Depression and New Deal Review Flashcards
Stock Market Crash –
sharp decline in stock prices that started in 1929 and was one of the main causes of the Great Depression
Margin Buying
purchasing stock on credit (borrowing money to buy stock)
Dow Jones Industrial Average-
formula that tracks the stock performance of 30 large and influential companies. The DJIA is often used as an indicator of the overall performance of stocks.
Depression
a lengthy or severe recession (when the economy is contracting/struggling)
Laissez-Faire
the idea that the government should not intervene or interfere with the economy or the free market. Laissez-faire proponents believe that the government intervention harms the economy. Supporters of laissez-faire argued that the best way to get the economy to recover during the Great Depression was to leave it alone.
Bank Failure/Panic.Runs
Bank failure is when a bank closes down because too many of the loans that they made will not be paid back. During the 1930s, millions of people lost their savings because of bank failures. Bank runs are when people panic and try to withdraw all of their money from a bank. Bank runs caused many bank failures in the 1930s because banks cannot function without deposits for money for the banks to lend.
Dust Bowl
Bank failure is when a bank closes down because too many of the loans that they made will not be paid back. During the 1930s, millions of people lost their savings because of bank failures. Bank runs are when people panic and try to withdraw all of their money from a bank. Bank runs caused many bank failures in the 1930s because banks cannot function without deposits for money for the banks to lend.
Huey Long
was a radical New Deal critic that proposed the “Share our Wealth” program. Long wanted to tax all incomes beyond $1 million to fund a minimum income of $2500 for all Americans. Long’s proposal was never followed but the support for Long increased pressure on Roosevelt to do more for the poor.
Rugged Individualism
was a radical New Deal critic that proposed the “Share our Wealth” program. Long wanted to tax all incomes beyond $1 million to fund a minimum income of $2500 for all Americans. Long’s proposal was never followed but the support for Long increased pressure on Roosevelt to do more for the poor.
Bonus Army
Group of WWI veterans and their families that camped in Washington in 1932 and refused to leave until their service bonuses were paid. The bonuses were due to be paid in 1945 but the veterans wanted the money in 1932 because so many were unemployed. President Hoover ordered the army to force the veterans to leave and several veterans were killed. The violent removal of the Bonus Army intensified Hoover’s unpopularity and contributed to his defeat in the election by Franklin D. Roosevelt.
New Deal
The laws and programs created by Franklin Roosevelt in the 1930s are collectively referred to as the New Deal. The New Deal was designed to end the Great Depression and create reforms to prevent a future Depression. The economy improved during the New Deal years but did not fully recover until WWII.
CCC- Civilian Conservation Corps
New deal program that mostly hired young men to plant trees and build roads and parks
WPA- Works Progress Administration
New deal program that mostly hired young men to plant trees and build roads and parks
AAA- Agricultural Adjustment Act
government program that helped to increase crop prices by paying farmers to destroy crops and lives stock as well as to leave sections of land unplanted. The idea was to reduce farm production so that prices would increase and farmers could profit.
FDIC- Federal Deposit Insurance Corporation
restored confidence in the banking system by insuring the first $5,000 deposited in a bank. The FDIC still insures bank deposits today so it a great example of a New Deal reform.
NRA- National Recovery Administration
was a government agency that worked with businesses to control prices and wages and stop the pattern of decreasing prices and wages. The NRA operated for several years before being declared unconstitutional by the Supreme Court.
American Liberty League
political organization that was critical of the New Deal’s intervention in the economy and its cost.
Social Security
New Deal program that provides pensions (money) for older and disabled Americans. Social Security remains today the largest government social program.
National Labor Relations Act (Wagner Act)
this law provides workers the right to unionize, bargain collectively, and participate in strikes. This laws still prevents businesses from discriminating against or firing workers for participating in unions or strikes. The Wagner Act resulted in greater membership and power for unions.
Fair Labor Standards Act
New Deal Law that established a minimum wage, 40-hour work week, and child labor restrictions.
5 Causes of the Depression
- Stock Market Crash
- Business Cycle
- Bank Failures
- Dust Bowl
- Overspending and Borrowing during the 1920s
Role of excessive borrowing in bank failures and runs
people borrowed more then they could afford and lost money through stock speculation. People panicked and led to bank runs where depositors ran to get their money out of the bank. This led to more failures and runs.
Hoover’s belief
believed in rugged individualism
Relief, Recovery, and Reform
Relief- Direct help to the unemployed such as food/money
Recovery- programs designed to help the economy to heal such as WPA
Reform- Laws (like FDIC) designed to improve the system and prevent a future Depression
Criticisms of the New Deal
Conservative- Too expensive/debt building, gave gov. too much control over businesses
Liberal- Supported New Deal but some argued Roosevelt needed to do more
Radical- Capitalism was unfixable and should be replaced by a new gov. like communism
New Deal impact on African Americans, Women, and Workers
African Americans – many gained jobs from New Deal programs but the New Deal failed to help with racial segregation and lynching
Women – Roosevelt appointed women to his cabinet (group of advisors) and this helped advance more equal status for women.
Workers – the Wagner Act and the Fair Labor Standards Act created unprecedented and substantial benefits for workers. Workers gained the right to form unions, participate in strikes, a minimum wage and a maximum work week.
