HW: 2/27/20



Name:Notes #:Social Studies 8 Date:An Overview of the Great Depression Directions:Use the following reading to answer the questions that follow. You should HIGHLIGHT where you found your answers in the reading; you do NOT need to restate your answers.The 1920s were a time of prosperity and a booming stock market in the US. Much of this boom, however, was based on shaky practices such as installment buying and buying on margin. The prosperity of the 1920s came to a screeching halt in 1929 and the US plummeted into the worst depression ever seen. This period of time, throughout the 1930s, therefore became known as the Great Depression.Herbert Hoover was elected president in 1928, at the peak of American prosperity. Even as he was elected, though, there were signs of weakness in the American economy. Older industries and agriculture were on the decline even as stock prices continued to soar. For a time, the gamble of buying on margin seemed to be paying off for most Americans…that is, until the Stock Market crashed in October of 1929.2286083185From May of 1929 through September of 1929 stock prices soared, but soon after this in October of 1929 stock prices began to rapidly decline. As prices dropped, banks and stock brokers who had lent money to people so they could buy stocks on margin began calling in their these loans. People who could not afford to pay off their loans had to sell off their stock to try and pay off their debt. This dropped stock prices even more as more and more shares were up for sale. On October 29, 1929, known as Black Tuesday, the stock market completed crumbled. People panicked and tried to sell off their shares, but no one wanted to buy. Prices of stocks plummeted and suddenly valuable shares of stock were worth nothing – people lost all of their money! This ushered in a twelve year period of economic disaster in the US known as the Great Depression.While many people blame the stock market crash for starting the Great Depression, there were really four long term causes of the depression. Overproduction of goods caused prices to fall, which led to business debt as companies were making less and less money. Installment buying led to consumer debt as people were buying more and more goods and were not able to pay off their debts. Farmers were also facing harsh times as severe weather and drought led to farm debt. Finally, the US economy was suffering as countries in Europe stopped buying American goods after World War I as they were trying to rebuild their own nations, this led to a severe decline in trade. The start of the Great Depression also marked a time of crisis in the banking system in the US. Banks had loaned out money to people so they could buy stocks on margin. When the stock market crashed, people lost all of this money. This meant that when the bank recalled their loan, which means that they require people to pay back their loan immediately, people were unable to pay. Since people could not pay back their loans, banks ran out of money and therefore had to close down. This meant that any money that people had in the banks was gone. Between 1930 and 1933, a total of 5,500 banks closed across the US. Many were left penniless as their life savings disappeared with the banks.2286038100As the economy began to fail, companies were forced to lay off workers as they could not afford to keep them. During this time, unemployment hit an all time high as more and more businesses were forced to scale back and eventually close. Between 1929 and 1933 unemployment went from 3% to 25%. Across the nation, more than 13 million people were unemployed; and those who were lucky enough to keep their jobs were faced with lower wages and less hours. Growing poverty crushed many Americans who were forced to live in “Hoovervilles” (shanty towns for the homeless that sprung up in cities across the US) and sleep under “Hoover blankets” (newspapers) in the streets. To get food many Americans turned to soup kitchens for free food. Many Americans looked to the federal government for help during this time and began to blame President Hoover for their conditions as they felt he did very little to help them. 22860-1905President Hoover had been elected at the peak of prosperity in 1928 and was suddenly forced to face the greatest economic downturn in US history. His advisors considered the depression to be a temporary setback and expected the economy to rebound soon, therefore they advised him to do nothing about it. Hoover disagreed, but felt that it was up to business leaders and local governments and NOT the federal government to solve the problem. He urged local and state governments to create job programs to put people back to work and encouraged private charities to set up soup kitchens. Despite these ideas, the economy continued to worsen. Eventually Hoover realized that he was not doing enough to improve the economy. In 1932 he formed the Reconstruction Finance Corporation (RFC) to fund critical businesses such as banks, insurance companies and railroads. The RFC also gave money to fund public-works projects that were meant to create jobs. Despite these efforts, the economy still continued to worsen. In the end, Hoover proved unable to meet the needs of the people during the Great Depression. When he ran for reelection in 1932 he lost to Franklin D. Roosevelt by one of the largest margins in US history. Franklin D. Roosevelt received 472 electoral votes to Hoover’s 59, and also received nearly 58% of the popular vote. This proved that the American people had very little confidence in Hoover’s ability to help get the US out of the Great Depression. 2222588900During his election campaign Franklin D. Roosevelt, better known as FDR, had pledged “a new deal for the American people.” This phrase, New Deal, would soon describe his entire political program and plan to not only get the US out of the Great Depression, but also prevent this type of widespread depression from ever occurring again. On March 4, 1933, FDR was sworn in as the 32nd president of the US and reassured Americans that the he would work to pull the US out of the Great Depression and bring prosperity back to the country. While he did not specify what actions he would take to achieve this end, many Americans were encouraged by the new president’s confidence. Americans became fully confident in FDR’s ability to meet the challenge.Questions:Based on your knowledge of Social Studies, define the following:Installment Buying - Buying on Margin - Depression - When did the Great Depression occur?When was Herbert Hoover elected president?Why was it unfortunate timing for Hoover to be elected?When did the Stock Market crash?What did people do to try to pay back their loans? How did this affect the stock market?What was Black Tuesday?How long did the Great Depression last?Explain the following long term causes of the Great Depression:Business Debt - Consumer Debt - Farm Debt - Decline in Trade - What does it mean when a bank recalls a loan?What happened to the banks as people were unable to pay back their loans? How did this affect the people?How many banks closed between 1930 and 1933?What does “unemployment” mean?What was the unemployment rate in 1929? What was it in 1933?What were Hoovervilles?What were Hoover blankets?How did Americans get food during this time?How did Hoover initially try to deal with the Great Depression?What was the RFC and what did it do?Who won the Election of 1932? Why did this candidate win?What was FDR’s “New Deal”?How did the American people react to FDR? ................
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