Chapter 23.1

Why did the economy collapse after the stock market crash?

- Troubled industries - Factories were producing more than the people could afford to buy. With prices rising faster than salaries, many people cut back on their purchases. Also housing and automobile manufacturing were on the decline because most people who could afford houses and cars had already bought them. - Crisis in Banking - struggling farmers found it impossible to pay back their loans, When farms failed banks who funded them went out of business. City banks failed too because they had loaned money to investors and after the crash terrified depositiors ran to the banks to withdraw their savings. More than 5,500 banks closed between 1930 & 1933 - Loss of Jobs - when people could not afford to buy what factories were producing - people in factories lost their jobs. Many companies were forced into bankruptcy which caused even more layoffs.

What was the Human Cost in the Great Depression

-Unemployment -The Americans who lived in cities and worked in factories in offices who lost their jobs had no money for food and no land in which to grow food. People who were able to keep their jobs had their hours cut and their salaries slashed. -Their was growing poverty. -Impact on Families fathers left their homes in search of work, others deserted their families because they were ashamed they could not find a job. Young people put off marriage plans and had fewer children. Many children suffered life-long health problems from a lack of food and dental care. Many schools were closed and budget cut so many children did not go to school.

What actions did President Hoover take to try to ease the economic crisis?

.-He encouraged business executives and city and state governments to create public works projects to employ jobless people. -He also urged private charities to set up soup kitchens -He formed the Reconstruction Finance Corporation (RFC) to fund critical businesses, such as banks, insurance companies and railroads. .

How did the major troubles cost people there jobs?

.As the factories shut down workers lost their jobs. Loss of Jobs - when people could not afford to buy what factories were producing - people in factories lost their jobs. Many companies were forced into bankruptcy which caused even more layoffs.

Why do you think Hoover wanted business leaders and local governments to take the lead?

He wanted to empower them to volutarily help support the people which would make society stronger over time.

What was the goal of the Bonus Army?

In 1924, Congress approved a bonus of $1,000 for every veteran of WWI. The bonus was not to be paid until 1945. Many desperate by the Depression demanded immediate payment. When Hoover refused, an angry "Bonus Army"of at least 20,000 veterans marched to Washington where they camped out. Congress rejected their plea. Most marchers left but about 2,000 stubbornly remained and government forces used tear gas, tanks and machine gund to make them leave. Many Americans were outraged by the image of government forces firing on unarmed veterans.

What happened on Black Tuesday?

On October 29, 1929, the stock market crumpled completely. Panicked traders rushed to sell but there were no buyers. Prices plumented. Investors who thought they owned valuable shares were left with worthless pieces of paper. Millionaires lost their fortunes over night.

What were Hoovervilles?

On the outskirts of big cities, homeless people built communities out of rundown shacks. They called these makeshift towns Hoovervilles, because they blamed the President for failing to solve the crisis. They slept under "Hoover blankets," or newspapers.

How did the depression spread overseas?

The Great Depression had soon spread worldwide. After World War I, many European nations owed America huge sums of money. A slowdown, in international trade, however, caused these countries to default on their loans. And as the financial crisis worsened in America, investors cut back on their loans to Europe, layoffs, and bankruptcies repeated itself as Europe sank into the economic depression.

List the major troubles that industries faced in the Great Depression.

There were troubled industries, crisis in banking, unemployment, and growing poverty. Troubled industries - Factories were producing more than the people could afford to buy. With prices rising faster than salaries, many people cut back on their purchases. Also housing and automobile manufacturing were on the decline because most people who could afford houses and cars had already bought them.

overproduction

a situation in which the supply of manufactured goods exceeds the demand - How can overproduction hurt the economy?

bonus

extra payment - additional sums of money

default

failure to repay there loans - What happens when a company or individual defaults on a loan?

bankruptcy

is a financial failure cause by a company's inability to pay its debts When would a company declare bankruptcy?