Great Depression and The New Deal Study Guide – Flashcards
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Herbert Hoover
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President when the stock market crashed - Believed in little government interference - he was unpopular with the public and some blamed him for the Depression
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Franklin Roosevelt
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Became President in 1933 - Developed the New Deal - popular for his fireside chats and being open with the public - He was a pragmatist - served as President longer than anyone in U.S history, having been elected four times
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Eleanor Roosevelt
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Very active First Lady - Considered the eyes and ears of the White House - she worked to help women, African Americans, children, and workers - Later became the U.S representative in the United Nations
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Huey Long
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Senator from Louisiana - critic of FDR - wanted to heavily tax the rich to give to the poor - believed every family should be provided with a home, $2,000 a year and free college education - He was assassinated.
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Frances Perkins
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First female Cabinet member - appointed by FDR as Secretary of Labor
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Dr. Townsend
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Critic of FDR - proposed a plan to give the elderly a pension of $200/ month which they would have to spend within 30 days to help stimulate the economy
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Stock
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a percentage of ownership in a company, known as a share
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On margin
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buying stock by paying a small down payment, usually 10%, and borrowing the rest from a stock broker. On margin buyers hoped that the stock value would increase over time so they could sell the stock, pay back the broker, and make a profit
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Speculation
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risky business practice done with the hope of making a quick profit (playing the stock market)
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Securities
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stocks and bonds
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Black Tuesday
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October 29, 1929 - day the stock market crashed
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Social Security Act
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Government program to provide money those unable to work - especially the elderly
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Foreclosure
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bank taking away a property if the mortgage payments are not made
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Brain Trust
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economists, lawyers, and political scientists from Columbia University who advised FDR
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Dole
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direct gifts of money, food, clothing, etc.
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Deficit Spending
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government practice of spending more money than it receives in taxes
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Pump Priming
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government money invested into the economy to stimulate economic recovery
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Explain how the stock market crash contributed to the Great Depression.
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People had been borrowing money during the 1920s to buy stocks on margin. When the market crashed people could not pay back those loans. This contributed to some banks going bankrupt and people that had kept their money in banks that closed lost their savings. Some businesses also failed due to the crash and people losing their money and being unable to buy as many products as they previously could. This in turn caused factories to produce less which caused more unemployment = negative economic cycle.
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Explain how overproduction and under-consuption in farms contributed to the Great Depression.
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crop surpluses following World War 1 caused crop prices to decline and farmers' income decreased. Farmers could not pay back loans that they had taken out during World War 1 to increase the size of their farms and this also contributed to banks going bankrupt.
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Explain how overproduction and under-consumption in factories contributed to the Great Depression.
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Factories were producing more than could be bought which led to people being laid off. Increased unemployment led to less income, even less consumption, less production, and even more unemployment. It was a negative economic cycle.
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What was Hoover's philosophy about what government should and should not do?
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Hoover did not believe in direct government assistance such as a dole. He believed people should be taught to help themselves. He felt a dole would destroy people's drive.
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How did Hoover's philosophy impact his economic actions?
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Hoover tried the Trickle Down Effect which meant the government gave money to self liquidating business projects that would earn money and be able to sustain themselves. Ideally it would create a positive economic cycle.
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What was the goal of Communists and Socialists?
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They wanted the economy that was planned and run by the government. No more capitalism and free market economy. The hope was to create more economic equality.
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How did Communists and Socialists differ?
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Communists believed in violence to gain power. Socialists wanted to gain power through persuasion and elections.
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What did AAA stand for, and what did the program do?
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Agricultural Adjustment Act - the government paid farmers to reduce their crop surpluses. It was a form of Relief because of money being given and Recovery because it would help to fix supply and demand.
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What did CCC stand for, and what did the program do?
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Civilian Conservation Corps. - young single men were hired to complete in environmental projects. They were paid $30 per month and $22 of it was give to their families. Relief because of the money being given to the families, and recovery because if the money was spent then it would help the economic cycle.
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What did FDIC stand for, and what did the program do?
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Federal Deposit Insurance Corporation - The government insures depositors savings in the bank. Reform because it was a permanent change to the banking system designed to prevent another financial crisis.
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What was FDR's leadership style and his philosophy regarding government involvement in Americans' lives?
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FDR was a pragmatist, he believed in a practical approach to problem solving. He sought advice from many people from many different backgrounds. For the most part, people really liked him and felt connected to the White House through his fireside chats. The public felt that FDR cared for them and understood their problems. FDR believed the government had an obligation to help people and be involved in the economy and business. He was involved through New Deal programs.
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How did the New Deal impact African Americans?
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Sadly, African Americans were helped the least by the New Deal. Sharecroppers, a common occupation of African Americans, were no longer needed and lost their jobs and homes. Even "alphabet soup" jobs discriminated against minorities. African Americans were often the last hired and first fired.
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Explain the positive impact on farmers by the New Deal.
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On the positive side, land owner farmers were helped by the AAA which paid them to grow less which reduced crop surpluses this adjusting crop prices. Over time their income increased 50%+. Banks also couldn't foreclose on farms for five years which gave farmers a chance to get back on their feet before losing their property.
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Explain the negative impact on farmers by the New Deal.
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On the negative side, sharecroppers lost their jobs/homes. There was less work for crop pickers. Ironically people were starving in the cities while farmers were purposely growing less.
