Great Depression Student Notes

Ms. Buckman’s U.S. History
The Great Depression
Causes of the Great Depression
Overproduction Of Consumer Goods
& Farm Products
1. Sales declined
a. Surpluses piled up (you have all these extra
goods not being sold just sitting on the shelves)
b. Results- businesses closed; unemployment
2. Product/Crop prices declined
Surplus of goods + Stagnant wages
= Decline in Sales
Unequal Distribution of Income
Wages had risen very little compared to the large
increases in productivity ... If people made more
money, the depression would have been less severe.
**1920s created a large income gap between the
rich & the poor**
Stagnant Wages = When productivity increases, but
YOUR income doesn’t increase, it stays the same....
As the cost of living goes up each year, you can’t
afford certain things that you could in the past –
you’re income isn’t moving!
Buying On The Margin
Buying stock w/ borrowed $
Stock Speculation
Buying/selling to make a quick profit
***Led to the stock market crash of 1929!
1. Individual debt
2. International debt caused by WWI
Stock Market Crash
1. October 29, 1929
2. Shares sold and prices plunged (millions lost)
Depressions are inevitable part of business cycle!
***Conditions characteristic of an economic
depression -- high unemployment rates &
President Herbert Hoover 1929-1933
In his inaugural speech, Hoover predicted poverty
would soon be banished from the land.
Rugged Individualism
Success comes through individual effort
1. Not the federal government’s responsibility to
care for the people -- meaning he was a more
laissez-faire president (he didn’t want to interfere
with the process very much)
***Because of this, in the early part of the Great
Depression the federal government DID NOT
respond with aid for the people!!!
His Efforts
1. Encouraged businesses to keep wages up
2. Encouraged labor unions not to strike
3. Funded federal projects to provide jobs &
stimulate business
****4. Hawley-Smoot Tariff: Effort to buy
American products only (Backfired- Europeans
retaliated by not buying American goods and it hurt
5. Reconstruction Finance Corporation: Allowed
credit to big businesses (Too little, too late)
6. Agricultural Marketing Act (AMA): Allowed
government to buy surplus crops…Plan too costly;
had little impact
Hoover's Unpopularity
1. Said "no one was actually starving".
2. Commented that some Americans made more $
selling apples on the street
3. In an interview w/ reporters, he fed his dog red
4. Hoovervilles, Hoover blankets, Hoover flags &
other terms were used b/c poor Americans blamed
him for their suffering & misery.
5. Out of touch with reality- "Better days are
ahead." & "Prosperity is just around the corner."
Impact of the Great Depression
1. 25 % unemployment
2. Men moved around to find work.
3. Wages- 10 cents an hour
4. Blacks fired 1st
5. Women worked for less (hired more)
6. People still feared that immigrants would take
their jobs.
7. Many sold apples on streets.
1. City governments, Salvation Army & Red Cross
provided direct relief, especially in those early years
(NOT the federal government)
2. Breadlines & soup kitchens were common.
3. Shantytowns developed outside cities.
a. nicknamed Hoovervilles
1. Surplus of crops; no one could buy crops
2. Farmers could not afford the mortgages on their
land (went bankrupt or land was auctioned off)
3. Neighbors would bid low on land & tools at
auction (Ex. $800 farm sold for 1.90).
4. Forced to destroy their over-supply of crops by
letting them rot and kill off livestock; hoped to
drive up prices by decreasing the supply
1. Families moved in together;
took in boarders
2. People waited to get married
3. Made own food and clothes
1. Many were unable to pay bank loans
2. People were scared and withdrew money
3. Banks could not pay customers
Entertainment of the 1930s
Radios & movies popular; provided escape
Board Games were popular
Discontent: Bonus Army
Bonus Army
1. WWI vets that were promised $ for service
(many were homeless) and they demanded that
Congress fulfill these payments
2. March in Washington
3. Congress denied the bonus bill
a. Many stayed in protest
b. Hoover forced the vets out (By any means
necessary -- only added to his bad public image)
Great Plains: Dust Bowl
Dust Bowl
***Occurred in the Great Plains
1. Caused by long-term drought, erosion, and poor
farming techniques
2. Many abandoned their farms... Families moved
west to California to find work as migrant workers
3. Showed how geography & natural disasters can
seriously affect people’s lives
***Eventually, as a way to prevent soil erosion and
in hopes to keep another Dust Bowl from occurring,
FDR developed a program to plant millions of trees
along the Great Plains.
Election of 1932 – FDR’s Presidency
Hoover (R) vs. Franklin D. Roosevelt (D)
FDR wins this election because the American
public would rather have ANYONE than Hoover
serve another term as president! Remember they
blame him for the Great Depression!
FDR’s Promise & Style
During his campaign Roosevelt promised to help fix
some of the economic hardship facing the nation by
establishing work programs and making sure the
federal government finally got involved. **** He
was NOT for laissez-faire! He wanted the
government to help solve the problems of the
Great Depression! ****
a. Wants to "reassure" Americans all will be ok
b. Met with press on weekly basis
c. Fireside Chats
1. FDR spoke on radio to inform America
2. Discussed his New Deal plans
d. Radio brought news & entertainment to a mass
Restore Confidence In Banks – Bank Holiday
1. FDR ordered all banks to close for 3 days.
2. Only banks that were stable & financially sound
could reopen. This was meant to help restore public
confidence in banks! If a bank reopened, it must be
safe to use.
The New Deal & Its Agencies
The New Deal
1. FDR promised "a New Deal" for American
2. Created to provide RECOVERY, RELIEF, &
REFORM programs (3 R’s of FDR’s New Deal)
***3. It funded public work relief programs.
(Agencies provided jobs or some type of
government aid)
4. Nicknamed "alphabet agencies"
New Deal Agencies
1. Federal Deposit Insurance Corporation
a. People lost $ in banks -- THIS (along with the
bank holiday, restored public confidence in banks)
b. Insured bank deposits up to $5000
c. Still exists (today $250,000)
2. Farm Credit Administration (FCA)
a. Farmers were losing their farms, couldn't pay
taxes & needed better seeds, equipment, etc.
b. Gave $ to pay off their farms, taxes & buy
c. Successful
3. Home Owners Loan Corporation (HOLC)
a. Home owners had difficult time making
mortgage payments.
b. Gave $ to make sure they didn't lose their homes
& helped refinance loans to make monthly
payments less.
c. Successful
4. Federal Emergency Relief Administration
a. Some areas were hit harder by depression than
b. Gave $ to relief agencies in these areas.
c. Limited success; $3 billion spent, but wasn't
5. Civil Works Administration/Public Works
Administration (PWA/CWA)
a. High unemployment.
b. Gave jobs building roads, bridges, dams,
schools, airports & other public services
c. Successful
6. Civilian Conservation Corps
a. High unemployment.
b. Gave men (18-25) jobs working on various
conservation projects (fighting forest fires, restoring
battlefields, etc.) Combo. of boot camp & Boy
Scouts. Paid $35 a mo. & had to send $25 home.
c. Most popular & successful program
7. Securities & Exchange Commission (SEC)
a. Stock market wasn't regulated.
b. Regulated & protected investors from dishonest
trading practices (fraud) in the stock market helped to limit the risk associated with making
c. Still exists
8. TN Valley Authority (TVA)
a. Unemployment, flooding & lack of electricity
b. Gave jobs building government-owned dams,
which controlled flooding, & created hydroelectric
c. Still exists
9. Agricultural Adjustment Act (AAA)
a. Farmers were producing too much; which made
prices fall.
b. Farmers were paid not to farm a portion of their
c. Supreme Court declared it unconstitutional.
10. National Recovery Administration (NRA)
a. Wasn't a national minimum wage or limit on
work hours & companies were overproducing.
b. Designed to limit production so prices would go
c. Established national minimum wage & limited #
of work hours.
d. Supreme Court eventually declared it
11. Works Progress Administration (WPA)
a. High unemployment.
b. Same as CWA/PWA, but in addition, it focused
on giving jobs to writers & artists. (interviewed
former slaves, painted murals in public buildings,
c. Successful
12. Social Security Administration
a. Old-age insurance, paid partially by workers &
partially by employers
b. Provided monthly pension to people over 65;
handicapped people; unemployment insurance wanted to prevent poverty among the elderly
c. Still exists
Court Packing Plan
a. Supreme Court ruled some agencies
b. FDR wanted to increase the number of justices
changed from 9 to 15
c. He would "pack" the court (people on his side) -he wanted the Supreme Court to support his New
Deal programs!
d. Congress did not approve plan
New Deal Outcomes
1. The New Deal shifted American opinion into
believing that the federal government should
become more involved with various aspects of
American lives (think economic/social
2. This expanded the role of the federal
3. It also encouraged workers to even spend money
so businesses would be more successful, improving
the economy.
4. More money had to fall in the hands of the lowerincome families if the economic situation could
ever improve.
Critics Of The New Deal
A. Some believed FDR had gone too far in
expanding powers of the federal government
(threatening the system of checks & balances)
B. Said this could potentially make people too
dependent on the federal government
C. The New Deal also raised the national debt
D. Francis Townsend:
1. Plan to give people 60 & older $200 a
month; would have to spend within the
E. Senator Huey P. Long- Louisiana
1. "Share Our Wealth" plan; would give
Amer. an income of $2500 a year
2. Take $ away from those who made over
$ 1 mil.
F. Father Charles Coughlin
1. Anti-semantic Radio priest
2. Blamed depression on Jews
Labor Unions
****A. Wagner Act: Guaranteed workers the right
to organize unions & be represented in collective
bargaining (negotiating rights) -also referred to as
the National Labor Relations ActB. Congress of Industrial Organizations (CIO)
1. organized all workers; used strikes
Balanced Budget
A. 1937-economy was improving
B. FDR wanted to cut spending:
1. People panicked & economy plunged
2. "Hooked" on assistance programs
Deficit Spending
1. Definition: Spending more than what you’re
receiving in taxes, borrowing to spend
2. Economist John Keynes said this was necessary
to “prime the pump” --- in difficult times the
government needs to spend well above its tax
revenues to initiate economic growth -- increase
investment & create jobs
3. FDR hoped this would lead to job creation for the
4. Sometimes public money is needed to encourage
At The End of Everything
1. World War II would help turn America into a
world super power.
2. The American spirit prevailed as people refused
to give into their problems and found ways to make
it work.
3. Term limits for presidents were also established
after FDR’s controversy of being elected in 1940.