1. Chapter 21
The Great Depression

2. Causes of the Depression
Section 1
Causes of the Depression

3. 1920’s
Prosperity
Consumption increased
Gross national product increased
Stock market increased

4. Herbert Hoover Chosen by Republicans as Presidential candidate in 1928
From Iowa; orphaned as a child
Mining engineer
Head of Food Administration during WWI

5. Secretary of Commerce for Pres. Harding & Coolidge
Won the election; defeated Alfred E. Smith (Democrat)

6. Economic Troubles
Farmers: made up ¼ of workforce – had increased farm yields during WWI – bought more land & equipment (huge debts & mortgages) – demand fell after war but production remained high – rural depression

7. Widening gap between the rich & poor
Overproduction/under-consumption
Installment buying – (buying on credit) small percentage down payment made at purchase with balance paid over a period of months or years

8. Black Tuesday
Tuesday, October 29, 1929 – stock market crash signaling the beginning of the Great Depression

9. Great Depression
Period lasting from 1929 to 1941 in which the economy faltered and unemployment soared
641 commercial banks failed in 1929
Too little money was in circulation after the stock market crash

10. Global depression Germany had been forced to pay war reparations
France & Britain were attempting to rebuild
Business failures, bank collapses & high unemployment

11. Americans Face Hard Times
Section 2
Americans Face Hard Times

12. Effects of Depression
25% of Americans lost jobs by 1933
Others saw hours & pay cut
Ate smaller meals: water replaced milk; no meat

13. Many became homeless developing “Hoovervilles”: makeshift shantytowns of tents & shacks built on public land or vacant lots (So-named for Pres. Herbert Hoover whom they blamed for the Depression)
Many farmers lost their farms & moved

14. Dust Bowl
Term used for the central & southern Great Plains during the 1930’s when the region suffered from drought & dust storms
Storms killed cattle, birds & fish
Forced many farm families to migrate

15. Depression Effects (con’t)
Many men deserted their families
Birthrates dropped
Many children quit school
African American poverty in 1932 was near 50%

16. Hoover’s Response Fails
Section 3
Hoover’s Response Fails

17. Hoover’s Plan “Hands-off” – at first
Saw business cycles as natural occurrences
Asked businesses & industries to keep employment, wages & prices at current levels

18. Called for tax reductions, lower interest rates & public works programs
Wanted wealthier individuals to give more money to charity

19. Localism
Policy whereby problems could be solved at local & state levels
More jobs & relief measures by state & local governments

20. Reconstruction Finance Corporation
(1932) – gave $1billion in gov’t loans to railroads & large businesses
Lent money to banks

21. Trickle-down economics
Economic theory holding that money lent to banks & businesses will trickle down to consumers

22. Bonus Army
Group of WWI veterans who marched on Washington D.C. in 1932 to demand early payment of a bonus promised by Congress

23. Chapter 22
The New Deal

24. FDR Offers Relief & Recovery
Section 1
FDR Offers Relief & Recovery

25. Election of 1932 Herbert Hoover vs. Franklin D. Roosevelt
Hoover believed relief should come from state & local gov’ts & private agencies
Roosevelt believed strong action from the federal gov’t was needed

26. Franklin D. Roosevelt (FDR)
Served in the New York State Senate
Assistant Secretary of the Navy for W. Wilson
Governor of New York
Promised a “New Deal” for all Americans

27. New Deal
Programs & legislation enacted by FDR during the Great Depression to promote economic recovery & social reform

28. Brain Trust
Group of professionals & academics who advised FDR in the planning of the New Deal

29. First Hundred Days
FDR proposed & Congress passed 15 bills as part of the First New Deal to accomplish 3 goals: relief, recovery, & reform
Relief: from the immediate hardships of the depression

30. Recovery: long-term economic recovery
Reform: to prevent future depressions

31. Emergency Banking Bill
Gave FDR power to declare a four-day bank “holiday” with the idea that banks would get all accounts in order before reopening.

32. Fireside chats
Informal radio speeches made to the American people by FDR explaining the measures taken to relieve the depression
Reassured the people that the banks were safe

33. Federal Deposit Insurance Corporation
FDIC – insured bank deposits up to $5000 to reform the national banking industry

34. Securities & Exchange Commission
SEC – established by Congress to regulate the stock market & make it a safer place for investments

35. Agricultural Adjustment Act
AAA – sought to end overproduction of farm crops & raise crop prices
Provided financial aid; paid farmers subsidies not to grow certain crops & to kill excess livestock

36. Tennessee Valley Authority
TVA – built a series of dams in the Tennessee river valley to control flooding & generate electric power
Replanted forests, built fertilizer plants, created jobs & attracted industry

37. Civilian Conservation Corps
CCC – provided jobs for young men replanting forests, building trails, digging irrigation ditches & fighting fires

38. National Industrial Recovery Act
Established the National Recovery Administration (NRA) to develop codes of fair competition to govern whole industries
Established minimum wages & prices

39. Public Works Administration
Built bridges, dams, power plants & government buildings
Improved the nation’s infrastructure & created millions of new jobs

40. Section 2
The Second New Deal

41. Works Progress Administration
WPA – created to administer the $5 billion appropriated for new jobs
Built & improved highways, harbors; promoted soil & water conservation
San Antonio River Walk & Appalachian Trail

42. Social Security Act
Created a pension system for retirees, established unemployment insurance for workers who lost their jobs, & created insurance for victims of work-related accidents

43. Rural Electrification Administration
Established to loan money to electric utilities to build power lines & bring electricity to isolated, rural areas

44. Welfare state
A government that assumes responsibility for providing for the welfare of children, the poor, elderly, sick, disabled and unemployed

45. FDR’s effect on the Presidency
Increased power of the President & the executive branch
Made mass media an essential tool in advertising & promoting policies
Expanded Presidential role in managing the economy

46. Expanded Presidential role in developing social policy
Won 3rd & 4th terms which led to the 22nd Amendment