Great Depression Study Guide

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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”


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

How it affected Businesses:

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.

  • Now Hoover was unpopular with the public.

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.

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