Chapter 22 Flashcards
During the Great Depression, when a bank collapsed -
a) the government stepped in to run the bank
b) the government covered the bank’s debts
c) the government repaid deposits on insured accounts only
d) depositors lost their savings
d) depositors lost their savings
A major reason for Herbert Hoover’s landslide victory in the 1928 election was -
a) the prosperity of the 1920s
b) his tax relief plan
c) his promise to end Prohibition
d) his plan to support farm prices
a) the prosperity of the 1920s
During the Depression, many unemployed people -
a) destroyed “Hoovervilles”
b) lived in federal housing
c) collected unemployment
d) road the rails
d) road the rails
The first feature-length animated film was -
a) Animal Crackers
b) The Wizard of Oz
c) Snow White and the Seven Dwarfs
d) Mr. Smith Goes to Washington
c) Snow White and the Seven Dwarfs
The purpose of the Reconstruction Finance Corporation was to -
a) regulate the stock market
b) manage public works projects
c) make loans to banks, railroads, and agricultural institutions
d) administer public assistance programs for the unemployed and the homeless
c) make loans to banks, railroads, and agricultural institutions
What severely dampened commerce on both sides of the Atlantic and intensified the Depression in the United States -
a) the bull market
b) the Federal Reserve
c) Black Thursday
d) the Hawley-Smoot Tariff
d) the Hawley-Smoot Tariff
October 29, 1929, the day when stock prices took the steepest dive of that time, is known as -
a) Black Thursday
b) Black Tuesday
c) Bloody Monday
d) Panic Tuesday
b) Black Tuesday
Beginning in 1932, America’s pastures and wheat fields form the Dakotas to Texas became a vast -
a) “Bread Basket”
b) “Dust Bowl”
c) mud basin
d) prairie
b) “Dust Bowl”
Many families on the Great Plains packed their belongings into old cars or trucks and headed west, hoping for a better life in -
a) the cities
b) the mountains
c) California
d) New Mexico
c) California
Most people during the Depression were able to enjoy two popular forms of entertainment: the movies and -
a) sailing
b) television
c) travel
d) radio
d) radio
Daytime radio dramas were sponsored by makers of laundry soap and nicknamed -
a) soap operas
b) laundry stories
c) guiding lights
d) detergent dramas
a) soap operas
Hoover believed that only state city governments should dole out -
a) loans
b) relief
c) work programs
d) soup kitchens
b) relief
People who moved West from the Great Plains to find jobs were called -
a) tenant farmers
b) Okies
c) homeless
d) immigrants
b) Okies
During the 1920s, many people bought expensive items using -
a) credit cards
b) bank loans
c) cash
d) the installment plan
d) the installment plan
The National Credit Corporation tried to rescue troubled banks using -
a) tax money
b) money from New York bankers
c) deficit spending
d) money borrowed from foreign banks
b) money from New York bankers
_______ invested in stocks, betting that the market would continue to climb so that they could make a quick profit
speculators
A long period of rising stock prices is known as a ________
bull market
A period of falling stock prices and sales is called a _____ market.
bear market
During the Depression, charities set up ________ to give poor people a meal.
soup kitchens
Newly homeless people put up communities of shacks that they called “____________”, blaming the president for their plight.
Hoovervilles
During the Depression, people who moved around the country by slipping into open boxcars on freight trains for a ride were called ______.
hobos
Many people lost their farms through __________
foreclosure
Made photographs of Depression Era scenes and people
Dorothea Lang
Made the first non-stop flight across the Atlantic
Charles Lindberg
was convicted of kidnapping the Lindberg’s baby
Bruno Hauptman
was President when the Depression began
Herbert Hoover
wrote The Grapes of Wrath, which was about a family fleeing the Dust Bowl
John Steinbeck
used a method of writing called stream of consciousness
William Faulkner
was sent to clear veterans out of Washington; led the troops that dispersed the Bonus Army
Douglas MacArthur
painted American Gothic
Grant Wood
Name the immediate cause, and explain the underlying causes of the Depression
- Most economists agree that OVERPRODUCTION was a key cause of the Depression. Efficient machinery sped up production of factory and farm goods. Americans didn’t earn enough to buy up the flood of goods produced. As consumers bought more on the installment plan, the debt forced some to reduce their other purchases. As sales slowed, manufacturers cut production and laid off employees. Not having jobs cause people to cut back more on purchases which caused business activity to spiral downwards.
A second cause was the loss of export sales. The Hawley-Smoot Tariff dampened foreign sales in the US and caused foreign countries to buy fewer American products.
A third cause was mistakes by the Federal Reserve - instead of raising interest rates to curb excessive speculation, it lowered taxes. This encouraged banks to make risky loans and encouraged businesses to borrow more money to expand production which added to the problem of overproduction.
Explain what the Bonus Army was, why they marched on Washington, whether they were successful, and what happened to them as a result.
The bonus army was a group of WWI veterans from Oregon who marched to Washington to lobby Congress to pass a bill that would allow them to receive their $1,000 bonus early. When the bonus army reached Washington, they camped in Hooverville’s. The bill WAS passed by the House of Representatives, and sent to the Senate. The bill WAS NOT passed so some went home while others stayed because they had no job and nothing to return home to. President Hoover ordered the police to clean out the buildings. While doing this, one of them panicked and fired killing two veterans. Douglas McArthur then sent in the cavalry, infantry, and tanks to clear out the buildings.
Bonus answer:
Nixon and Hoover
Most economists agree that a key cause of the Depression was -
a) overconsumption
b) overproduction
c) inflation
d) deflation
b) overproduction
President Hoover opposed direct federal relief to the unemployed because he believed that -
a) only state and city governments should dole out relief
b) the Depression would end soon
c) charities could provide sufficient relief until the economy improved
d) individuals should be responsible for taking care of themselves
a) only state and city governments should dole out relief
When many people decide to withdraw their money from the bank at one time, a/an ____ occurs -
a) panic
b) depression
c) bank run
d) overrun
c) bank run
Alfred E Smith endured a smear campaign in the 1928 election because -
a) he was a Quaker
b) he was a Mormon
c) he was Catholic
d) he was Jewish
c) he was Catholic
The great stock market crash occurred on ________
October 28, 1929.
Buying on a 10% margin, investors could buy stock worth _______ with $1,000 of their own money.
$10,000
The group of World War I veterans who marched on Washington in 1932 was called the ________
Bonus Army
Religion was an issue in the 1928 campaign because Alfred E. Smith’s religion was ________
Roman Catholic
The day that the stock market crashed is called _________
Black Tuesday
People in the Midwest who left their farms and traveled to find work were called _______
Okies
Some people lost their farms or homes through a processed called ________ because they could not make the payments
foreclosure
Court officials who evicted people from their homes were called ______
bailiffs.
Headed the Food Administration during WWI and won the presidency by a landslide
Herbert Hoover
Bonus question answer
White Angel
Bonus question answer
The Battle Hymn of the Republic
buying and selling ownership shares of companies
stock market
a key cause of the Depression
overproduction
takes place when many depositors decide to withdraw their money at one time
bank run
making a down payment and paying the rest of the price in monthly installments
installment plan
when stock prices continue to rise
bull market
In order to protect loans made by stockbrokers to investors who bought stocks on margin, brokers could issue a -
a) collateral
b) speculation call
c) margin call
d) foreclosure
c) margin call
In 1929 the top 5 percent of all American households earned 30% of the nation’s income, which was -
a) an uneven distribution of wealth
b) supply-side economics
c) a bull market
d) a recession
a) an uneven distribution of wealth
For some banks, the losses they suffered in the crash were more than they could absorb and they were forced to -
a) increase interest rates
b) approve more loans
c) attract more depositors
d) close
d) close
places where newly homeless people put up shacks on unused or public lands; communities of makeshift shacks on public lands
shantytowns
unemployed Americans who wandered around the country, walking, hitchhiking, or “riding the rails”
hobos
a famous film of the Depression era
Gone with the Wind
court officers
bailiffs
private charities setup to give poor people a meal
soup kitchens
The Dust Bowl occurred because plowed land was left uncultivated and there was a terrible -
a) insect infestation
b) drought
c) winter
d) increase of wild grasses
b) drought
held rallies and “hunger marches” during the Depression
American Communist Party
World War I veterans who marched to Washington, DC
Bonus Army
created when the government spends more money than it collects in taxes
budget deficit
created a pool of money to rescue troubled banks
National Credit Corporation
government-financed building projects
public works
By 1932 Hoover concluded that the only way to provide funding for borrows was for the government to do the lending, so he requested that Congress set up the -
a) Reconstruction Finance Corporation
b) Federal Reserve Board
c) Emergency Relief and Construction Act
d) National Credit Corporation
a) Reconstruction Finance Corporation
Hoover did not want the government to create many new jobs because that would mean increased government -
a) involvement in business
b) taxes
c) regulation
d) spending
d) spending
Between 1930 and 1932, creditors foreclosed on nearly one million farms, and farmers retaliated in all of the following was EXCEPT by -
a) destroying their crops to reduce the supply and raise prices
b) blocking milk trucks and emptying milk cans into ditches
c) preventing the delivery of vegetables to distributors
d) marching to Washington, D.C., in protest
d) marching to Washington, D.C., in protest
The public’s perception of President Hoover was shaped by the image of the routed Bonus Marchers and the -
a) lingering Depression
b) hunger marches
c) public works
d) National Credit Corporation
a) lingering Depression
fictitious heroine in Gone with the Wind
Scarlett O’Hara
comic star of stage and screen who was one of the many people wiped out financially in the stock market crash
Groucho Marx
fictitious companion of the Lone Ranger
Tonto
investing in the stock market hoping for a quick profit is called ______ and the people who do it are called _______
speculation
speculators
spending more than is collected in taxes
budget deficit
stock market crash
Black Tuesday
A major campaign issue in the 1928 election was -
a) economic recovery
b) Prohibition
c) Depression relief
d) social reform
b) Prohibition
Stock prices first began to decline in late 1929 because -
a) stockbrokers stopped margin loans
b) company earnings declined
c) several companies went bankrupt
d) investors began to sell their stock
d) investors began to sell their stock
The Federal Reserve contributed to the Depression by -
a) lowering loan rates
b) raising loan rates
c) loaning to foreign companies
d) loaning to speculators
a) lowering loan rates
In 1932 famers on the Great Plains began to lose their crops because -
a) the soil lost its fertility
b) frequent rains eroded the soil
c) a wheat fungus devastated the fields
d) the soil dried up
d) the soil dried up
President Hoover hoped the public works would -
a) solve the budget deficit
b) spur the construction industry
c) provide jobs lost in the private sector
d) spur industry to create more jobs
c) provide jobs lost in the private sector
Thousands of World War I veterans came to Washington in 1932 to lobby Congress to -
a) enact a bonus for war veterans
b) pass legislation giving veterans their promised bonus early
c) provide public works jobs for unemployed veterans
d) provide military jobs for unemployed veterans
b) pass legislation giving veterans their promised bonus early
Explain how buying on a margin works, what are the rewards and risks. Give an example
When buying stock on margin, investors made only a small cash down payment - as low as 10%. With $1,000, an investor could by $10,000 worth of stock (10% of $10,000 is $1,000 - so $1,000 down (10%) would buy $10,000 worth of stock. Which would be $1,000 down payment and a $9,000 loan for the total amount of $10,000. If the stock price rose to, say, $12,000, the investor could sell it - if sold for $12,000, then $9,000 would go to the “loan”, the investor would get his initial down payment of $1,000 back and make a $2,000 profit.
But, if the stock price dropped, to say $8,000, the broker might issue a margin call demanding the investor repay the loan at once. In this case, the investor would only get $8,000 and his loan amount was still $9,000 so he would owe the $9,000. So, the investor would then lose his initial down payment of $1,000 plus lose another $1,000 because the loan payment was $1,000 more than what he sold the stock for. The investor’s total loss in this case would be $2,000.
“wet” candidate in the 1928 election
Alfred E Smith
film superstar who fled to Hollywood to escape hardship in Europe
Marlene Dietrich
successful engineer and former head of the Food Administration during World War I
Herbert Hoover
loss of property due to nonpayment of the mortgage
foreclosed
buying now and making payments each month
installment plan
system for buying and selling shares of companies
stock market
drought-related conditions in the Great Plains
Dust Bowl
money that went directly to impoverished families
relief
stockbroker’s demand for immediate repayment of a loan
margin call
Before the late 1920s, stock prices -
a) did not change much
b) generally reflected the stocks’ true value
c) generally did not reflect the stocks’ true value
d) were too high for most people to afford
b) generally reflected the stocks’ true value
The stock market crash weakened the nation’s banks because -
a) banks had invested their deposits in the stock market
b) banks depended on income from the sale of their stock for operating funds
c) investors no longer had money to deposit in banks
d) investors could no longer afford to take out loans from banks
a) banks had invested their deposits in the stock market
To pay for public works, the government would have to raise taxes or -
a) print money
b) reduce inflation
c) borrow from foreign governments
d) borrow from banks
d) borrow from banks
The Emergency Relief and Construction Act provided -
a) direct federal relief
b) loans to the states for direct relief
c) loans to businesses willing to create jobs by constructing new facilities
d) loans to banks so that they could make home construction loans
b) loans to the states for direct relief
When the Senate voted the new bonus bill down, many veterans waiting outside the capitol building -
a) rioted and burned several public buildings
b) fixed bayonets on their service rifles and prepared to fight
c) left peacefully
d) refused to leave, remaining on the capitol steps until they were evicted by force
c) left peacefully
Explain how banks operate and why runs on banks can result in bank failure. Use the diagram Deposits going into bank - bank making loans
Most banks make a profit by lending out money received from depositors and collecting interest on the loans. The bank holds only a small portion of the depositors’ money to cover day to day business, such as withdrawals. Ordinarily that reserve is enough to meet the bank’s needs, but if too many people withdraw their money at the same time, the reserves will not be sufficient to cover the withdrawals, and the bank will eventually collapse.
Describe Herbert Hoover’s dilemma in considering whether to greatly increase public works projects to spur economic recovery.
The problem was that someone had to pay for the public works projects. if the government raised taxes to pay for them, that would take money from consumers and hurt businesses that were already struggling. If the government decided to keep taxes low and run a budget deficit instead, it would have to borrow money from banks. If the government did this, less money would be available for businesses that wanted to expand and for consumers who wanted mortgages or other loans. Hoover feared that deficit spending would actually delay an economic recovery.
