The Great Depression Flashcards
What is Speculation?
When investors gamble that stock prices will rise
What is Black Tuesday?
October 29, 1929
The day the stock market crashed
What is a Business Cycle?
Periodic expansion and contraction of the economy
What is the Great Depression?
The collapse of the United States and world economies beginning in 1929
Who was Herbert Hoover?
Former Secretary of Commerce and Republican Candidate for President in 1928
What is the Hawley-Smoot Tariff?
High protective tariff passed in June 1930 that contributed to a worldwide depression.
Protected American manufacturers from foreign competition.
Other nations retaliated and raised their tariffs as well.
Only made American products harder to sell.
How did the prosperity of the 1920s give way to the Great Depression?
In the 1920s, many Americans enjoyed what seemed like an endless era of prosperity. But, in 1929, the stock market crashed due to the investments by people who couldn’t actually afford it.
Uneven distribution of wealth.. Wealthy was a small percentage, the poor population was larger.
Production fell, unemployment rose, and and the economy went into a period of dramatic decline.
Republicans claimed that the economy were great and only getting better. Decade before the Great Depression was a Republican decade
Why was Herbert Hoover blamed for the Great Depression/Stock Market Crash?
Because during the election of 1928, Republicans (aka Hoover) took credit for the strong economy, and he was also President during the beginning of such events.
What were some issues with the economy after Hoover’s election?
Agricultural: farmers had huge surpluses of food that depressed prices
Farmers could not afford to buy goods or repay their loans.
How did the Stock Market crash?
Many people borrowed money (loans) to buy stock, assuming prices would continue to go up.
The stock market had continued to rise until 1929
October 29, 1929: investors tried to sell stocks at any price, billions of dollars were lost in a few hours, and many who bought stocks on margin were wiped out.
What did the Great Crash do to the nation’s business cycle?
Made periods of growth and contraction a natural occurrence in the business cycle.
Growth periods: workers are hired, wages rise, demand for products increases.
Contraction periods: workers are fired, wages drop, demand for products falls.
What did the stock market crash NOT do?
The stock market crash did not cause the Great Depression alone.
Instead, it quickened the collapse of the U.S. Economy.
What were Bank Runs/what did they cause?
People feared for their money so they immediately ran to the banks and withdrew their funds.
The banks didn’t have enough money on hand, so the bank runs caused banks to fail.
Banking crisis: banks failed, people lost all or a majority of their money, and trust in banks was lost
What happened to businesses just before/during the Great Depression?
Business failure
The demand for goods was lowered
1933: the employment rate reached 25%
What happened after International Trade fell?
U.S. Profits plummeted
U.S. Investors have little or no money to invest abroad
European nations cannot pay off war debts
European production plummets
Europeans cannot afford American goods (cycle back)
What were the causes of the Great Depression?
Hardships in Europe and Rural America Uneven Distribution of Wealth Speculation in the Stock Market Increased Personal Debt Hawley-Smoot Tariff Unemployment Stock Market Crash Lower Production Demand
What is a Bread Line?
Where charities or local agencies gave food to the poor
What is a Hooverville?
Term used to describe makeshift shantytowns set up by homeless people during the Great Depression
