UNIT 10 AKS 46 & 47: Great Depression & New Deal

After World War I and the roaring 20s, the United States fell into an economic depression. This unit will examine the causes, effects, and
recovery efforts involved in the Great Depression.
Essential Knowledge
The Interactions of Business Overproduction and Consumer Underconsumption
During the 1920s, the wealthy grew wealthier due in large measure to government fiscal policies that both reduced business regulations
and allowed the wealthy to keep more of their money. These reduced regulations and low corporate taxes increased the profits of
corporations and made their stocks more valuable. At the same time, the poor and working classes lost the ability to buy products because
their wages stayed the same while prices rose. This reduction in consumption resulted in business overproduction and eventually caused
business profits to decline. These factors were an important cause of the Great Depression.
New methods of buying products, including the installment plan and buying on credit, became popular during the 1920s. These methods
encouraged consumers to buy more than they could afford and to go into debt. Larger numbers of people also engaged in stock market
speculation. Banks loaned people money to buy stock with very little money down. The stocks themselves became the collateral for the
loan. This was called buying on margin. Rising stock prices and the ability of ordinary people to buy stock on credit increased investment in
the stock market and inflated the price of stocks above their actual value. Then, by October 1929, the U.S. economy was beginning to
show signs of slowing down. Stockholders feared the economy was ending a period of prosperity and entering a period of recession. This
caused some investors to panic and sell their stock. As more people sold their stock, other people panicked and sold their stock, driving
down prices and causing a stock market crash. In turn, the stock market crash triggered other economic weaknesses and plunged the
United States into the Great Depression—a severe economic recession in the 1930s that affected all the world’s industrialized nations
and the countries that exported raw materials to them. Industry, trade, construction, mining, logging, and farming decreased sharply.
Business profits, tax revenues, and personal incomes did too.
Vocabulary
Overproduction the supply of manufactured goods exceeds the demands.
Speculation buying stocks at a high risk with the expectation the price will rise. 
Buying stock on margin Buying stock by paying only a portion of the stock price and borrowing the rest.
Stock market crash a quick and usually unanticipated drop in stock prices.
Black Tuesday also known as the Wall Street Crash of 1929, was the worst stock market crash in US
history.
Knowledge Check
How does what happens to farmers post WWI foreshadow what was to come with the economy at the end of the 1920’s?
Farmers planted more and took out loans for land and equipment hoping for a good payout when the crop prices
declined and farmers lost land.
What does “living beyond your means” entail?
To spend more money than one can afford to spend.
How was the prosperity of the 1920’s built on a fragile foundation?
Unequal distribution of income resulted in most Americans not fully participant in the economic advances of
1920s
What was the Hawley-Smoot tariff’s intention? What result did it actually have?
It was meant to protect US industry but had the opposite effect. Other countries passed their own tariffs and world
trade fell 40%
When the stock market crashes what happens to people who bought stock on margin?
People who bought on margin had no way to pay off loans
What about the banks?
Banks had invested in the stock market and lost money
What about people who just had their money in the bank but not the stock market?
People panicked and withdrew their money from banks. They couldn't get their money back from the banks
because banks invested in the stock market and suffered from the crash.
Essential Knowledge
Dust Bowl
In the 1930s, the Great Plains states experienced a severe drought. When a series of severe dust storms hit the prairies, they picked up
the dirt loosened by the drought and the poor farming practices that had eroded the soil. This ecological disaster was called the Dust
Bowl. Dry conditions and high winds made farming impossible. Tenant farmers and sharecroppers were among the hardest hit as their
landlords evicted them and sold the land. Over 500,000 Americans were left homeless. Many farmers from Oklahoma, Texas, and the
surrounding Dust Bowl states migrated west to California in search of work.
Vocabulary
 Dust Period of widespread drought and dust storms in the plains states during 1930s
Bowl
Okies Name given to migrants fleeing the Dust Bowl

Knowledge Check
What were the major causes of the Dust Bowl?
Economic depression combined with extended drought, unusually high temperatures, poor agricultural practices,
etc.
Essential Knowledge
Widespread Unemployment
As profits fell and it became clear consumers would need to reduce spending, workers began to lose their jobs. By 1932, the
unemployment rate in the United States had reached 25%. Unemployed workers who had no savings could not pay their debts, and many
lost their homes. Homeless and unemployed people settled in camps of shacks and tents in rundown areas. These camps became known
as Hoovervilles, named after Herbert Hoover, the U.S. president when the Great Depression started. Hooverville residents slept in
packing crates if they were lucky; if not, they slept on the ground. They begged for food from people who still had jobs and housing.
In the first presidential election during the Great Depression, American voters rejected Herbert Hoover and voted in Franklin D. Roosevelt.
Roosevelt used the name “New Deal” for his series of programs to end the Depression. He promised these programs would help different
segments of the economy recover by addressing specific needs and weaknesses.
Vocabulary
Brain Trust A small group of academic advisors who came together in 1932 to help Franklin D Roosevelt find
ways out of the Great Depression.
First Hundred The beginning of a leading politician's term in office, the term while FDR was taking office.
Days
Bank Holiday A business day during which financial institutions are closed.
WPA Works Progress Administration (WPA) employed tons of unemployed people (mostly unskilled
men) to carry out public works projects, including the construction of public buildings and roads.
CCC Civilian conservation Corps (CCC) employed about 3 million men (between 18-25) to work on
projects that benefited the public, planting trees to reforest areas, improving national parks, etc.

FDIC Federal Deposit Insurance Corporation (FDIC) insured bank deposits in eligible banks against loss
in the event of a bank failure and to regulate certain banking.
SEC The Securities and Exchange Commission (SEC) is an independent federal regulatory agency that
protects investors and capital, oversees the stock market and proposing/enforcing federal securities
laws.
TVA New Deal program that led to the creation of hydroelectric dams on Tennessee River.

Wagner Act Law recognizing rights of unions to organize

WPA program of Second New Deal that employed artists and construction workers

Knowledge Check
Describe some of the social impacts of the Great Depression both negative & positive.
Positive: FDR’s New Deal efforts to relieve Americans of the depression hardships
Negative: banks fail, schools close, people out of work, increased suicide rates, etc.

How does the stock market crash effect generations to come in how they view economics?
People are more conscious about investing in the stock market.
What are Hooverville’s and why were they given that name?
Americans who lost their homes during the depression lived in shantytowns also known as “Hooverville’s”,
named after the president at the time, Herbert Hoover.
How did minorities fair when it came to the depression?
Women and African Americans were either the last hired or first fired, and the unemployment rate for African
Americans remained around 50%
 What was Hoover’s philosophy when it came to dealing with the depression? How does the American public react to this?
Hoover tried to reassure Americans that wealth would return without the government taking bold actions to end
the depression earlier. Americans lost faith in Hoover and started to look for new leadership.
What was the Bonus Army?
A large group of demonstrators consisting of world war I veterans and their families who demanded bonus
payment for their war service.
What impact does the Bonus Army have on the election?
The way Hoover handled the eviction of the Bonus Army ultimately caused Hoover to lose the presidential
election of 1932.
Why was the first action FDR took as president declaring a bank holiday?
The banks needed to recover quickly because people had no confidence in them anymore.
What was FDR’s goal of having the “fireside chats”?
Fireside chats were FDR’s way of getting his new deal plans to Americans through the radio in hopes of gaining
support for his plans.

Describe labor disputes in the 1930’s.

Unemployment rates reached great heights through pro labor laws that strengthened the union force. 

Essential Knowledge
Second New Deal
The Second New Deal refers to the programs President Roosevelt instituted after his original New Deal failed to completely fix the
American economy. One of the most important actions of the Second New Deal was the Social Security Act, which was passed in 1935.
This law consisted of three components: 1.Old-age insurance for retirees aged 65 or older and their spouses, paid half by the employee
and half by the employer 2.Unemployment compensation paid by a federal tax on employers and administered by the states 3.Aid for the
disabled and for families with dependent children paid by the federal government and administered by the states
Vocabulary
Second It includes programs to redistribute wealth, income, and power in favor of the poor, the old, farmers
New Deal and labor unions.
Knowledge Check
What does the Social Security Act do?
the Social Security Act established a system of old-age benefits for workers, benefits for victims of industrial
accidents, unemployment insurance, aid for dependent mothers and children, and the disabled.
How did FDR plan to help farmers?
FDR's Agricultural Adjustment Act sought to cure the problem of overproduction of crops, and low prices for
those crops, by paying farmers not to produce.
FDR’s new deal was costly, describe the cost. What does the government have to do to finance these plans?
The government spent more than the revenue at the time (deficit spending) to finance FDR’s plans.

Essential Knowledge
Roosevelt’s Political Challenges
During his 12-year presidency, Roosevelt faced many challenges to his leadership and had many critics. Opponents of the New Deal came
from all parts of the political spectrum. Some believed that his efforts to “pack the court” to gain support for his New Deal programs was
attacking the independence of the judiciary and was unconstitutional. Some, like Louisiana senator Huey P. Long, thought that the New
Deal had not gone far enough to promote Socialism and eliminate inequality in America.
As first lady, Eleanor Roosevelt focused on humanitarian causes and social progress. She advocated for women and African Americans or
Blacks, and helped to end discriminatory practices associated with New Deal legislation. She is also credited with changing the role of First
Ladies from that of passive spouses to women who use their position of influence to address societal issues.
Vocabulary
Court packing Changing the number of judges on a court, making it more favorable to particular goals
bill
Huey Long The 40th governor of Louisiana and US senator from 1932-1935. He criticized FDR’s New Deal
programs and created a “Share Our Wealth” movement to lessen the effects of the Depression. The
idea was to distribute wealth more evenly among Americans.
Share Our a program designed to provide a decent standard of living by evenly spreading the nations wealth
Wealth Club among people.
 Good The United States kept its eye on Latin America in a more peaceful tone. The Good Neighbor policy
Neighbor was the foreign policy of Franklin Roosevelt toward the countries of Latin America. 
policy
Neutrality Act Designed to avoid American involvement in World War II by preventing loans to those countries
taking part in the conflict.
Mary McLeod  a world-renowned educator, civil and human rights leader, and an advisor to five U.S. presidents.
Bethune Mary Mcleod.Bethune became a special advisor to President Roosevelt on minority affairs
Knowledge Check
Describe the role of Eleanor Roosevelt played as First Lady.
Eleanor Roosevelt campaigned to help minority groups and spoke out against racism in America.

Why did people from both parties criticize the New Deal?
FDR’s New Deal programs failed to end the depression leading to frustration and fueled criticism from both
parties.
Why does FDR feel the need to try and “pack the court” by adding more SC justices?
FDR wanted to “pack the court” to gain favorability for his New Deal program ideas.
SSUH.I.46: analyze the causes and consequences of the Great Depression
SSUH.I.46.a: describe the causes, including overproduction, underconsumption, and stock market speculation that led to the stock market crash of 1929, bank failures, and the Great
Depression
SSUH.I.46.b: explain factors (include over-farming and climate) that led to the Dust Bowl and the resulting movement and migration west
SSUH.I.46.c: explain the social and political impact of widespread unemployment that resulted in developments such as Hoovervilles

SSUH.I.47: evaluate Franklin D. Roosevelt's New Deal as a response to the Great Depression and compare how governmental programs aided those in need
SSUH.I.47.a: describe Roosevelt's attempts at relief, recovery, and reform reflected in various New Deal programs
SSUH.I.47.b: explain the passage of the Social Security Act as a part of the second New Deal
SSUH.I.47.c: analyze political challenges to Roosevelt's leadership and New Deal programs
SSUH.I.47.d: examine how Eleanor Roosevelt changed the role of the First Lady including development of New Deal programs to aid those in need