GA EOCT and Milestones review questions and answers for the Great Depression and New Deal programs; GPS standards SSUSH 17 and 18

1. The Great Depression and New
Deal

2. • Buying stock on speculation (made high-risk
investments in hopes of making large returns on their
money)
• Investors engaged in “buying on the margin” where
they purchased stocks for only a portion of what they
cost, then borrowed the difference & paid interest on the
loan.
• Increase in production meant manufacturers could
charge less $ which caused consumerism – the practice
of buying and consuming products – spending more $
than they saved.
• Overproduction & underconsumption – producing
more goods than consumers want and/or need to buy =
falling prices b/c of competition to persuade consumers
to buy  hurts producers, raises unemployment, people

3. • Manufacturers had the ability to produce goods at a
greater number and more efficient rate b/c of
mechanization (increased use of machinery for
production) – eventually turning out products faster than
consumers could buy them.
• Overproduction is when the market has more of a
product than consumers want. And consumers’
reluctance to buy all that has been produced is referred
to as underconsumption.
• Over production combined w/ underconsumption leads to
falling prices as producers try to convince consumers to
pick their goods over others. Eventually, falling prices
hurt producers, raise unemployment, and hurt the
economy.

4. • As stock prices reached all time highs, many investors of
the 1920s engaged in something called “buying on
margin”.
• Under this practice, investors purchased stocks for only a
portion of what they cost (made a down payment).
• They then borrowed the difference (loan) and paid
interest.
• $100 (your cash) + $100 (borrowed $) = $200…stocks go
up in value of 20% ($240) …40% on YOUR CASH
investment BUT when prices drop…that’s bad for
you…b/c you will have to pay X amount of $ to maintain
your cash value or sell some of your stock.
• When stock prices drop too much and too fast, investors

5. • Another way investors tried taking advantage of the
prosperity in the Stock Market of the 1920s was buying
stock on speculation – making high-risk investments in
hopes of making large returns on their money.
• Buying a rental home = investment.
• Buying 1000’s of acres on the coast at a low price b/c
you heard that the next big tourist development was
possibly going to built there and then you’d sell the land
for a higher price after the contracts for the development
are set = speculation.

6. • October 29, 1929 – known as “Black Tuesday”.
• Many who bought stock on speculation or invested by
buying on margin lost everything.
• Others were financially ruined as brokers and banks
began to call in loans but people had no money to pay.
• The disaster marked the beginning of the Great
Depression which lasted more than a decade and
remains the greatest economic crisis in U.S. History.

7. • In an attempt to take advantage of high demand for their
products during WWI, midwestern farmers unknowingly
stripped much of the land and left it damaged by poor
farming techniques.
• This damage combined with massive droughts left much
of the mid-western soil extremely dry, exposed by a lack
of crops, and easily swept away by high winds.
• These conditions served to create the disaster in the
early 30’s known as the Dust Bowl – a series of storms
that hit the Mid-West, causing enormous clouds of dust to
be created by the high winds.
• The clouds would blanket farms & cities as they
destroyed areas, leaving them uninhabitable – displaced
hundreds of thousands of farmers, forcing them to be
homeless migrants.

8. • This damage combined with massive droughts left much
of the mid-western soil extremely dry, exposed by a lack
of crops, and easily swept away by high winds.
• These conditions served to create the disaster in the
early 30’s known as the Dust Bowl – a series of storms
that hit the Mid-West, causing enormous clouds of dust to
be created by the high winds.
• The clouds would blanket farms & cities as they
destroyed areas, leaving them uninhabitable – displaced
hundreds of thousands of farmers, forcing them to be
homeless migrants.

9. • At one point during the Great Depression, roughly 1 out
of 4 U.S. citizens did not have a job & countless numbers
became homeless.
• In larger cities, many of the homeless gathered together
to live in homemade shacks – these makeshift villages
came to be called Hoovervilles, in reference to the
president (Herbert Hoover) whom much of the nation
blamed for the Great Depression.

10. • Much of the nation blamed their problems on President
Herbert Hoover (example: Hoovervilles).
• As the U.S. approached the presidential election of 1932,
many citizens felt hopeless and desperate.
• The nation needed leadership and direction.

11. • Roosevelt believed that the country needed the gov’t to
provide direct relief (federal help to those hurting from
the financial crisis).
• Many economists argued that the economy would
eventually be okay if government left it alone (laissez-
faire) but FDR thought this policy had already proven to
be a failure; he was willing to engage in deficit spending
(spending more than you take in).
• To do this, FDR introduced new legislation & a number of
programs known as the New Deal to provide economic
relief and recovery.

12. • TVA: Tennessee Valley Authority; est. 1933 – the TVA
built hydroelectric dams to create jobs and bring cheap
electricity to parts of the South that had previously been
without power, particularly the southern Appalachians.
• SSA: Social Security Act; passed in 1935 – est.
retirement income for all workers once they reach the
age of 65; it also provided benefits to certain unemployed
workers & is the only New Deal program still around
today.
• SEC:

13. • The Period from FDR’s inauguration in March 1933
through the following June became know as the first 100
days.
• During this time, Roosevelt pushed program after
program through Congress in an effort to provide
economic relief and recovery.

14. • National Labor Relations Act (NLRA); also known as the
Wagner Act.
• This law was passed in 1935 and created a board to
monitor unfair management practices, such as firing
workers who joined unions.
• It protected the right of workers in the private sector (non-
government employees) to organize unions, engage in
collective bargaining, and go on strike.
• The act demonstrated a strong shift by the federal
government towards supporting the interest of workers
and made Roosevelt extremely popular among laborers
and union leaders – as a result union membership
increased.

15. • 1934; FDR chose to launch a bold new set of programs:
• Wagner Act (National Labor Relations Act) – see last slide.
• Social Security Act: Passed in 1935, this act est. retirement
income for all workers once they reach the age of 65. It also
provided benefits to certain unemployed workers. Today the SSA
is the only New Deal program still around today. It continues to
pay retirement benefits to those over the official age of retirement.
• Revenue Act of 1935: This law raised taxes on those making
above $50,000 per year as well as corporate and estate taxes. It
won the favor of many on the left and was nicknamed the “soak
the rich tax”.

16. • FDR’s wife; she was one of the most impactful first ladies in
US history.
• Even before moving to Washington, she was a social activist –
in NY she worked for reforms in state gov’t, campaigned for
legislation regarding public housing, fought for the rights of
working women, and supported the distribution of information
about birth control.
• Once she became “first lady”, she presented herself as a
supporter of the “common citizen”.
• Due to FDR’s physical limitations b/c of contracting polio as a
child, Eleanor traveled in his place.
• Thanks to her visibility, activism, and occasional willingness to
take stands even the president wouldn’t, Eleanor
revolutionized the role of first lady and became a formidable

17. • Many criticized FDR for giving gov’t too much control
over business and the economy; some even called him a
socialist.
• One of his harshest critics in Congress was Senator
Huey P. Long of LA; he advocated a redistribution of
wealth and a guaranteed income of $2000 per year for
every US family.
• He proposed legislation that would limit the income of
any US citizen to 1 million dollars per year, with the
government taking the rest in taxes.
• He gathered a large following & many believed he would
run for president in 1936; in September 1935, the son-in-
law of one of his political enemies assassinated him in

18. • Another source of resistance to Roosevelt’s programs
was the United States Supreme Court; the court
frustrated FDR by striking down a number of his New
Deal ideas.
• In February 1937, just a few months after winning re-
election, he proposed his “court-packing scheme”.
• Since the Constitution did not specify the # of SC
Justices, the president proposed enlarging the court from
9 to as many as 15 judges – this would allow him to
“pack” the court with justices favorable to his programs.
• Fierce opposition to the measure arose as politicians
drew comparisons b/t FDR & the dictators who were
beginning to come to power in Europe – in the end
political pressures forced FDR to withdraw his request.

19. • As FDR & Congress battled the Great Depression at
home, they kept a watchful eye on the militaristic
dictators rising to power in Germany & Italy that
threatened sending Europe back to war. At the same time
Japan began to expand its empire in SE Asia – despise
these concerns, the US practiced isolationism.
• The devastation of WWI left many unwilling to become
involved in another international conflict while the effects
of the Great Depression caused citizens to want the gov’t
to fix the problems at home rather than abroad.
• Passed in 1935, the act prohibited the sale of weapons to
warring nations & was meant to keep the US from
forming alliances that might drag the nation into war.