1. American History Chapter 11 On-Line Study Guide The Great Depression Begin Mr. Maxa & Mr. Bellisario

2. Table of Contents Chapter 11 Section 1 The Causes of the Great DepressionChapter 11 Section 1 The Causes of the Great Depression Chapter 11 Section 2 Life during the DepressionChapter 11 Section 2 Life during the Depression Chapter 11 Section 3 Hoover Responds to the DepressionChapter 11 Section 3 Hoover Responds to the Depression

3. The Election of 1928 The election of 1928 pitted Herbert Hoover versus Alfred E. Smith. Smith was governor of New York but he was also Catholic, which he felt was smear campaign against his candidacy. Hoover, the Secretary of Commerce, campaigned on the prosperity of the 1920s and as a result, he won!

4. Stock Market during the 1920’s After the election, stock prices continued to increase. The stock market was a system for buying and selling shares of companies.

5. Bull Market The late 1920s saw a bull market, or a long period of rising stock prices.

6. Buying Stock “On-Margin” & Margin Call Many investors began buying stocks on margin. They made a small down payment on the stock and took out a loan from a stockbroker to pay for the rest. If stock prices fell, the stockbroker issued a margin call, a demand for the investor to repay the loan.

7. Stock Prices Falling By mid-1929, the stock market was running out of new customers. Professional investors began selling off their holdings. –Prices decreased. Other investors sold their shares to pay the interest on loans from brokers. –Prices fell further.

8. Speculation Before the late 1920s, the prices that investors paid for stocks had to do with the company’s profits. This was no longer true by the late 1920s. Many buyers hoped to make a quick profit and practiced speculation. They were betting that the stock market would continue to climb.

9. Black Tuesday October 29, 1929 On October 29, 1929, which became known as Black Tuesday, stock prices took their steepest dive. The crash was not a major cause of the Great Depression, but it undermined the economy.

10. Money Lost Many banks had lent money to stock speculators. They had also invested depositors’ money in the stock market. When stock prices fell, many banks lost money on their investments, and speculators could not repay their loans.

11. Why Banks Began to Close The banks had to cut back on the number of loans they made. As a result, people could not borrow as much money as they once did. This helped send the economy into a recession. Many banks were forced to close. People who had deposits in these banks lost all their savings.

12. Bank Runs Some Americans began bank runs. This takes place when many people withdraw money at the same time out of fear the banks will close. This caused many more banks to collapse.

13. Roots of the Depression The Federal Reserve had kept interest rates low in the 1920s, encouraging banks to make risky loans. Low rates also misled many business leaders into thinking that the economy was still growing. They borrowed more money to expand production. This led to overproduction when sales were actually decreasing.

14. Overproduction During the 1920s, manufactures produced an abundance of goods to meet the demand. When sales slowed, manufacturers cut production and laid off employees. This effect rippled through the economy.

15. Uneven distribution of wealth Most Americans did not earn enough to buy up the flood of goods they helped produce. In 1929, the top 5% of all American households earned 30% of the nation’s income. About 2/3 of families earned less than $2,500 a year.

16. Installment Plans During the 1920s, many Americans bought high- cost items on the installment plan. This allowed people to pay for items in monthly installments. Some people had to reduce their purchases in order to pay their debts.

17. Hawley-Smoot Tariff Americans were also not selling many goods to foreign countries. In 1930, Congress passed the Hawley- Smoot Tariff. –It raised the tax on many imports. Foreign countries then raised their tariffs against American goods, which caused fewer American products to be sold overseas.

18. Banks and companies that failed More than 9,000 banks failed by 1933 In 1932, 30,000 companies had gone out of business.

19. Number of unemployed By 1933, more than 12 million workers or ¼ of the workforce was unemployed.

20. YMCA During the depression, charitable organizations like the YMCA set-up soup kitchens to provide meals for poor people.

21. Hoovervilles People and families that were evicted or had to foreclose on their homes built shacks-like communities called Hoovervilles, named after President Hoover.

22. Hobos Some homeless and unemployed people wandered around the country. Known as hobos, they traveled by sneaking onto open boxcars on freight trains.

23. The Dust Bowl What & Why Great Plains Farmers soon faced a new problem. When crop prices decreased in the 1920s, farmers left many fields unplanted. In 1932, the Great Plains experienced a severe drought. The unplanted soil turned to dust. Much of the Plains became a Dust Bowl.

24. Okies Many families packed their belongings and headed west to California. They were given the nickname, Okies due to the region that they came from.

25. Entertainment during the Great Depression During the Great Depression, Movies and radios were two popular forms of entertainment. Walt Disney produced the first feature-length animated film in 1937, Snow White and the Seven Dwarfs.

26. Soap Operas Daytime radio shows like, Guiding Light, were often sponsored by laundry soap manufactures, thus they got the nickname, soap operas.

27. John Steinbeck The Grapes of Wrath Novelists such as John Steinbeck wrote about the lives of people in the Depression. In The Grapes of Wrath, Steinbeck told the story of an Oklahoma farm family who fled the Dust Bowl to find a better life in California. He based his writing on visits to and articles about migrant camps in California.

28. Dorothea Lange Photographer during the Great Depression, who took pictures of reality.

29. What influenced art and literature Art and literature in the 1930s reflected the realities of life during the Depression. Some writers during the Depression influenced literary style in a technique known as stream of consciousness. This style showed what characters were thinking and feeling without using conventional dialogue.

30. Life Magazine Life magazine was introduced. It was a weekly magazine that showcased the work of photojournalists, such as Dorothea Lange and Margaret Bourke-White, who documented the hardships of the Great Depression.

31. Hoover’s effort for public confidence Publicly, President Hoover declared the economy to be on the right track soon after Black Tuesday. –Privately, he was worried. He brought together business, as well as government and labor leaders. Industry leaders promised not to cut factories or cut wages. –By 1931, they had broken these promises.

32. “Rugged Individualism” President Hoover felt that the government should not step in to help individuals. People needed to work hard themselves to get back on their feet. Hoover wrote, American Individualism, outlining the best social, political, spiritual, and economic system.

33. Public works Hoover increased public works, or government-financed building projects, to create jobs. –It wasn’t enough. For public works to make a dent, Hoover needed to massively increase government spending. He would have to either raise taxes or run a deficit. Either way, Hoover was afraid it would only delay economic recovery.

34. Reconstruction Finance Corporation Hoover set up the National Credit Corporation and the Reconstruction Finance Corporation to provide money to banks and businesses, but neither met the nation’s needs.

35. Hoover’s approach to federal relief Hoover opposed relief, money given directly to destitute families. By the spring of 1932, local and state governments were running out of money. Congress passed an act to provide loans to states for direct relief. Hoover signed it, but the program could not reverse the economy’s downward spiral.

36. Protests by farmers farmers began destroying crops, hoping the lack of supply would raise prices. Some even blocked food deliveries or dumped milk into ditches.

37. Farm Foreclosures Farms were heavily mortgaged to pay for supplies. Many lost their farms when creditors foreclosed and took ownership.

38. The Bonus Army Congress had scheduled bonus payments of $1,000 to World War I veterans for 1945. In 1931, a congressman introduced a bill to distribute the bonuses early. A group of veterans—dubbed the Bonus Army by the press—marched to the Capitol to lobby for early bonuses.

39. Herbert Hoover’s response The Senate voted down the bill. –Many veterans went home. Some stayed on, squatting in vacant buildings or in camps. Hoover ordered the buildings cleared but the camps left alone. When police killed two veterans, the army was called in.

40. General Douglas MacArthur General Douglas ignored Hoover’s orders and attempted to remove all the veterans—including those in the camps. Newsreel images of troops assaulting veterans further damaged Hoover’s reputation and haunted him throughout the 1932 campaign.

41. GOOD LUCK!!!!! Back to the Beginning!