Great Depression

Question 1

John Jacob Raskob

Answer 1

CEO of General Motors who said that everyone could become rich if they invested 15$ a week in common stocks. He said this in an article called “Everybody Ought to be Rich” in the Ladies Home Journal.

Question 2

Bull Market

Answer 2

An economy where stock prices are increasing.

Question 3

Bear Market

Answer 3

An economy where stock prices are decreasing.

Question 4

Why did Americans invest in the stock market? (6 Reasons)

Answer 4

-Rising Stock Dividends
-Increase in personal savings
-Relatively easy money policy
-Companies invested over-production profits into new production.
-Lack of stock market regulation
-Psychology of consumption

Question 5

Rising Stock Dividends

Answer 5

New investors entering the stock market helped raise prices. Although there were never more than 4 million Americans in the stock market, new investors replacing old investors ensured there was always money floating around.

Question 6

Increase in Personal Savings

Answer 6

Increased wages meant average Americans had money to invest in the stock market.

Question 7

Relatively Easy Money Policy

Answer 7

Banks made it easier to get loans at lower rates. Some people took out loans to invest in the stock market.

Question 8

Companies Invested Their Over-production Profits into New Construction

Answer 8

From 1925 on, companies were over-producing. In anticipation of selling the over-produced goods, company owners invested more into the company, building more factories and creating an aura of financial stability.

Question 9

Lack of Stock Market Regulation

Answer 9

Since there were no regulations for the stock market, companies could keep creating more stocks. People also bought stocks on margin.

Question 10

Margin

Answer 10

Buying stock with credit. People did this to be able to claim the stocks and use the money they gained from the stocks to pay off the credit.

Question 11

Black Thursday

Answer 11

Happened October 24th, 1929. People dumped their stocks as quickly as they could, shifting the market from a bull market to a bear market.

Question 12

Black Tuesday

Answer 12

Happened October 29th, 1929. Within the first few hours the stock market opened, prices collapsed, causing $30 billion to leave the American economy. Beginning of the Great Crash.

Question 13

Great Depression Global Effects

Answer 13

The Great Depression affected all industrialized nations. USA, France, England, and Germany were all affected. Germany faced rapid inflation due to needing to pay reparations, crippling their economy. Due to this, France and England couldn’t pay USA, making them in debt.

Question 14

Social Problems of the Great Depression: (7 Problems)

Answer 14

-Unemployment and poverty
-Breakdown of families
-Soaring high school dropout rates
-Homelessness
-Organized protests
-Hoovervilles
-Farmers stopped banks from foreclosing

Question 15

Unemployment Rates

Answer 15

25%

Question 16

High School Dropout Rates

Answer 16

From 2 million to 4 million

Question 17

Poverty

Answer 17

1/3rd of Americans were below the poverty line.

Question 18

Images of Depression: (6 Images)

Answer 18

-Bread lines
-Hoboes hopping freight trains
-College Graduates becoming gas station attendants/enrolling in grad school
-Skyrocketing rates of suicide/mental illness
-Former businessmen selling pencils/apples
-Okies

Question 19

Okies

Answer 19

Oklahoma farmers who moved to the California to look for migrant farm work due to the Dust Bowl.

Question 20

“The Three B’s”

Answer 20

Americans blamed Bankers, Brokers, and Businessmen for the Crash and the Depression.

Question 21

Hoovervilles

Answer 21

Homeless people during the Great Depression built cardboard neighborhoods named Hoovervilles to criticize Herbert Hoover’s inaction.

Question 22

5 Reasons for the Depression

Answer 22

-Unequal distribution of wealth
-Lack of diversity in industry
-Lack of international trade
-Poor banking structure
-Credit structure of economy

Question 23

Unequal Distribution of Wealth

Answer 23

Despite increasing wages, the top 1% was making 650% more than the bottom 11%. This unequal distribution made the economy dependent on the wealthy elite buying luxuries.

Question 24

Lack of Diversity in Industry

Answer 24

During the 1870’s and on, monopolies, trusts, and consolidation of companies of potential competitors started to emerge. In 1929, the 200 biggest corporations controlled 50% of the economy. This meant that if only a few companies were effected by the Great Depression, it would be a massive blow on the economy.

Question 25

Trust

Answer 25

A combination of companies organized to eliminate competition and control prices.

Question 26

Holding Company

Answer 26

A single company that controls other companies. In the 1920s, holding companies started to replace trusts.

Question 27

Poor Banking Structure

Answer 27

In the 1920s, banks were opening at a rate of 4-5 per day. However, due to lack of regulations, banks were opening but not able to repay debts, causing banks to close at a rate of 2 per day.

Question 28

Lack of International Trade

Answer 28

After the war, both the Allies and the Central Powers owed the US more than they could afford. Republicans insisted on payments in gold bullion, however the gold was limited and eventually the US controlled most of the gold supply. This led to the US saying payments could be given in goods and services, but protectionism and high tariffs prevented that, meaning the US couldn’t get their money back.

Question 29

Credit Structure of the Economy

Answer 29

During the Depression, gold was limited. This led to people pushing for money backed by credit, not gold, to be printed. However, Hoover refused to go away from the gold standard, making it where money remained severely limited.