

  1. Compare and contrast the causes of the Great Depression and the Great Recession. What causes do they have in common? What causes are different?

Brainstorm:

______

  1. Compare and contrast the severity of the Great Depression and the Great Recession based on the economic indicators:

Brainstorm:

______

  1. What are the three key tools of the Federal Reserve? How did the Federal Reserve’s response during the Great Depression differ from that of the response to the 2008 financial crisis (regarding the use of these tools)?

Brainstorm:

______