CH 32- Beginning of the Great
Depression
• Analyze the factors that Caused the Great Depression, how
American lives were negatively impacted, and Government’s
negligence in reacting to help Americans in need
1. ID the 4 factors that caused the Great
Depression
2. Use evidence and explain two ways
Americans were impacted by the Great
Depression
3. Analyze President Hoover’s response to
the Great Depression
• ID- The Harding Scandals (747)
• Summary 1- What is the cartoon implying about government under President
Harding’s administration?
– That the Gov. has been bought/controlled by business
• OI- The Republican “Old Guard” Returns, GOP Reaction at the Throttle
• 1) What was Warren Harding’s greatest liability as a President?
– Unintelligent and easily tricked by smarter associates around him
•
2) How did government under President Harding’s administration go beyond
the concept of Laissez-Faire?
– Gov. would help business (by limiting regulations/rules)
• 3) What types of Progressive legislation did the Supreme Court strip away in
the 1920’s
– Progressivism- gov. tries to solve problems in society by holding
business accountable for it’s actions (ie Meat Inspection Act)
– Ignored- child labor laws, Gov. ability to regulate, limits on the work day,
anti-trust laws
• 4) Why would the appointment of the head of the Interstate Commerce
Commission, which insures that RR’s charge fair rates, be a conflict of
interest?
– New director was a railroad man and supported the RR over the people
• 5) What direction is the government going in the 1920’s? How might this
create problems in the future?
– Gov is ignoring it’s responsiblity to protect the people from business taking
advantage of workers, Gov. will be unprepared to help if things go bad
• ID- Washington Officials Trying to Outpace the Teapot Dome Scandal (751)
• Summary 2- What natural resource was at the center of Tea Pot Dome?
– Oil (reserves/in ground for the Navy in Wyoming)
• OI- The Stench of Scandal, “Silent Cal” Coolidge
• 6) What was in Charles Forbes background that would imply that he was a
bad appointment for the Veteran’s (Former Soldiers) Bureau? What was he
caught doing?
– Deserter (ran away) in Army, stole $200 mil. From Veteran’s Bureau
• 7) What was the most devastating scandal of the Harding Administration?
Briefly summarize what Albert Fall approved and what he received in return?
– Tea Pot Dome (Albert Fall-Sec. of Interior- leased the rights to drill for oil, w. out
Navy’s permission, to two Republicans backers, Fall was found guilty for
receiving a $400K in bribes, served 1 year in jail
• 8) Why did Harding not run for re-election?
– He died in office
• 9) Coolidge said that “the man that builds a factory builds a temple”
and that “the man that works there worships there.” What do you think
that means?
– People that create businesses are more important than the people
that work there
• 10) What do you believe was President Coolidge’s attitude towards the
role of government in regards to business and workers?
– Government should help business first, if business does well, then
worker will do well
• Do you feel that business will take of the workers if business is well?
Stock Market Crash (1929)
• Objective- Students will
understand the causes and
importance of the Stock
Market Crash
– Crash marks the beginning of
the Great Depression because
people lost so much money
(but is not the cause of the
Great Depression)
• Stock Market- place where
people buy STOCK (part
ownership) in a company
with the hope of making
money (as a company
become successful) when
the stock is sold
Stock Market in 1920’s- prices rose steadily, more
people wanted in on the action
• Speculation- more people
bought stock and prices
became inflated (price of
stock was more than value)
– Buying on Margin- investor
puts down 10% of purchase
and borrows 90%
• Why would a person want to
borrow so much money?
• How does the money get paid
back?
• How does Buying on Margin
help raise prices?
Stock Market Crash- Oct. 24, 1929 prices drop,
people start selling stocks, Oct 29 (Black
Tues.) prices plummet (16 mil. Shares dumped)
•
What happened
1) Saturation- too many investors,
prices artificially rose
2) Decline in Prices- brokers called
in “Margins” (loans), investors
can’t pay back loans
3) Massive Selling- brokers sell
stock to pay back loans
–
Brokers selling, no buyers, prices
start to drop (Oct. 24)
4) Panic- EVERYONE starts selling,
no one buying (Oct.29)
5) Crash- loans due, people lose
everything
Impact of the Stock Market
Crash
• Investors- lose stocks,
savings, value
• Stockbrokers- house,
career, $
• Banks- go out of
business (loaned
money to stockbrokers
that can’t pay back)
• People- an money
deposited in banks
was loaned to
stockbrokers (savings
lost!)
• ID- Pride Goes Before a Fall (760)
• Summary 3- How much money is this seller losing on his car?
Why is he selling it for so little? Why is no one else buying it?
– $100, lost his money in the stock market, so did everyone else (no one
can afford to buy a car)
• OI- The Great Crash Ends the Golden Twenties
• 11) What happened on “Black Tuesday”?
– Stock Market Crashed (Oct. 29, 1929)
• 12) How much money was lost by the end of 1929?
– $40 Billion in value (more than cost of WWII)
• 13) How many workers were unemployed in 1932?
– 25% (12 million)
• 14) Why is a bank going out of business such a calamitous
event for ordinary people? How many banks went out of
business?
– If a bank went out of business it took the depositors/peoples money with
the bank (even though those people did nothing wrong, they were now
broke!!!)
• ID- “Hooverville” in Seattle (763)
• Summary 4- What are these homes made of?
Describe the part of town this shantytown is in?
– Junk (discarded wood, steel), by the railroad, industrial part
of town
16) How did people mock President Hoover by using his
name?
• Hoovervilles (name of the shanty towns, Hooverflag
(pockets turned out to show you are broke)
1st Cause of Depression- Farm Problems
• Farm Problems (1/3 of Americans)
• Overproduction (grew more food than could be sold)
– What is the problem for farmers with growing too much food? (hint- answer is not
that it will spoil)
» price of food dropped
• Loans- borrowed money to grow more food (earn money they lost with
low food prices), food prices dropped more
– Impact on Farmers- could not pay back loans, lost farms
– Impact on US- farmers could not buy new products (truck, tractor), US
industries made less (laid off workers)
2nd Cause of Depression- Middle Class
(wages did not go up in 1920’s)
• Credit- Americans borrowed money in 1920’s
to keep up their standard of living
– Why is borrowing to buy big ticket items (cars, radios,
washing machines) a bad way to fuel your lifestyle?
• Americans ended up putting more and more money back
into what they loaned, rather than buying new products
• Industries suffered as Americans bought less
3rd Cause of GD- Rich vs. Poor- wealthiest 5%
earned 33% of the money, poorest 40% earned
only 10%
• Why would this disparity in wealth hurt ordinary
Americans?
– $ is not being shared and circulated, so ordinary
Americans have less access to money to buy new
products
4th Cause- Industry (made $ in 1920’s, put
profits into stock market, not workers salaries)
• What problem will not increasing salaries
create?
– Overproduction (by 1927 companies made more
goods than were sold because people could not
afford those products)
• OI- Rugged Times for Rugged Individualists, Hoover Battles the
Great Depression, Routing the Bonus Army in Washington
• 17) Why did President Hoover feel the government should not help
out Americans in need?
– Gov. aid would make Americans lazy (destroy “Rugged
Individualism”
• 18) What was the Reconstruction Finance Corporation (RFC) and
who did it support?
– Gov. loaned money to banks and businesses
• How could the RFC been more effective?
•
•
•
•
19) What did Veterans from WWI want from government?
Bonus Army- WWI Veterans who wanted their retirement/war bonus early
20) How did they protest their demands?
– Camped out in Washington DC
21) What was Hoover’s response and how did this response impact Hoover’s opinion
among Americans?
– Hoover sent in the Army with tear gas, Hoover looked like he did not care about
ordinary Americans (ensured he would not be re-elected)
– Analyze why this event would hurt Hoover’s re-election chances?