The Great Depression: Review Guide
US History II
Part I- Causes of the Great Depression
Long Term Causes
- Unequal Wealth Distribution
o Majority of the increase in income of the 1920s was absorbed by the upper classHow can this slow down spending and negatively affect the economy?
- Protectionist Trade Policies
o Their original purpose/intention
o How Europe was affected by high tariffs (i.e. Smoot Hawley)
o The result of these trade policies (i.e. reduction in American exports to Europe,
retaliatory policies)
- Farm Failures
o How were farmers affected by WWI? What actions did they take to increase profit?
o After WWI, what happened to the price of products?
o How were farmers negatively affected by this, and how did this in turn affect the
rest of the economy? (i.e. failure to pay mortgages, reduced spending)
- Superficial Prosperity/Buying on Credit
o Review: Installment Plans
o False wealth/false demand of the 1920s = Overproduction of products
o Accumulating debt = inability to pay off loans (hurts banks) and reduce spending
Short Term Causes
- Stock Market Crash
o Increased value of stocks driven up by demand- Problem?
o Over speculation
o Margin buying
o Crash- Period of intense selling at lowered prices (Black Tuesday- Oct. 29, ’29)
o Loss of trust in financial system  affects banks
- Bank Failures
o Bank runs- Depositors request $$
o How does a bank function? How many deposits are kept in cash by bank? Invested
elsewhere?
o “Bank runs”
o Federal Reserve System- How did it work? Could it have done more? (See “The
Great Depression: An Overview” Article and Graphic Organizer)
o Decrease in money stock: Others can no longer borrow and make purchases
Economic Indicators
- GDP- Gross Domestic Product
- CPI- Consumer Price Index
o Inflation- Pros/Cons?
o Deflation- Pros/Cons?
- Unemployment Rate- 25%
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Part 2- The Great Depression
Hardships of the Depression
Herbert Hoover
- Past experience
- Philosophy (see campaign speech: “Rugged Individualism”)
- Hoover’s Reassurance- Economic cycles
- Hoover’s policies
o Boulder (Hoover) Dam
o Federal Farm Board
o National Credit Corporation
o Federal Home Loan Bank Act
o Reconstruction Finance Corporation- “Trickle Down” Economics
o **No Direct Relief
- Anti-Hoover Sentiment (i.e. Hoover flags, Hoovervilles, Hoover blankets)
- Mid-term elections (1930)
- Gassing the Bonus Army
o Patman Bill; Eisenhower and MacArthur
Franklin Delano Roosevelt
- Brain Trust
- Three Main Goals: Recovery, Relief, Reform
- “The First Hundred Days”
o National Bank Holiday
o Emergency Banking Relief Act
- Fireside Chats
The First New Deal (’33-’35)
Second New Deal (’35-’38)
Glass-Steagall Act of 1933
“Second Hundred Days”
o FDIC
Replacement of AAA
Federal Securities Act- 1933
Rural Electrification Act
Securities and Exchange Commission (SEC)
National Labor Relations Board (case against
st
Prohibition repealed by 21 amendment (1933)
Laughlin Steel Corps- Constitutional? Why?)
“Alphabet Soup” (See handout and slides):
Fair Labor Standards Act
o Agricultural Adjustment Act (AAA)
**Social Security Act (Frances Perkins)
o Tennessee Valley Authority (TVA)
Works Progress Administration
o Civilian Conservation Corps (CCC)
National Youth Administration
o Public Works Administration (PWA)
o National Recovery Administration (NRA)
Criticism and Supreme Court Reaction (i.e. NIRA;
AAA)
FDR’s response
- **Local Relief Contributions (i.e. Hohokus elementary school)
- Eleanor Roosevelt
- Dorothea Lange
- African American Advances
- Culture during the Great Depression
- Legacies- Expansion of Gov’t Power; Social Security and other federal programs to provide
relief that are still intact today
- Effect of WWII on Depression