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Social Studies 8 Date:

The Great Depression in New York

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Directions: You will need to answer questions based on the following reading. You MUST highlight AND annotate where you found yours answers.

The worst economic time period in US history, commonly referred to as the Great Depression, began in New York State. By the 1920s New York City’s Wall Street had become the financial center of the United States. Wall Street was the home of the New York Stock Exchange, where thousands of stocks and bonds were bought and sold each day. On Tuesday, October 29, 1929, the New York stock market crashed. Thousands of people sold their stock, and stock prices plummeted. By the end of that infamous day, called Black Tuesday, stock prices had dropped an average of 40 points a share. Stock worth $10 a share on Monday was worth only $6 a share on Tuesday. Thousands of people gathered outside the stock exchange on Wall Street as news of the crash spread. They waited anxiously, knowing that they could lose all money they had invested in stocks.

Why was the stock market crash so devastating to the economy? In the 1920s many Americans, not just the wealthy, were buying stock in hopes of getting rich. Some invested their life savings. When the stock market crashed, many were left penniless. People who had money in banks scrambled to withdraw their savings. Many banks, because they also had lost money on investments, did not have money to cover all withdrawals. This problem was compounded by the practice of borrowing on margin – people had borrowed money from the banks to invest in the stock market, when they lost their investments they could not pay back their bank loans. This contributed to many banks going bankrupt, or running out of money, and having to close. When the Bank of the United States in New York City closed two months after the crash, almost a half-million people lost their life savings. This happened at many banks around the state and country. At the time there was no government insurance on bank deposits, meaning once the money was lost there was no way to for people to recoup what they had lost.

During the Great Depression, the country’s economy came to a screeching halt. Thousands of companies went out of business in New York and across the country. People lost their jobs; many lost their homes. Many New Yorkers did not have enough money to buy anything but necessities. In the early 1930s there was no financial aid available from the federal government for food, housing, or medical care. People stood in long lines for handouts of soup and bread. Some built shacks from cardboard and other scraps. Shantytowns, or homeless villages, sprang up in places like Central Park and along the East River in Manhattan.

Franklin Delano Roosevelt was governor of New York when the Great Depression started. Many desperate New Yorkers turned to him for help. He firmly believed that the government had a responsibility to help people in need, and he established programs to help people get food, jobs and medical care. When FDR was elected President in 1932, he continued these types of programs as part of his “New Deal.” His efforts to get people back to work and provide for the needy helped New Yorkers and the rest of the country endure the ten-year Depression. Many of the country’s current policies and programs – such as the Social Security system, federal insurance on bank deposits, and agricultural price supports – have their roots in the Roosevelt administration.

QUESTIONS:

1. Explain what the statement “the Depression started in New York” means using specific evidence from the reading.

2. When did the stock market crash?

3. How did the stock market crash affect Americans?

4. How were banks affected by the stock market crash?

5. What happened to people’s life savings during the Depression? Why?

6. Why was borrowing on margin such a problem?

7. What was life like for most Americans during the Depression? Give specific examples.

8. How did Franklin Delano Roosevelt help the people of New York state during the start of the Great Depression?

9. How did Franklin Roosevelt help Americans during the Depression as president?

10. What parts of FDR’s administration are still used to help the American people today?

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