Glossary
Bank Failures
The collapse of financial institutions when they run out of money due to mass withdrawals or bad investments.
Example:
After the stock market crash, widespread bank failures meant that many Americans lost their life savings, as there was no federal insurance to protect their deposits.
Black Tuesday
October 29, 1929, the day the stock market experienced its most severe single-day crash, marking a pivotal moment in the onset of the Great Depression.
Example:
On Black Tuesday, panic selling overwhelmed the New York Stock Exchange, leading to a catastrophic drop in stock values and signaling the end of the economic boom.
Bonus March
A protest in 1932 by WWI veterans who marched on Washington D.C. to demand early payment of a bonus promised to them for their service.
Example:
The violent dispersal of the Bonus March by the U.S. Army further damaged President Hoover's public image and fueled discontent among the American populace.
Credit
The ability of a customer to obtain goods or services before payment, based on the trust that payment will be made in the future.
Example:
Many Americans in the 1920s bought consumer goods like cars and radios on credit, accumulating debt that became unsustainable when the economy faltered.
Dust Bowl
A period of severe dust storms and drought in the 1930s that devastated the ecology and agriculture of the American and Canadian prairies.
Example:
The Dust Bowl forced thousands of farming families, known as Okies, to abandon their homes in the Great Plains and migrate westward in search of work.
Federal Reserve
The central banking system of the United States, responsible for managing the nation's money supply, interest rates, and banking system.
Example:
Critics argue that the Federal Reserve worsened the Great Depression by tightening the money supply, making it harder for businesses to borrow and expand.
First Hundred Days
The initial period of Franklin D. Roosevelt's presidency (March to June 1933) during which he rapidly enacted a series of significant New Deal legislation to address the economic crisis.
Example:
During his First Hundred Days, FDR pushed through an unprecedented amount of legislation, including the Emergency Banking Act, to stabilize the financial system and restore public confidence.
Franklin Delano Roosevelt (FDR)
The 32nd U.S. President (1933-1945) who led the country through the Great Depression and World War II, known for his New Deal programs.
Example:
Franklin Delano Roosevelt (FDR) inspired hope with his promise of a "New Deal" and his famous fireside chats, reassuring Americans during the depths of the Depression.
Great Depression
The most severe economic downturn in US history, characterized by widespread unemployment and poverty.
Example:
During the Great Depression, many families lost their homes and struggled to find work, leading to immense social hardship across the nation.
Hawley-Smoot Tariff
A highly protectionist tariff passed in 1930 that raised import duties to record levels, aiming to protect American industries but instead stifling international trade.
Example:
The Hawley-Smoot Tariff triggered retaliatory tariffs from other countries, leading to a sharp decline in global trade and deepening the worldwide economic depression.
High unemployment
A period where a large percentage of the workforce is unable to find jobs, leading to economic stagnation and social distress.
Example:
The high unemployment rate during the 1930s meant that millions of Americans were out of work, leading to widespread poverty and desperation.
Hoovervilles
Shantytowns built by homeless people during the Great Depression, named sarcastically after President Herbert Hoover, who was blamed for the economic crisis.
Example:
Families who lost their homes due to foreclosures often ended up living in makeshift shelters in Hoovervilles on the outskirts of cities, symbolizing the era's despair.
Lack of regulation
The absence or insufficiency of government rules and oversight in economic sectors, which can lead to risky practices and instability.
Example:
The lack of regulation in the banking and stock market sectors allowed for speculative practices and risky loans that made the financial system vulnerable to collapse.
Margin buying
The practice of borrowing money from a broker to purchase stocks, using the stocks themselves as collateral.
Example:
Investors engaged in widespread margin buying during the 1920s, amplifying their potential gains but also their losses when stock prices plummeted.
New Deal
A series of programs and reforms enacted in the United States between 1933 and 1939 under President Franklin D. Roosevelt, aimed at combating the Great Depression.
Example:
The New Deal introduced groundbreaking initiatives like Social Security and the Civilian Conservation Corps, fundamentally changing the role of the federal government in American life.
Okies
Migrant agricultural workers and their families, primarily from Oklahoma and surrounding states, who moved to California during the Dust Bowl era in search of work.
Example:
The plight of the Okies, depicted in John Steinbeck's "The Grapes of Wrath," highlighted the human cost of the environmental and economic disasters of the 1930s.
Overproduction
A situation where the supply of goods and services exceeds consumer demand, leading to falling prices and unsold inventories.
Example:
Farmers experienced severe hardship due to overproduction in the 1920s, as abundant harvests led to plummeting crop prices, making it difficult to earn a living.
President Herbert Hoover
The 31st U.S. President (1929-1933) who initially responded to the Great Depression with limited government intervention, believing in self-reliance and voluntary cooperation.
Example:
President Herbert Hoover faced widespread criticism for his perceived inaction during the early years of the Depression, leading to the naming of shantytowns as "Hoovervilles."
Purchasing Reduction
A decrease in consumer spending, which further reduces demand for goods and services and slows economic activity.
Example:
As people lost jobs and confidence during the Depression, a significant purchasing reduction occurred, creating a vicious cycle where businesses had no reason to produce.
Risky loans
Loans made by banks or lenders that have a high probability of not being repaid, often due to the borrower's poor credit or the speculative nature of the investment.
Example:
Banks made numerous risky loans to speculators and businesses during the 1920s, contributing to their instability and eventual failure when the economy declined.
Roaring Twenties
A decade of economic prosperity and cultural change in the United States during the 1920s, characterized by consumerism and new social norms.
Example:
The carefree spirit of the Roaring Twenties masked underlying economic vulnerabilities, such as excessive speculation and unequal wealth distribution, which contributed to the later crash.
Run on the bank
A situation where a large number of bank customers simultaneously withdraw their deposits due to fears about the bank's solvency.
Example:
News of a struggling bank could trigger a run on the bank, as anxious depositors rushed to withdraw their money, often forcing the institution to close its doors.
Stock Market Crash
A sudden and steep decline in stock prices, often signaling the start of a broader economic downturn.
Example:
The Stock Market Crash of 1929, known as Black Tuesday, wiped out billions of dollars in wealth and shattered public confidence in the economy.