Chapter 22 Crash and Depression

What are some of the events that led to the stock market’s Great Crash in 1929?
– Dow was at an all-time high in Sept 1929. Prices for many stocks soared above the company’s real value in terms of earnings and assets
-Black Thursday (market dropped $3 billion in 1 day)
– Bankers pooled money to buy stock and stop panic, but by Black Tuesday (Oct 29), a record 16.4 million shares were sold.
– By Nov 1929, the stock fell from 387 to 198.7 or a loss of $30 billion

Why did the crash produce a ripple effect throughout the nation’s economy?
Stocks directly effected only 4 million out of 120 million people. Indirectly:
– risky loans hurt banks (businesses unable to repay loans)
– consumer borrowing (Customers could not pay back)
– bank runs (people withdrew money from banks – banks did not always have $ to give them due to lending $ and those people couldn’t pay back)
– bank failures (had to close when could not pay depositors $$ 5500 banks failed)
– Savings wiped out (Banks failures wiped out peoples savings)
– cuts in production
-Rise in unemployment
– further cuts in production

What were the main causes of the Great Depression?
– Unstable economy (Uneven prosperity)
– Overspeculation (bought stocks with borrowed $, then pledged those stocks to buy more stocks)
– Government policies (Federal Reserve system limited $ to discourage lending which resulted in too little $ in circulation for economy to recover)

How did poverty spread during the Great Depression?
People of all society levels were affected. Some moved in with relatives. There were estimated 15.000 homeless in NY. Many homeless became drifters moving from place to place. Many farmers suffered as low crop prices cut their incomes (in the South they protested and dumped thousands of gallons of milk and destroyed crops), Dust Bowl (60% of families there lost their farms)

What social problems were caused by poverty in the 1930s?
-Impact on health (poor diet and inadequate medical care)
– Stress on families living together and losing their jobs
– Discrimination increased (whites took minority jobs; many were deported)

How did some people struggle to survive hard times?
Children were put to work instead of school, swap work with neighbors, rent house/land, growing on own

In what ways did Americans pull together to survive during the Great Depression?
*Farmers would bid mere pennies on land and machines auctioned by banks to help struggling neighbors
* Many young people left home (out of necessity or seek better life) and road the rails
* Rise in interest in radical and reform movements
* Depression humor

What signs of change did Americans begin to notice in the early 1930s?
* Prohibition was repealed
* Construction of Empire State Building ($41 million)
* Al Capone brought down; Coolidge died, Babe Ruth retired;

How did President Hoover respond to the Great Depression
His strategy was very limited. At first he insisted key to recovery was confidence, then met with business leaders and they agreed to maintain wage rates (worked for awhile); supported programs but insisted relief should be handled by state and local government

What did Roosevelt mean when he offered Americans a “new deal”
A change from Hoover’s administration

Why was the election of 1932 a significant turning point for American politics
Historical battle between those who believed that the federal government could not and should not try to fix people’s problems and those who felt that large scale problems such as the Depression required the governments help.

Agricultural Marketing Act
Congress passed in 1929 (w/ support Hoover) a form of relief for farmers by creating a Federal Farm Board which was designed to stabilize the prices of farm crops (failed)

Home Loan Bank Act
Congress passed in 1932, discounted mortgage rates, helped home owners save their homes and farmers keep their farms

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