Causes of the Depression, Hoover, and the New Deal
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Flip to reveal answersWhat are the two main categories of causes of the Great Depression that Paper 3 requires you to explain?
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Question
What are the two main categories of causes of the Great Depression that Paper 3 requires you to explain?
Answer
Political causes (e.g. Republican low-regulation, low-tax, high-tariff policy under Harding/Coolidge) and economic causes (overproduction, unequal wealth, credit/margin buying, weak banks, farm depression).
Question
What is 'buying on margin'?
Answer
Buying shares using mostly borrowed money, putting down only a small deposit — this multiplied both gains and losses, making the 1929 stock market crash far more damaging.
Question
Give an example of a chain of causation from overproduction to bank failure.
Answer
Overproduction → unsold goods and falling prices → factories cut jobs and profits fall → some turn to stock speculation instead → Crash wipes out margin investors → banks that lent for speculation or held falling investments collapse.
Question
What was the Smoot-Hawley Tariff (1930) and what effect did it have?
Answer
A law raising US import taxes on over 20,000 goods, meant to protect US industry. Other countries retaliated with their own tariffs, so world trade collapsed, deepening the Depression globally.
Question
What philosophy guided Herbert Hoover's response to the Depression?
Answer
Voluntarism and 'rugged individualism' — the belief that private charity, local government, and voluntary business cooperation should solve the crisis, not direct federal relief to individuals.
Question
What was the Reconstruction Finance Corporation (1932)?
Answer
Hoover's main intervention: a federal agency that lent money to banks, railroads, and insurance companies to stop them collapsing. Criticized for rarely reaching ordinary unemployed families.
Question
What was the Bonus Army incident (1932) and why did it matter?
Answer
WWI veterans camped in Washington DC demanding early payment of a promised bonus; Hoover had the army forcibly clear them. The harsh scenes badly damaged Hoover's public image before the 1932 election.
Question
What are the '3 Rs' of FDR's New Deal?
Answer
Relief (immediate help for the unemployed and poor), Recovery (getting the economy growing again), and Reform (fixing structural weaknesses so it couldn't happen again).
Question
Name two New Deal agencies focused mainly on Relief, and two focused mainly on Reform.
Answer
Relief: Civilian Conservation Corps (CCC), Works Progress Administration (WPA). Reform: Social Security Act (1935), Wagner Act (1935).
Question
Why did the Supreme Court strike down the NRA and AAA?
Answer
The Court ruled in 1935 (NRA, Schechter case) and 1936 (AAA) that these programmes were unconstitutional over-reach by the federal government into areas beyond its powers.
Question
Name one critic of the New Deal from the political left and one from the right.
Answer
Left: Huey Long ('Share Our Wealth'), who said it didn't redistribute wealth enough. Right: the American Liberty League, business leaders who said it was pushing the US towards socialism.
Question
Did the New Deal fully end the Great Depression by 1939?
Answer
No. Unemployment fell from about 25% (1933) to about 14% (1937), but a recession hit in 1937–38. Full recovery only came with wartime production spending from 1941.
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Topic 19.12 hub
The Great Depression and the Americas (mid 1920s–1939)
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