Great Depression Study Guide
During the late 1920’s the overall wealth and prosperity of the richest
Americans hid the majority of society that was struggling economically. It
also hid the fact that a lot of industries were in trouble as well. A lot of
people were out of jobs, especially African Americans. This was the start of
era called, The Great Depression. A lot of events caused this to occur.
-
In the 1920’s industries had better ways to produce more goods, but
since the economy was struggling, this caused negatives effects as
well:
New technology caused
goods to be produced
faster…
Middle class / poor people
can’t afford to buy the
goods.
Products stayed in
warehouses- not being
sold-industries not making
$$$
Industries can’t pay
salaries, for materials or
shipping of goods
People still want to buy
goods / stocks: so buy on
speculation and
buy on margin.
If prices rose, borrowers
could pay back their
loans. If they fell, they
couldn’t pay back what
their loans.
Speculation: buying and selling stock hoping to make a profit
Buying on margin: when people buy a small part down payment and
borrow the rest of the money.
-
In 1928, Herbert Hoover (Republican) ran for president.
 believed that soon poverty will be “banished” from the nation.
 Despite economic problems, people believed Hoover.
 Hoover wins the election.
The Crash of 1929
-
Sept. 3rd, 1929: stocks reached a very high point
-
Oct. 23rd, 1928: prices began to drop quickly
 so people tried to sell their stock before it dropped even more
 but the low prices scared off any buyers of the stocks
-
Oct. 24th, 1929: a record high of shares were traded.
-
Oct. 29th, 1929: “Black Tuesday”
 millions of shares of stocks were sold at extremely lower then
before
 caused a huge plunge in the stock market……
This low plunge in the stock market was
known as the Crash of 1929…
the 1st event of the
Great Depression
How the Crash affected banks:
- banks got nervous that their loans wouldn’t be paid back.
- They demanded the money back from borrowers
- People couldn’t repay
- Banks ran out of money
 this made people even more nervous
 people ran to the banks to withdraw their money
 banks didn’t have enough cash to pay everyone
 Banks Closed!
How it affected Businesses:
- people had no money so they stopped buying goods
- businesses went bankrupt
- businesses had to fire workers because they couldn’t pay salaries
- unemployment increased
 people couldn’t bay bills
 people lost their homes, went hungry
How the Great Depression affected Europe:
- European countries had borrowed money from US banks after WWI.
- So when our economy went down, so did theirs.
- This spread around the globe.
What was done to Help:
- Hoover was scared that if the gov. interfered, it would do more
damage.
- Hoover’s ideas backfired.
 he cut gov. spending and raised taxes
 made the economy even worse
-
Now Hoover was unpopular with the public.
 he didn’t believe in giving aid ($) to the poor
 unemployment, hunger, and homelessness grew
Hoover Finally Gives Relief:
- he started the public works projects: agencies set up to lend $ to
states, cities and towns.
 money went towards building roads and damns
 this created jobs
However, Hoover still remained unpopular:
- he didn’t keep his promise to the war veterans that they would receive
a bonus for their war efforts.
- So, the Bonus Army (15,000 angry veterans) marched into
Washington.
- Hoover still voted against the bonus payment
- Americans were very against Hoover when it was time for the 1932
election.