Splash Screen Contents Chapter Introduction Section 1Causes of the Depression Section 2Life During...

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Contents

Chapter Introduction

Section 1 Causes of the Depression

Section 2Life During the Depression

Section 3 Hoover Responds

Chapter Summary

Chapter Assessment

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Intro 1

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Intro 5

Why It MattersProsperity in the United States seemed limitless before the Great Depression struck. Overproduction and agricultural problems contributed to the economic catastrophe. President Hoover looked to voluntary business action and limited government relief as solutions, but these efforts failed. Meanwhile, millions of Americans lost their jobs and life savings. Artists and writers depicted this suffering, and many people turned to lighthearted films to escape their difficult lives.

End of Intro

Section 1-1

Guide to Reading

Inflated stock prices, overproduction, high tariffs, and mistakes by the Federal Reserve led to the Great Depression.

• Alfred E. Smith

Main Idea

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Key Terms and Names

• stock market • bull market • margin • margin call

• speculation • Black Tuesday • installment

• Hawley-Smoot Tariff

Section 1-4



Section 1-5

The Election of 1928


• The 1928 election placed former head of the Food Administration and secretary of commerce, Herbert Hoover, on the Republican ticket against Democratic candidate, Alfred E. Smith, a four-time governor of New York and the first Roman Catholic to be nominated for president.

• The issue of Prohibition played a major role in the campaign.

• Hoover favored a ban on liquor sales.

• Smith opposed the ban.(pages 656–657)(pages 656–657)

Section 1-6

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• Religious differences between the candidates had a major effect on the campaign.

• The Catholic issue led to a smear campaign against Smith.

• The Republicans took full credit for the prosperity of the 1920s, and Herbert Hoover easily won the 1928 election by a landslide.

The Election of 1928 (cont.)

(pages 656–657)(pages 656–657)

Section 1-7

What were the major campaign issues in the election of 1928?

The issue of Prohibition played a major role in the campaign. Hoover favored a ban on liquor sales. Smith opposed the ban. Religious differences between the candidates had a major effect on the campaign. The Catholic issue led to a smear campaign against Smith. The Republicans took full credit for the prosperity of the 1920s.

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The Election of 1928 (cont.)

(pages 656–657)(pages 656–657)

Section 1-8


The Long Bull Market• The stock market was established as a

system for buying and selling shares of companies.

• A long period of rising stock prices is known as a bull market.

• Prosperous times during the 1920s caused many Americans to invest heavily in the stock market.

(pages 657–658)(pages 657–658)

Section 1-9


• As the bull market continued to go up, many investors bought stocks on margin, making a small cash down payment.

• This was considered safe as long as stock prices continued to rise.

• If the stock began to fall, the broker could issue a margin call demanding that the investor repay the loan immediately.

The Long Bull Market (cont.)

(pages 657–658)(pages 657–658)

Section 1-10


• In the late 1920s, new investors bid prices up without looking at a company’s earnings and profits.

• Speculation occurred when investors bet on the market climbing and sold whatever stock they had in an effort to make a quick profit.


(pages 657–658)(pages 657–658)

Section 1-11



Why were stock market investors in the 1920s sensitive to any fall in stock prices?

Investors were uneasy about any fall in the price of stocks because it meant they might be unable to make money quickly to repay their loans.


(pages 657–658)(pages 657–658)

Section 1-12


The Great Crash• By late 1929, a lack of new investors in

the stock market caused stock prices to drop and the bull market to end.

• As stockbrokers advised their customers of margin calls, customers responded by placing their stocks up for sale, causing the stock market to plummet further.

• Stock prices fell drastically on October 29, 1929, Black Tuesday, resulting in a $10 to $15 billion loss in value.

(pages 658–659)(pages 658–659)

Section 1-13


• While this did not cause the Great Depression, it did undermine the economy’s ability to hold out against its other weaknesses.

• The stock market crash weakened the nation’s banks.

• Banks lost money on their investments, and speculators defaulted on loans.

• Because the government did not insure bank deposits, customers lost their money if a bank closed.

The Great Crash (cont.)

(pages 658–659)(pages 658–659)

Section 1-14

• Bank runs resulted as many bank customers withdrew their money at the same time, causing the bank to collapse.


(pages 658–659)(pages 658–659)

Section 1-15



How did the stock market crash weaken the nation’s banks?The stock market crash caused the banks to lose money on their investments, and speculators defaulted on bank loans. Because the government did not insure bank deposits, customers lost their money if a bank closed. Bank runs resulted as many bank customers withdrew their money at the same time, causing the bank to collapse.


(pages 658–659)(pages 658–659)

Section 1-16


The Roots of the Great Depression• Efficient machinery led to overproduction,

and Americans could not afford to buy all the goods produced.

• The uneven distribution of wealth in the United States added to the country’s economic problems.

• In 1929 the top 5 percent of American households earned 30 percent of the country’s income.

• More than two-thirds of the nation’s families earned less than $2,500 a year.

(pages 659–660)(pages 659–660)

Section 1-17


• Low consumption added to the economic problems.

• Worker’s wages did not increase fast enough to keep up with the quick production of goods.

• As sales decreased, workers were laid off, resulting in a chain reaction that further hurt the economy.

The Roots of the Great Depression (cont.)

(pages 659–660)(pages 659–660)

Section 1-18


• Many Americans bought on the installment plan, making a down payment and paying the rest in monthly installments.

• Paying off installment debts left little money to purchase other goods.

• The Hawley-Smoot Tariff intensified the Depression by raising the tax on imports.

• Americans purchased less from abroad because of the high cost.


(pages 659–660)(pages 659–660)

Section 1-19


• In return, foreign countries raised their tariffs on American products, causing fewer to be sold overseas.

• Instead of raising interest rates to stop speculation, the Federal Reserve Board made the mistake of lowering the rates.

• This encouraged banks to make risky loans and misled business owners into thinking the economy was still expanding.


(pages 659–660)(pages 659–660)

Section 1-20



How did the Federal Reserve Board help cause the Depression?

Lowering the interest rate instead of raising it helped cause the Depression in two ways. First, it encouraged banks to make risky loans. Second, it made it appear as if the economy was still thriving, which caused businesses to borrow money to further expand their production.


(pages 659–660)(pages 659–660)

End of Section 1

Section 2-1


Guide to Reading

Many people were impoverished during the Great Depression, but some found ways to cope with the hard times.

• bailiff

Main Idea

Key Terms and Names

• shantytown • Hooverville • hobo • Dust Bowl

• Walt Disney • soap opera • Grant Wood • John Steinbeck

• William Faulkner

Section 2-4



Section 2-5


The Depression Worsens


• By 1933 thousands of banks had closed and millions of American workers were unemployed.

• Unemployed workers often stood at bread lines to receive free food or at soup kitchens where private charities gave a free meal to the poor.

• Americans unable to pay their mortgage or rent lost their homes.

(pages 661–663)(pages 661–663)

Section 2-6

• Those unable or unwilling to move had a court-ordered eviction notice delivered by a court officer or bailiff who forced nonpaying tenants out onto the street.

• Many of the homeless built shacks in shantytowns, which they referred to as “Hoovervilles” because they blamed the president for their financial trouble.

• Hobos, or homeless Americans who wandered around hitching rides on railroad cars, searched for work and a better life.

The Depression Worsens (cont.)


(pages 661–663)(pages 661–663)

Section 2-7

• As crop prices dropped in the 1920s, many American farmers left their fields uncultivated.

• A terrible drought in the Great Plains, beginning in 1932, caused the region to become a “Dust Bowl.”

• Many Midwestern farmers and Great Plains farmers lost their farms.

• Many families moved west to California hoping to find a better life, but most still faced poverty and homelessness.



(pages 661–663)(pages 661–663)

Section 2-8

What happened to unemployed workers and Midwestern and Great Plains farmers during the Depression?




(pages 661–663)(pages 661–663)

Section 2-9

Unemployed workers often went to bread lines or soup kitchens to receive free food. Americans unable to pay their mortgage or rent lost their homes. Many of the homeless built shacks in shantytowns. Hobos wandered around hitching rides on railroad cars, searching for work and a better life. As crop prices dropped in the 1920s, many American farmers left their fields uncultivated. A terrible drought in the Great Plains, beginning in 1932, caused the region to become a “Dust Bowl.” Many Midwestern farmers and Great Plains farmers lost their farms. Many families moved west to California hoping to find a better life, but most of them still faced poverty and homelessness.


(pages 661–663)(pages 661–663)

Section 2-10

Escaping the Depression


• Americans escaped the hardships of the Depression by going to the movies and listening to radio broadcasts.

• Stories tended to be about overcoming hardships and achieving success.

• Walt Disney produced the first feature-length animated film, Snow White and the Seven Dwarfs, in 1937.

• Other films, like The Wizard of Oz, Mr. Smith Goes to Washington, and Gone with the Wind, contained stories of triumph over adversity and visions of a better life. (pages 663–664)(pages 663–664)

Section 2-11

• Families gathered around the radio daily to hear news or listen to comedians like George Burns or a dramatic series like the Lone Ranger.

• Melodramas, called soap operas, became very popular with housewives.

• Soap operas received their name because makers of laundry soaps often sponsored them.

Escaping the Depression (cont.)


(pages 663–664)(pages 663–664)

Section 2-12

Why were movies and radio programs important during the Depression?

Movies and radio programs allowed Americans to escape their own lives and use their imagination.



Escaping the Depression (cont.)

(pages 663–664)(pages 663–664)

Section 2-13

The Depression in Art


• Homeless and unemployed Americans were the subjects of art and literature during the 1930s.

• Artists and writers tried to capture the real life drama of the Depression.

• Thomas Hart Benton and Grant Wood emphasized traditional American values in their art.

(pages 664–665)(pages 664–665)

Section 2-14

• John Steinbeck’s 1939 novel The Grapes of Wrath told the story of an Oklahoma family fleeing the Dust Bowl to find a new life in California.

• Steinbeck, like many writers of this time, wrote of poverty, misfortune, and social injustice.

The Depression in Art (cont.)


(pages 664–665)(pages 664–665)

Section 2-15

• Novelist William Faulkner’s literary technique, stream of consciousness, revealed characters’ thoughts and feelings before they spoke–thoughts they dared not reveal.

• In his novels, he exposed hidden attitudes of Southern whites and African Americans in a fictional Mississippi county.



(pages 664–665)(pages 664–665)

Section 2-16

What was emphasized in the work of Thomas Hart Benton and Grant Wood?

The two artists were a part of the regionalist school, which focused on traditional American values, particularly those of the rural Midwest and South.




(pages 664–665)(pages 664–665)

End of Section 2

Section 3-1


Guide to Reading

President Hoover’s philosophy of government guided his response to the Depression.

• public works

Main Idea

Key Terms and Names

• Reconstruction Finance Corporation

• relief • foreclose

• Bonus Army

Section 3-4



Section 3-5

Promoting Recovery


• In an effort to promote economic recovery, President Herbert Hoover held a series of conferences bringing together the heads of banks, railroads, big business, labor, and government.

• Hoover received a pledge from industry to keep factories open and stop cutting wages.

• After the pledge failed, Hoover increased public works–government-financed building projects.

(pages 668–670)(pages 668–670)

Section 3-6

• Hoover asked the nation’s governors and mayors to increase public works spending.

• At the same time, however, Hoover refused to increase government spending or taxes. He feared that deficit spending would actually delay an economic recovery.

• Americans blamed the Republican Party for the Depression.

Promoting Recovery (cont.)


(pages 668–670)(pages 668–670)

Section 3-7

• As a result, in the midterm congressional elections of 1930, the Republicans lost 49 seats and their majority in the House of Representatives.


(pages 668–670)(pages 668–670)

Section 3-8

How did Hoover promote economic recovery?




(pages 668–670)(pages 668–670)

Section 3-9


(pages 668–670)(pages 668–670)

President Herbert Hoover held a series of conferences bringing together the heads of banks, railroads, big business, labor, and government. Hoover received a pledge from industry to keep factories open and stop cutting wages. After the pledge failed, Hoover increased public works to replace some construction jobs. Hoover asked the nation’s governors and mayors to increase public works spending. At the same time, however, Hoover refused to increase government spending or taxes. He feared that deficit spending would actually delay an economic recovery.

Section 3-10

Pumping Money Into the Economy


• President Hoover tried to persuade the Federal Reserve Board to put more currency into circulation, but the Board refused.

• Hoover set up the National Credit Corporation (NCC), which created a pool of money to rescue banks, but it was not enough to help.

(page 670)(page 670)

Section 3-11

• By 1932 Hoover felt the government had to provide funding for borrowers.

• He asked Congress to set up the Reconstruction Finance Corporation (RFC) to make loans to banks, railroads, and agricultural institutions.

• The economy continued to decline when the RFC was too cautious in its loan amounts.



Pumping Money Into the Economy(cont.)

Section 3-12

• Hoover opposed the federal government’s participation in relief–money that went directly to very poor families.

• He felt relief was the responsibility of state and local governments.

• In July 1932, Congress passed the Emergency Relief and Construction Act to get money for public works and for loans to the states for direct relief.




Section 3-13

What actions did President Hoover take to try to pump money back into the American economy?





Section 3-14

Hoover tried to persuade the Federal Reserve Board to put more currency into circulation, but the Board refused. Hoover set up the National Credit Corporation (NCC), which created a pool of money to rescue banks, but it was not enough to help. Hoover asked Congress to set up the Reconstruction Finance Corporation to make loans to banks, railroads, and agricultural institutions. The economy continued to decline when the RFC was too cautious in its loan amounts.



Section 3-15

In an Angry Mood


• By 1931 discontent over the economy led to violence.

• Looting, rallies, and hunger marches began.

• During a hunger march at the nation’s capital, police denied protestors food, water, and medical treatment.

• Congress intervened, stressing the marchers’ right to petition their government.

• Congress permitted them to march on to Capitol Hill.

(pages 670–672)(pages 670–672)

Section 3-16

• Between 1930 and 1934, creditors foreclosed, or took possession of, almost a million farms.

• Some farmers destroyed their crops, hoping the reduction in supply would cause the prices to go up.

• In 1924 Congress enacted a $1,000 bonus to be paid to veterans in 1945.

• In 1931 a bill was introduced in the House that authorized early payment of the bonus.

In an Angry Mood (cont.)


(pages 670–672)(pages 670–672)

Section 3-17

• In 1932 the “Bonus Army” marched to Washington, D.C., to ask Congress to approve the legislation.

• After Hoover refused to meet with the Bonus Army and the Senate voted the new bonus bill down, some of the marchers left.

• Some marchers stayed, moving into deserted buildings in Washington, D.C.

• When Hoover ordered the buildings cleared, disputes between the remaining people and the police (and later the army) resulted in several deaths.



(pages 670–672)(pages 670–672)

Section 3-18

What positive things did Hoover do as president?

Hoover did more to expand the role of the federal government than any previous president. His authorization of the Reconstruction Finance Corporation was the first time an American president had used federal power to intervene in the economy during peacetime.




(pages 670–672)(pages 670–672)

End of Section 3

Chapter Summary 1

End of Chapter Summary

Chapter Assessment 1

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Reviewing Key TermsDefine Match the terms on the right with their definitions on the left.

__ 1. a long period of rising stock prices

__ 2. a poor section of town consisting of crudely built dwellings usually made of wood

__ 3. demand by broker that investors pay back loans made for stocks purchased on margin

__ 4. nickname given to shantytowns in the United States during the Depression

__ 5. projects such as highways, parks, and libraries built with public funds for public use

A. bull market

B. margin

C. margin call

D. installment

E. bailiff

F. shantytown

G. Hooverville

H. Dust Bowl

I. public works

J. foreclose

F

C

A

G

I

Chapter Assessment 2



Reviewing Key Terms (cont.)

Define Match the terms on the right with their definitions on the left.

__ 6. buying an item on credit with a monthly plan to pay off the value of the good

__ 7. buying stock by paying only a fraction of the stock price and borrowing the rest

__ 8. name given to the area of the southern Great Plains severely damaged by droughts and dust storms during the 1930s

__ 9. to take possession of a property from a mortgagor because of defaults on payments

__ 10. minor officer of the courts

B

H

D

J

E

A. bull market

B. margin

C. margin call

D. installment

E. bailiff

F. shantytown

G. Hooverville

H. Dust Bowl

I. public works

J. foreclose

End of Slide Show

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