Mr. Judd
Name________________
Ch. 11&12 The Great Depression and New Deal Study Guide
Causes of the Great Depression
While we have spoken about the 20's as a time of great prosperity, it was a bit deceptive. Problems lie under
the surface that would not be dealt with by the conservative administrations of Warren G. Harding, Calvin
Coolidge and Herbert Hoover.
The Great Depression did not begin in 1929 with the fall of the over inflated stock market. In fact, the
Depression began ten years earlier in Europe. As the depression raged on in Europe, Americans believed they
would be immune to its effects. Isolationist sentiments and conservative doctrine held that the less we had to
do with Europe the better. As a result American polices never addressed the possibility of the United States
entering a depression as well. American policies actually contributed to our entry into the depression.
The early warning signs first came in the agricultural sector. Farmers continued to produce more and more
food due to technological advances like the tractor. As production grew farm prices dropped. It was simply a
matter of supply and demand. Farmers reacted in the traditional manner and boosted production even
further. Prices plummeted. Farmers began to default on their loans and the banks foreclosed. To make
matters worse the central part of the nation was hit with a terrible drought. Farmers were devastated. The
drought turned that portion of America into what was called "The Dustbowl."
In the 1920's American economic policy was laissez faire. Businesses were left alone and for sometime things
appeared to be fine. American businesses reported record profits and production was at an all time high. The
problem was that while earnings rose and the rich got richer, the working class received a disproportionately
lower percentage of the wealth. This uneven distribution of wealth got so bad that 5% of America earned 33%
of the income. What this meant was that there was less and less real spending. Despite the fact that the
working class had less money to spend, businesses continued to increase production levels.
Purchasing dropped internationally as well. Since Europe was in a depression people there weren't buying as
much as businesses had estimated. Then the Fordney-McCumber Tariff and the Hawley-Smoot Tariff raised
tariff levels to as much as 40%. Europe which was already angered at US foreign actions responded with high
tariffs of their own. As a result, international trade came to a standstill.
At this point you should be asking the question "If no one was buying and companies were increasing
production levels, wasn't there going to be a problem?" BINGO!!! The problem is known as overproduction.
American businesses were producing far more than could be consumed. The result was lost profits and
eventually debts. After a while many companies went out of business. Why would these companies continue
to overproduce? There are several reasons. Some were managed poorly. Others were part of holding
companies that placed layers and layers of companies, each relying on the others production levels like a
pyramid. If one company in the pyramid reported lower production levels the others fell off and it looked bad.
In many cases however crooked company owners reported earnings that were higher than they were actually
were in order to drive up the stock price.
As a result of World War I America had emerged as the world’s leading creditor nation. Foreign powers owed
the United States and its companies about a billion dollars annually. With declining trade in America, a
demand for reparation from the United States and the continuing European depression, this debt went
unpaid.
Throughout this period of time, Americans (and it seems this
included Harding, Coolidge and Hoover) truly felt they would be
prosperous forever. They didn't see or were unwilling to see the
warning signs. With this confidence Americans began to
increasingly invest in the stock market. Many bought stocks on
margin (credit) with money they didn’t really have. The market
began an unprecedented rise in 1928. By September 3rd 1929
the market reached a record high of 381. Then the decline
began. Many didn't think it would last, but on October 24th panic
selling began as 12.8 million shares changed hands. Then came
Black Tuesday, October 29th 1929. The market plummeted. By
July, the Dow Jones reached a low of 41.22. Millions upon
millions of dollars had been lost. Many who had bought on
margin (credit) had to pay back debts with money they didn't
have. Some opened up the windows and jumped to their deaths.
The depression had arrived.
Banks that had invested heavily in the stock market and real
estate lost their depositor’s money. A panic ensued as people lined up at the banks to get their money.
Unfortunately for many, the money just wasn't there. As the amount of money in circulation dropped,
deflation hit. Money was worth more but there was little money to be had. The Federal Reserve System which
had the power to put more money into circulation did nothing (again, the laissez faire approach). Workers
were fired as thousands of businesses closed down. Unemployment rose to 25-35%. In Toledo, Ohio, fully 80%
of the workers were unemployed! Real estate investments flopped because with deflation a building that was
once worth ten million was now worth five. The mortgage and debt stayed the same but the income was
gone. Banks foreclosed on loans and took possession of worthless properties that nobody could afford to buy.
Between 1930 and 1932 over 9,000 banks failed.
While the nation was in economic turmoil, President Hoover announced to Americans that they should "stay
the course." He felt that the ship would right itself. After all, Hoover was a self-made man, a rugged
individualist. By the time Hoover recognized he had to do something, it was too little and much too late.
Name: _______________________________________ Date: ___________________________
Causes of the Great Depression
Please complete the following chart…
Causes of the
Great
Depression
Falling demand
Overexpansion
of agricultural
production
Uneven
distribution of
wealth
American tariff
policy
Overproduction
of industry
Impact of
European and
world economy
Stock Market
speculation and
crash
Overexpansion
of credit
Unregulated
banking
practices
Philosophy and
policies of the
Hoover
Administration
Definition of how caused
depression
Could some specific intervention
have been used that might have
slowed, halted, or reversed the
depression
Rank the
following Great
Depression
factors from 1 to
10. (1 represents
the strongest
factor to 10 being
the weaker factor)
Economic Impact of the Great Depression
Based on the charts above, what effect did the stock market crash of 1929 have on the overall economy of the
United States?
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An Exercise in Empathy
Introduction: Empathy is the ability to imagine you in someone else’s position and to
intuit what that person is feeling. It is the ability to stand in other’s shoes, to see with their
eyes, and to feel with their hearts. It is not sympathy—that is, feeling bad for someone
else. It is feeling with someone else, sensing what it would be like to be that person. It is
climbing into another’s mind to experience the world from that person’s perspective.
2
3
1
4
6
5
7
8
Photograph Study Guide
Directions: Choose one of the photos from the previous page and answer the following questions.
1. What is happening in this picture?
2. What are the circumstances this photo represents?
3. If there are people in your photo:
a. How are these people dressed?
b. What can you infer from the expression on their faces and their posture?
4. If there are no people in your photo:
a. Describe the condition of any man-made objects in the photo.
b. What seems to have led to these circumstances?
5. Is there anything interesting or surprising about the situation represented here?
6. What problems or frustrations are suggested by this image?
7. What adaptations can you assume or infer people are making to these conditions?
8. What help seems to be needed here?
9. What is unique about this image that the photographer wanted to capture?
The Great Depression Takes Its Toll
The Dust Bowl
1. What were the 3 causes of the Dust Bowl? (Pg. 410)
2. What states were hardest hit by the Dust Bowl?
3. What was the main destination of most people leaving the northern part of the Dust Bowl? Southern part?
4. Which region of the country—east or west of the Mississippi River—was better off in 1934?
What statistics support your choice?
Presidential Terms
DIRECTIONS: Complete the following chart with philosophies and actions of each president during
the depression. There may be more than one example in each section of the chart.
President Hoover
Personal philosophies in
regard to dealing with the
economic crisis.
Actions taken to provide
relief , recovery, or reform
ie. laws, acts, programs,
etc.
President Roosevelt
Alphabet Soup Programs
Franklin Roosevelt’s New Deal programs (also known as the “Alphabet Soup” programs because of the acronyms)
were designed to alleviate the problems of the Great Depression. The New Deal focused on three goals: relief for
the needy, economic recovery, and financial reform.,Identify and discuss a New Deal program established to
help each of the following groups of people.
Group
Program
Purpose
farmers, migrant
workers, others living
in rural areas
teachers, writers,
artists, and other
professionals
generally
unemployed workers
homeowners
retired workers, the
disabled, dependent
mothers and children
labor union members
and employers
stock market
investors
bank depositors
victims of flooding
in southern states
Document Based Questions (DBS’s) Political Cartoon
1. Who are the three people depicted in this cartoon? How do you know who they
are?
2. What do some of the abbreviations stand for? Name two.
3. What is ironic about the “New Deal Remedies” bag?
4. How is Roosevelt depicted by the illustrator?
5. Do you think this cartoon is optimistic or pessimistic of the “New Deal”
Programs?
Song of the South
Chorus:
Song, song of the south
Sweet potato pie and I shut my mouth
Gone, gone with the wind
There ain't nobody looking back again
Cotton on the roadside, cotton in the ditch
We all picked the cotton but we never got rich
Daddy was a veteran, a southern democrat
They oughta get a rich man to vote like that
Sing it...
Chorus
Well somebody told us Wall Street fell
But we were so poor that we couldn't tell
Cotton was short and the weeds were tall
But Mr. Roosevelt's a gonna save us all
Well momma got sick and daddy got down
The county got the farm and they moved to town
Pappa got a job with the TBA
He bought a washing machine and then a Chevrolet
Sing it...
Discussion Questions
1.
“Gone, gone with the wind” is a throwback to Margaret Mitchell’s famous novel “Gone with the Wind” What
was the novel about? Why do you think southerners do not want to “look back again”?
2.
What effect did the Great Depression have on southern cotton farmers? Many people in the south turned to
sharecropping after the Civil War. How did sharecropping prevent farmers from “ever getting rich”?
3.
Daddy was probably a veteran of what war?
4.
What did it mean to be a southern democrat (or Populist) in the late 1800’s and early 1900’s?
5.
“Wall street fell” is a reference to what event in 1929? What effect did this event have on most southerners?
6.
Who is “Mr. Roosevelt”? What plan did he have to “save us all”?
7.
In addition to the economic crisis of the 1920’s and 1930’s, the plight of the farmer was exacerbated (made
worse) by what natural condition?
8.
Why did the “county get the farm”?
9.
What is the TVA? How did the TVA help many southerners?
10. What southern edible specialty does the singer reminisce about?