US Economy: 1920s Prosperity to 1930s Great Depression

Economic Boom and the Great Depression

A period of general prosperity in the 1920s ended with the collapse of the Great Depression in the 1930s.

Key Factors and Events

• Bull Market: A stock market in which stock prices were steadily increasing. In the bull market of the 1920s, stock prices became vastly inflated.
• Buying on Margin: Purchasers were able to buy stocks on margin, putting only 10% down and borrowing 90%.
• Speculation Boom: Refers to the practice of buying real estate, stocks, or anything else to sell later at a profit.
• Black Tuesday: The market crash on October 29th.
• Smoot-Hawley Tariff: Reduced international trade.

Key Figures and Groups

• Herbert Hoover: Republican who believed in Laissez-faire economics. He did not think the federal government had to interfere in the economy, and he feared that federal aid would weaken individual character.
• Hoovervilles: Shantytowns that sprang up on the outskirts of cities, named after Hoover.
• Bonus Expeditionary: "Bonus Army" - unemployed veterans and their families, former members of the American Expeditionary Forces during WWI, camped out in Washington D.C. in the summer of 1932, hoping to persuade Congress to grant them a promised bonus.

The Great Depression and its Impacts

• Great Depression: The worst depression America has ever had, it was ultimately cured by entering WWII.
• Gross National Product: The total value of all the goods and services produced by a nation in a single year.
• Dust Bowl: An environmental disaster. Farmers had removed the tough grasses that once protected the soil. A series of droughts in the early 1930s dried up crops and topsoil, turning the soil to dust.

Roosevelt and the New Deal

• Franklin D. Roosevelt: Became president in 1932 and introduced the New Deal to help the economy rebuild.
• Fireside Chats: Informal radio addresses to millions of listeners in which he explained his policies in simple, conversational terms.
• New Deal: Was practical, making choices based on trial and error. Roosevelt was willing to try anything that worked. It had three goals: relief, recovery, and reform.
• The Three R's: Roosevelt assembled Congress for a special session to cope with the nation's economic problems. Democratic control of both houses of Congress and the mood of the nation permitted Roosevelt to push through major legislation.

New Deal Programs and Policies

• The Bank Holiday: Roosevelt closed all the nation's banks just after his inauguration by declaring a bank holiday. Banks were permitted to reopen only after the government inspected its records and found it was financially sound.
• Federal Deposit Insurance Corporation (FDIC): Was created to insure deposits in banks.
• CCC: Gave outdoor jobs to young men.
• The Agricultural Adjustment Act (AAA): Provided loans to farm owners for the same purpose. Recovery to farms.
• TVA: Was a major experiment in public ownership.
• NRA: Set standard prices, limited production, reduced the work week to 40 hours, and established a minimum wage.
• The Works Progress Administration (WPA): Increased employment by creating new public work projects.
• Social Security: Our safety net to fall back on when we're struck by unemployment, illness, or a death in the family.
• National Labor Relations Act: Replaced several provisions of the National Industrial Recovery Act. Gave workers the right to form unions.
• Sit-Down Strike: Automobile workers held a sit-down strike at the General Motors plant in Flint, Michigan.
• Court Packing Plan: The greatest threat to the New Deal came from the Supreme Court. The court ruled that both the NIR Act and the Agricultural Act were unconstitutional.