Causes & Early Effects of the Great Depression

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1. What happened on "Black Tuesday"?

On "Black Tuesday" shareholders in the stock market tried to sell to buyers before prices went even lower than they already were. Also, the amount of shares that were "dumped" were close to 16.4 million, and more shares could not find buyers. The people who bought stocks on credit now had huge debts, and others lost their savings.

2. How did the economic trends of the 1920s in industry, agriculture, and with consumers help cause the Great Depression? (Make sure you include significant details about each area in your answer. It should be at least a paragraph)

The economic trends in the 1920's like industry, agriculture, and consumers helped to cause the Great Depression. Industry helped cause the Great Depression by many industries weakening and there being to much competition. For example, railroads lost business because of new forms of transportation like trucks and buses. Also, the industry of coal mining had tough competition with new energy resources such as natural gas and hydroelectric power. Agriculture helped to cause the Great Depression by farmers prospering during the war and buying more land, but then they they raised production which just decreased prices more. Furthermore, farmers lost their farms when banks foreclosed on them as payment for their debt, and the McNary-Haugen bill was passed by Congress to try to help out farmers by buying their crops and selling them at guaranteed prices in the world market. Lastly, consumers helped to cause the Great Depression by buying less because they couldn't afford it. During the 1920's most people bought things on credit where they would pay back what they owe over a period of time and getting that item right then, like credit cards nowadays, and it was easily available which just kept the debt piling up. Also, there was an uneven distribution of income, the rich got richer while the poor got poorer. In conclusion, industry, agriculture, and consumer trends of the 1920's were all contributing factors in causing the Great Depression.

3. According to your reading, what are the major causes of the Great Depression?

The major causes of the Great Depression are the tariffs and war debt policies that cut down the foreign market for American goods, a crisis in the farm "sector", the availability of easy credit, and an unequal distribution of income.


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4. What was Hoover’s philosophy of government?

Hoover's philosophy of government was that the government should not be forced to help businesses and people, he did not believe in direct relief or welfare (people should be able to fix it themselves without any help). Also, he believed that local organizations, charities, and individuals should pitch in to help the less fortunate rather than the government. Overall, President Hoover believed that things fix themselves, people should be able to fix their own problems without the help of the government.

5. What was Hoover’s initial reaction to the stock market crash of 1929?

Hoover's initial reaction to the stock market crash of 1929 was to call together key leaders in the fields of business, banking, labor to find solutions to this problem and to try not to make the bad problem worse.

6. What was the nation’s economic situation in 1930?

The nation's economic situation in 1930 was filled with anger. The depression just increased and many people suffered and became angry because President Hoover really wasn't doing anything to help the economy. Farmers sometimes didn't work on their fields, threw their milk on the highways, or even burned their crops thinking that it was a loss anyways to sell it in the market. Also, farmers would use force to try to keep their farms. Many people had derogatory names against Hoover such as inside out pockets were called Hoover flags. Lastly, some people would block roads so crops couldn't get to the markets hoping that it would raise prices.

7. How did voters in 1930 respond to this situation?

Voters responded to this situation by voting for Democrats in the 1928 election which made the Republicans lose majority in both the Senate and the House of Representatives.

8. What did Hoover do about the economic situation?

Hoover became active in the depression instead of letting things fix themselves by signing the Federal Home Loan Bank Act which lowered mortgage rates for homeowners and allowed farmers to refinance their farm loans and avoid foreclosure. Also, he made the Reconstruction Finance Corporation which authorized up to two billion dollars for emergency financing for banks, life insurance companies. railroads, and other large businesses.

9. How did the economy respond to his efforts?

The economic response to Hoover's efforts was businesses still went bankrupt and failed. Hoovers efforts did not help at all everythings kept going down hill. The RFC did loan 80 million dollars to those businesses such as insurance and etcetera but it only helped for five months.