The Great Depression Begins

Chapter 22

The Nation’s Sick Economy

Section 1

Economic Troubles on the HorizonDuring the 1920s, the economy boomed. But

there were economic problems under the surface.

industries., such as clothing, steel-making, and mining, were hardly making a profit.

Many industries had been successful, but by the late 1920s, they were losing business.

These industries included auto manufacturing, construction, and consumer goods.

The biggest problems were in farming.Many farmers could not make the mortgage

payment on their farms.

ContinuedCongress tried to help farmers by passing price

supports-law that keeps prices above a set level.With price supports, the government would not

allow food prices to fall below a certain level.Americans were buying less:Many found that prices were rising faster than

salaries.Many people bought on credit-an arrangement in

which consumers agreed to make monthly payments with interest.

A small number of rich people were getting richer.

Hoover Takes the NationThe Republican Herbert Hoover easily defeated

the Democratic challenger, Alfred E. Smith.People believed Hoover when he said the

American economy was healthy.The Dow Jones Industrial Average-a

measure of 30 popular stocks, was way up.Many people were engaging in speculation-

buying risky stocks in hopes of a quick profit.To do so, they were buying on margin-

paying just a small amount and borrowing the rest.

The Stock Market CrashesOn Tuesday, October 29, 1929, called Black

Tuesday, prices fell so sharply that people said the market had “crashed.”

Financial Collapse:The stock market crash signaled the Great

Depression-period of bad economic times when many people were out of work, lasted from 1929-1940.

The situation became worse when Congress passed the Hawley-Smoot Tariff Act-law that raised taxes on imports and worsened the Depression.

ContinuedThe Great Depression had several causes:

Tariffs and war debt policies that cut down the foreign market for American goods.

A crisis in the farm sector.The availability of east credit.An unequal distribution of income.

Hardship and Suffering During the Depression

Section 2

The Depression Devastates People’s LivesThe Depression brought suffering and

hardship to many Americans.Cities across the country were full of

homeless people.Some built shantytowns-where they lived

in little shacks they made out of scrap material.

Some ate in soup kitchens-charities served free food to the needy.

Those who could not afford to buy food stood in bread lines to receive free food.

ContinuedFrom 1929 to 1932, about 400,000 farmers lost

their land.The soil was exhausted from over-farming.When powerful winds swept across the Great Plains,

the soil simply blew away.This dry area of blowing soil was called the Dust

Bowl.Many Oklahoma farmers packed up their

belongings and started for California to look for work.

They became migrant workers, moving from place to place to pick crops.

Because so many of them came from Oklahoma, migrant workers were often called Okies.

Effects on the American Family.Children suffered terribly from poverty and

the break-up of families.Many children had poor diets and no health

care.Their parents could not afford to buy

healthy food or to pay doctor bills.During the early years of the Great

Depression, the federal government did not give direct relief-cash or food directly to poor people.

Hoover Struggles with the Depression

Section 3

Hoover Tries to Reassure the NationAt first Herbert Hoover (31st president)

believed that the Great Depression was just another slow-down that would end on its own.

Hoover believed government should help different groups work together to improve the economy.

Hoover also believed in “rugged individualism”-the idea that people should succeed through their own efforts.

He believed people should take care of themselves and each other, and that the government should encourage private groups to help the needy.

ContinuedHe thought that charities-not government-should

give food and shelter to people who were poor or out of work.

One project that did help was the Boulder Dam-a huge dam on the Colorado River, built to help create jobs during the Depression. (1,244ft. long, 726ft. high. Tallest in the world, Hoover Dam today.)

Farmers burned crops and dumped milk rather than sell it for less than it cost them to produce it.

People called the shanytowns that sprang up “Hoovervilles.”

Hoover Takes Action Hoover did not offer direct aid to the poor.He tried to help farmers with the Federal Farm

Board, and banks by creating the National Credit Corporation.

By 1931, the economy had not improved.Congress passed the Federal Home Loan

Bank Act-this law lowered mortgage rates.Congress hoped that low mortgage rates would

help farmers change the terms of there mortgages.

This would help protect there farms from foreclosure.

ContinuedHoover also created the Reconstruction

Finance Corporation-provided money for projects to create jobs.

Thousands of veterans and their families came to Washington.

This so-called Bonus Army set up tents to live in near the Capitol Building.

The Bonus Army was made up of unemployed WWI veterans who marched to Washington to demand their war bonuses.