Unit 9 - Roaring Twenties, Great Depression, FDR Flashcards
Ku Klux Klan in the 20s
Ku Klux Klan membership soared to 4 million people in the 1920s. They engaged in violent acts including lynching and burning crosses.
New Products in the 20s
A few new technologies that began changing America in the 1920s were electric lights, electricity, cars, radio
Prohibition & Speakeasies
The 18th Amendment, known as “Prohibition,” banned the sale of alcohol. Liquor was sold in “speakeasies,” which were illegal bars throughout the nation during this era.
Sports (Babe Ruth)
Spectator sports, like baseball, became huge entertainment in the 1920s. Babe Ruth was the biggest baseball star, and one of the greatest players and homerun hitters of all time. He hit 60 homeruns in a single season.
Charles Lindbergh & the Spirit of St. Louis
In 1927, the airplane “The Spirit of St. Louis” was flown by pilot Charles Limbergh. He was a daring young pilot attempting something no person had ever done. He flew alone across the Atlantic Ocean from New York to Paris. HIs success made him a hero in the U.S. and around the world.
Harlem Renaissance and Jazz
The “capital” of jazz music during the era was in Harlem, New York. Bessie Smith, Louis Armstrong, and Duke Ellington were famous jazz musicians during this era.
Scopes Trial and “science vs. religion”
In 1925, Tennessee high school teacher John T. Scopes was brought to trial in Dayton, Tennessee, for violating the law by teaching the theory of evolution in his public school. William Jennings Bryan, a 3-time presidential candidate, prosecuted Scopes and he was found guilty. Clarence Darrow defended Scopes in the trial. Christian fundamentalists viewed the teaching of evolution as a challenge to their beliefs. Darwin’s theory of evolution taught that humans and other species developed over vast periods of time. This conflict led to a “science vs. religion” battle between different groups of people in the country.
Buying on Credit/Margin Loans
A new consumer concept developed in the 1920s - buying on credit. This allowed people to “buy now and pay later.” Many people bought on margin, a process where the buyer paid as little as 10% of the price and borrowed the rest.
What Caused the Great Depression?
- The Stock Market Crash of 1929 - “Black Tuesday” on October 29, 1929, the stock market crashed ans lost 12% of its value, wiping out $14 billion of investments.
- Bank Failures - As people saw others losing their money, many decided to try and withdraw their money from their banks as quickly as possible, which caused thousands of banks to fail.
- Reduction in Purchasing (Spending) - Surviving banks were unsure of the situations, which made them concerned for their own survival. This led to less and less spending by the banks, and unwilling to lend money. With their investments worthless, savings diminished, and credit tight or nonexistent, spending by consumers and companies stopped. This led to workers being laid-off from their jobs by the masses. Then, people were unable to pay their bills or for things they had bought on credit. The unemployment rate rose above 25% in the country, with meant less and less money in taxes for the U.S. government, which led to poor economic policies.
- Poor U.S. Economic Policies (President Hoover) - Vowing to protect U.S. industry from overseas competitors, Congress passed the Smoot-Hawley Tariff. This imposed near-record tax rates on imported goods. America’s trading partners also imposed their own tariffs, and world trade dropped by two-thirds.
- Poor Social and Economic Conditions - the economic devastation was made worse by environmental destruction. A long drought, combined with poor farming practices created a vast region of the U.S to become known as the Dust Bowl. Unemployed people gathered in “Hoovervilles,” named after President Hoover, which were small towns of homeless and unemployed people.
Hoover’s Response to the Economic Crisis
President Hoover thought the economic crisis was temporary. He believed that prosperity was “just around the corner.” He also believed that the “depression cannot be cured by legislative action or executive pronouncement.” Instead, he called on business leaders not to cut wages or factory output. He asked charities to do their best to help the needy, as he thought voluntary action by citizens and local governments would pull the nation through the crisis.
Hawley-Smoot Tariff Act (1930)
In 1930, Congress passed tariffs, which raised the prices of goods purchased from other countries, trying to protect U.S. industry from overseas competitors. This hurt foreign countries, who then raised their own tariffs on American products, which hurt American businesses. The Act caused world trade to drop by two thirds by 1934.
Hoovervilles
Hoovervilles were small, makeshift towns of homeless and unemployed people - named after President Hoover.
The Bonus Army
When the Depression hit, a large group of U.S. World War I veterans called the “Bonus Army” went to Washington, D.C., to demand their war bonuses promised by congress be paid out to them early. Congress voted against meeting their demands. After the vote, about 2,000 Bonus Army members remained, and when police tried to break up their camp, conflict broke out and 2 people were killed. Hoover responded by calling in the U.S. Army. Veterans and their families fled as the troops burned their camp. Americans were horrified that the government had attacked war veterans. Hoover was then seen to be out of touch with ordinary people.
Hoover and the Public Works Programs
Hoover finally saw that the federal government had to take action. Pressed by Congress, he agreed in 1931 to federal spending on public works - projects such as highways, parks, and libraries meant for public use (Hoover Dam is an example). The thinking was that building these projects would create new jobs. Unfortunately, state and local governments were already out of money. Hoover then asked Congress to create the Reconstruction Finance Corporation (RFC). The RFC lent money to businesses and provided funds for state and local programs. However, the RFC’s leaders were not willing to give out risky loans, so most of it’s available funds went unused and it did little to reduce suffering and unemployment.
Election of 1932
President Herbert Hoover hoped for reelection, but his chances were slim with the nation’s economy falling apart. The Democrats chose New York Governor Franklin D. Roosevelt as their candidate, and voters elected him in a landslide victory.
FDR’s New Deal
During the election of 1932, FDR told the Democrats and the nation, “I pledge you, I pledge myself, to a new deal for the American people.” He declared that “the country demands bold, persistent experimentation.” He also spoke of trying to help “the forgotten man at the bottom of the economic pyramid.”
FDR’s Background
FDR was a distant cousin of Theodore Roosevelt. He came from a wealthy New York family. He won election to the NY Senate in 1910, where he became known as a leader with the ability to get others to support his views. IN 1913, he became assistant secretary of the navy. In 1920, Democrats chose him as their VP candidate, but they lost the election. In 1921, he was struck with polio, which left him paralyzed in both legs and bound to a wheelchair. He later returned to politics and won election to be the Governor of NY, where he earned a reputation as a reformer.
Fireside Chats
In FDR’s first week in office, he ordered all banks closed for 4 days and Congress passed the Emergency Banking Relief Act to help banks reorganize. He gave a radio talk to the nation about how they could trust putting their money back in banks. This was the first of many “fireside chats” that helped him gain the public’s trust.
John Maynard Keynes
Keynes was an English economist who believed that even free market capitalist nations needed some oversight by government, and is best known for new ways to get out of recessions. He argued for governments to stimulate faltering economies with public investiture. Even a small increase in government spending could net sizeable results, creating economic and social stability.
Government-led investment infused the economy with cash and provided work for those previously unable to participate in the economy because of joblessness. For instance, if a government hires a construction firm to build a bridge, the firm needs to hire workers and pay them. Those newly employed workers use their salaries to purchase food from a farmer. That farmer now sees increased demand and needs to hire more laborers, and so on. More workers meant more happy citizens, more money in the economy, and more equality among members of society.
When FDR assumed power in the midst of the Great Depression, Keynesian economic philosophy figured heavily into the new administration’s financial relief plan: The New Deal. When FDR assumed power in the midst of the Great Depression, Keynesian economic philosophy figured heavily into the new administration’s financial relief plan: The New Deal. Within one hundred days, FDR had created three crucial agencies designed to stimulate job growth.
FDR’s New Deal and the Three R’s
The New Deal programs were known as the three “Rs”; Roosevelt believed that together Relief, Reform, and Recovery could bring economic stability to the nation. Reform programs focused specifically on methods for ensuring that depressions like that in the 1930s would never affect the American public again.
Glass-Steagall Act
In 1933, in the wake of the 1929 stock market crash and during a nationwide commercial bank failure and the Great Depression, two members of Congress introduced an act, known today as the Glass-Steagall Act (GSA), that would separate investment and commercial banking activities. This was initially called the Banking Act of 1933. At the time, improper banking activity–the overzealous commercial bank involvement in stock market investment–was deemed the main culprit of the financial crash. It was believed that commercial banks took on too much risk with depositors’ money.
Federal Deposit Insurance Corporation (FDIC)
On June 16, 1933, President Franklin Roosevelt signed the Banking Act of 1933, a part of which established the FDIC, which had the responsibility to insure bank deposits in eligible banks against loss in the event of a bank failure and to regulate certain banking practices. It was established after the collapse of many American banks during the initial years of the Great Depression.
Gold Reserve Act (1934)
The Gold Reserve Act of 1934 was passed under President Franklin D. Roosevelt at the height of the Great Depression to stabilize the money supply in the U.S. Gold reserves were transferred from the Federal Reserve bank to the U.S. Treasury at a discount.
The precious metal was effectively converted from a currency to a commodity with the passage of the Act.
The intended effect of the law was to increase the money supply and stem deflation by devaluing the dollar, including in foreign exchange markets.
Civilian Conservation Corps (CCC)
Roosevelt asked Congress to create the Civilian Conservation Corps (CCC). Over the next 10 years, the CCC employed about 3 million young people. The wokers did projects that helped the public, including planting trees to reforest areas, building levees for flood control, and improving national parks.
