Unit 2 Lesson 1: Causes of the Great Depression

Question 1

Who won the presidential election of 1928

Answer 1

Herbert Hoover won the presidential election of 1928

Question 2

How did the repulican party help Hoover win

Answer 2

He benefited from the popularity of his political party. The two Republican administrations before his helped create a time of economic prosperity.

Question 3

How did Hoover increase civil service reform

Answer 3

He continued civil service reform by expanding opportunities for employment throughout the federal government

Question 4

(Presideny Hoover) What was the Department of Justice

Answer 4

He directed the Department of Justice to crack down on organized crime. This led to the arrest and imprisonment of the infamous gang leader, Al Capone.

Question 5

By the summer of 1929, Hoover had signed into law the Agricultural Marketing Act. What is that act; what did it do?

Answer 5

This law created the Federal Farm Board to help regulate farm prices.

Question 6

Hoover’s other accomplishments include:

Answer 6

• expanded tax cuts across all income classes
• set aside federal funds to clean up slums in major American cities
• created the Veterans Administration and expanded veterans’ hospitals
• established the Federal Bureau of Prisons to oversee prison conditions nationwide
• reorganized the Bureau of Indian Affairs to further protect Native Americans

Question 7

What old age pension program did Hoover propose

Answer 7

Hoover even proposed the creation of an old-age pension program, promising 50 dollars per month to all Americans over the age of 65. This proposal was remarkably similar to the social security benefit that would become a centerpiece of Roosevelt’s New Deal programs several years later.

Question 8

What factors led to overproduction in the United States?

Answer 8

Farmers scaled up production to meet the demands of World War I. Many farmers purchased more land to support increased production. After the war ended, the demand for agricultural goods overseas dropped.

Question 9

What were the effects of overproduction?

Answer 9

Farmers produced more than was needed, causing prices for agricultural goods to plummet. As a result, incomes decreased, and many struggled to pay mortgages and other debts.

Question 10

Why do you think Hoover focused on addressing these issues early in his presidency?

Answer 10

Agriculture was a large part of America’s economy, and it had been struggling for a long period of time. Providing immediate relief to this industry would ultimately contribute to the nation’s general prosperity.

Question 11

In the midst of the Great Depression, President Herbert Hoover left office with one of the lowest presidential approval ratings ever. Americans had been disappointed with his handling of the unprecedented economic crisis. However, he had actually accomplished several major policy goals during his presidency :

Answer 11

1. Hoover increased the federal budget to include children’s programs. He hosted the White House Conference on Child Health and Protection to discover how the government could actively ensure the welfare of children. The Children’s Charter created at this conference identified the rights and needs of children.
2. Hoover backed prison reform. He had new prisons built to reduce overcrowding, authorized improved training for prison employees, and advocated for the humane treatment of prisoners.
3. Hoover was a leading conservationist. He revoked private oil leases on public lands, limited pollution of coastal waters, and expanded millions of acres of protected national park lands.
4. Oh, and he funded infrastructure improvements, particularly dams.

Question 12

what does business cycle mean

Answer 12

Though there were some periods of recession during the Roaring Twenties, few anticipated the business cycle, or pattern of economic expansion and contraction, would contract so sharply at the end of the decade and into the 1930s.

Question 13

On Tuesday, October 29, 1929, often referred to as

Answer 13

Black Tuesday

Question 14

What is Black Tuesday

Answer 14

Black Tuesday, prices of stocks at the New York Stock Exchange fell rapidly.

Question 15

What is considered to be the start of the great depression

Answer 15

This stock market crash is considered to be the start of the Great Depression

Question 16

Casues of the Crash: Lower rates and requirments

Answer 16

Lower rates and requirements: The Federal Reserve set interest rates artificially low and eased the reserve requirements—or the money financial institutions had to keep on hand—on the nation’s largest banks.

Question 17

Casues of the Crash: Increased money supply and investments

Answer 17

Increased money supply and investments: An increase in the country’s money supply convinced even more Americans of the safety of investing in questionable schemes.

Question 18

Casues of the Crash: Speculation

Answer 18

Speculation: Investors made high-risk purchases they hoped would pay off quickly, and this became the norm.

Question 19

Casues of the Crash: Margin buying

Answer 19

Margin buying: One dangerous type of speculation was buying “on margin.” Investors would borrow money to make a small down payment on stocks, hoping to sell them at a much higher price before the remaining payment came due.

Question 20

Casues of the Crash: Market losses

Answer 20

Market losses: The stock market experienced a brief downturn in September 1929 followed by market corrections of 11% on October 24 and 13% on October 28. To prevent additional losses, stockholders dumped their stocks as quickly as they could on October 29.

Question 21

Effects of the Crash:

Answer 21

• On October 29, 1929, stockholders traded more than 16 million shares, and a lost more than $14 billion in wealth in a single day.
• Between September 1 and November 30, 1929, the stock market lost more one-half its value, dropping from $64 billion to approximately $30 billion.
• Banks, facing debt and seeking to protect their assets, demanded payment for the loans they had provided to individual investors. As a result, investors lost not only their stocks but also their life savings in a matter of minutes. And they were still indebted to the bank.
• While only 10 percent of households had investments, more than 90 percent of all banks had invested in the stock market. Many banks failed due to their dwindling cash reserves.
• Though the events on Black Tuesday were not the cause of the Great Depression, they did trigger the start of a recession that eventually grew into a full-blown depression in the United States and around the world.

Question 22

What effect did the Stock Markert Crash have on the countrys gross national product

Answer 22

Following the stock market crash, the country’s gross national product declined by more than 25 percent within a year

Question 23

What effect did the Stock Markert Crash have on wages and salries

Answer 23

wages and salaries declined by $4 billion

Question 24

What effect did the Stock Markert Crash have on unemployment

Answer 24

. Unemployment tripled, from 1.5 million at the end of 1929 to 4.5 million by the end of 1930. Such widespread unemployment resulted in the loss of homes and forced many Americans to seek aid. Homelessness and bread lines became a reality for many.

Question 25

Causes of the great depression: Risky Investing Practices

Answer 25

Explantion: Investors made risky investments and bought stocks on margin in the hopes of earning a quick payout.

Effect: When the stock market crashed, investors were unable to pay back the loans they had borrowed from banks to purchase the stocks.

Question 26

Causes of the great depression: Overextension of Credit

Answer 26

Explantion:Businesses extended lines of credit to consumers through the 1920s, regardless of income level or ability to make payments.

Effect: Many consumers used credit to make large purchases they could not afford. After the stock market crashed, many people were unable to continue making payments on what they had purchased.

Question 27

Causes of the great depression: Overproduction

Answer 27

Explantion: Production in many industries, including the agricultural sector, exceeded consumer demand prior to the stock market crash.

Effect: Many industries had laid off employees prior to the crash. As the depression deepened, fewer consumers could purchase goods. This led industries to lay off more workers, and in turn, further decreased consumerism.

Question 28

Causes of the great depression: Lax Government Regulation

Answer 28

Explantion: The Federal Reserve lowered the amount of money banks were required to have on hand at any given moment. This led many banks to make risky investments with a larger percentage of the money people deposited.

Effect: When people went to withdraw their money, many banks did not have adequate funds.

Question 29

Causes of the great depression: Bank Runs

Answer 29

Explantion: Investors, along with the general public, withdrew their money from banks by the thousands, fearing the banks would go under.

Effect: The more people pulled out their money in bank runs, the closer the banks came to failure due to lack of funds. Many banks ultimately failed, and countless Americans lost all of their savings.

Question 30

The Great Depression was not unique to the United States. Its effects were felt on a global scale. What was it like for European countires

Answer 30

Many European countries had been suffering financially even before the Great Depression began. A post-World War I recession and continuing wartime inflation had hurt many economies. So did a decrease in agricultural prices, which made it harder for farmers to buy manufactured goods or pay off loans to banks.

Question 31

At the same time, the U.S. government took measures to support its own economy. Congress put tariffs on imported goods to raise their prices to consumers. This was done in an effort to encourage people to buy American-made products. In turn, many other countries around the world embraced this practice of protectionism. How did this effect other countries

Answer 31

Ultimately tariffs enacted by the United States and its trade partners caused more economic distress.

Question 32

A similar attempt to spur the world economy, known as the Hoover Moratorium, likewise met with significant opposition and little economic benefit. What was the Hoover Moratorium

Answer 32

The moratorium was issued in 1931 and called for a halt to World War I reparations continuing to be paid by Germany to France, as well as forgiveness of Allied war debts to the United States.

Question 33

What was the U.S.’s 1930 Smoot-Hawley Tariff. What imapct did it have

Answer 33

, the U.S.’s 1930 Smoot-Hawley Tariff angered foreign trade partners, who raised their own tariffs in retaliation. This raised the cost of goods for consumers in all of these nations, deepening the economic crisis internationally.

Question 34

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What was the Agricultural Marketing Act, and why was it signed into law?

Answer 34

The Agricultural Marketing Act created the Federal Farm Board to provide much needed funds to struggling farmers. The goal of the act was to improve market efficiency and mitigate the effects of years of overproduction and plummeting agricultural prices.

Question 35

What are three reasons for the depression and high unemployment that followed the stock market crash in 1929?

Answer 35

People couldn’t afford to buy goods or invest in businesses, so those businesses had to lay off workers or cut wages. Overextension of credit meant that many consumers were unable to afford what they had purchased. Lax government regulations allowed banks to lower their cash reserves, meaning that many did not have adequate funds to cover withdrawals.