Name: 

WORLDWIDE SHOCK WAVES

The United States was not the only country gripped by the Great Depression. Much of Europe, for example, had suffered throughout the 1920s. European countries trying to recover from the ravages of World War I faced high debt payments. In addition, Germany had to pay war reparations-payments to compensate the Allies for the damage Germany had caused. The Great Depression compounded these problems by limiting America's ability to import European goods. This made it difficult to sell American farm products and manufactured goods abroad

In 1930, Congress made a bad situation worse by passing the Hawley-Smoot Tariff Act, which established the highest protective tariff in United States history.

This act-designed to help American farmers and manufacturers by protecting their products from foreign competition-had the opposite effect . By reducing the flow of goods into the United States, the tariff prevented other countries from earning American currency to buy American exports

Many countries retaliated by raising their own tariffs . Within a few years, world trade had fallen more than 40 percent-a severe reduction in overall economic activity

The Hawley-Smoot Tariff Act, _____ the American economy by protecting American industries and jobs.

The Great Depression was a _____ phenomena.

The high tariffs of the Hawley-Smoot Tariff Act, _____ world trade

Who ran for president in the 1928 election?

The main purpose of the Reconstruction Finance Corporation was to
provide emergency help for

FARMERS NEED A LIFT

Perhaps more than any other part of the economy, agriculture suffered in the 1920s . During World War 1, international demand for crops such as wheat and corn had soared, causing prices to rise. Farmers had planted more crops and taken out loans to buy land and equipment. After the war, demand for farm products fell, and crop prices declined by 50 percent or more.

To compensate for falling prices, farmers boosted production in the hope of selling more crops, but this only depressed prices further. Farmers who had gone into debt had difficulty in paying off their loans . Many lost their farms when banks foreclosed and seized the property as payment for the debt. As farmers began to default on their loans, many rural banks began to fail

To prop up the farm sector, members of Congress proposed a complicated piece of legislation called the McNary-Haugen bill . This proposal called for federal price supports-the support of certain price levels at or above market values by the government-for key products . The bill had three major provisions:

1- The government would buy surplus crops, such as wheat, corn, cotton, and tobacco, at guaranteed prices that were higher than the market rate. "

2- The government would then sell these crops on the world market for the lower prevailing prices . 

3- To make up for losses caused by buying high and selling low, the government would place a tax on domestic food sales, thus passing the cost of the farm program along to consumers.

Congress passed the bill twice, in 1927 and 1928, but each time President Coolidge vetoed it. Farm prices remained low, and farmers continued to struggle

The government passed the McNary-Haugen bill . This proposal called for federal price supports. What was the purpose of the law?

After World War One ended, demand for farm products decreased and farmers were left with large debts and no way to make money to repay their loans.

What did farmers do in response to the increased demand for farm products during World War One?

The Stock Market Comes Tumbling Down

By 1929, some economists were warning of serious weaknesses in the economy. Most Americans, however, remained unaware of these problems and continued to have confidence in the nation's economic health . Those who could afford to invest in the stock market did so in increasing numbers.

DREAMS OF RICHES IN THE STOCK MARKET

As stock prices rose, several problems became evident. More and more investors were engaging in speculation-that is, they bought stocks and bonds on the chance that they might make a quick or a large profit, ignoring the risks . Their unrestrained buying and selling fueled the market's upward spiral . When stock prices rise it is called a “bull market.” As prices rose, wealth was generated on paper, but it bore little relation to the real worth of companies or the goods that they produced.

Furthermore, many investors began buying on margin-paying a small percentage of a stock's price as a down payment and borrowing the rest. With stockbrokers willing to lend buyers up to 75 percent of a stock's purchase price, buying on margin became the rule . This system worked as long as prices continued to rise, since investors could sell their inflated stocks to make a profit and pay off their debt. If stocks declined, however, there was no way to pay off the loan

BLACK TUESDAY

In early September 1929, stock prices peaked and began to decline.  On October 29-known as Black Tuesday-the bottom fell out of the market . People and corporations alike frantically tried to sell their stocks before prices plunged even lower. When stock prices fall it is called a “bear” market. The individual investors who had bought stocks on credit acquired huge debts as the prices plummeted. Other investors, who had put most of their savings into the market, lost huge portions of their nest eggs. By mid-November, investors had lost $30 billion, an amount equal to American spending in World War I. The stock market bubble had finally burst

Buying on margin is a good thing because you do not have to repay the price of stocks when the value of the stocks goes down

What happened on Black Tuesday?

During the 1920s, which of the following was true of farming conditions?

To fight the Great Depression, Herbert Hoover did all of the following except

During the 1920s, stock prices rose because

Which of the following was an unintended effect of the Hawley-Smoot Tariff Act?.

When did key American industries first begin showing signs of being in financial trouble?

The main purpose of the Hawley-Smoot Tariff Act was to

Who gave the order to remove the Bonus Army from its camp in the
nation’s capital?

Which of the following occurred first?

Price supports are intended to provide the most benefit for

To buy stock on margin means that the buyer

Whose fortunes were most dramatically changed on the day known as

The Great Depression lasted from

CAUSES OF THE GREAT DEPRESSION

The stock market crash signaled the beginning of the Great Depression-the period from 1929 to 1941, in which the economy was in severe decline and millions of people were out of work. The crash alone did not cause the Great Depression, but it hastened the collapse of the economy and made the Depression more severe .

Although historians and economists differ on the main causes of the Great Depression, most cite a common set of factors. Among these causes were the following

1- an old and decaying industrial base-outmoded equipment made some industries less competitive

2-  a crisis in the farm sector-farmers produced more than they were able to sell, especially after the end of World War I and the disappearance of markets that the war had opened to them

3-  the availability of easy credit-many people went into debt by buying goods on the installment plan

4-  an unequal distribution of income-there was too little money in the hands of working people, who were the vast majority of consumers .

The period from 1929 to 1941, in which the economy was in severe decline and millions of people were out of work is called

When the Great Depression began, soup kitchens and bread lines
were mainly run by