Economic Crisis, Stock Market Crash & Early Depression

Which was the economically weakest sector in the US throughout the 1920s?

The Farming Sector

What condition during WW1 created an economically strong farming sector in the US?

European demand for American agricultural products

What occured to reduce the demand for American agricultural products?

European production

How did farmers respond to drop in crop prices following WW1?

Farmers take out mortgages to buy more acreage and equipment in order to maintain overall income levels

What was the result of the farmers taking now having more equipment and acreage to produce more crops faster?

It drove the crop prices even lower

What occured in 1926 which furthere contributed to the agricultural crisis in the South?

Massive cotton crop runs prices even lower

By as early as 1927, several indicators suggested a developing economic problem. What were they?

Steel production is down, Home construction is down, Automobile sales are down, Consumer spending is down

What economic indicators had begun showing up by 1929?

Industrial production is down, Unemployment is increasing

What was the Great Bull Market?

Stock prices since 1924 were high and continuing to increase

Explain speculation...

People were buying assets (stocks), hoping for a quick turn-around and high profits; it was working for many

Explain buying on margin...

Use of bank loans to buy stock in a company. Caused high prices. People then sold all their stock at once when they feared a drop in the economy. The price of stock dramatically dropped and stock became worthless

What were seven causes of the stock market crash in October 1929?

Overproduction, Easy credit, Disparity of wealth, Farm sector crisis, Unstable and unregulated financial systems, High tariffs, Federal reserve banks

When did the stock market crash?

October 29th, 1929 (Black Tuesday)

What was President Hoover's overriding (primary) political philosophy relative to the role of the government?

-"Let the economy fix itself."
-Government should not get involved - laissez-faire

Whom did President Hoover believe was responsible for coming to the assistance of persons who were impacted by the effects of the stock market crash and of the deepening recession/ depression?

Individuals, farmers, charities, businesses, churches, etc.

As evidenced by the excerpt from his Nomination Acceptance Speech (1932) Hoover favored cooperative effort between government and the private sector in dealing with the economic crisis. How does the Hoover Dam project exemplify this cooperative effort?

The federal government paid for the whole project but the contractors managed it

As agriculture prices continued to decline, what actions did farmers take as the cost of harvesting a crop exceeded its market value?

They began plowing under the crops in the field

What was another impact of declining crop prices for famers?

Farmers were losing their property as banks began to foreclose

What natural event emerged around 1930 that further compounded farmers' woes?

The Dust Bowl

What was Hoover's policy regarding direct aid to individual Americans?

Reconstruction Finance Corporation (RFC)

What was the Reconstruction Finance Corporation (RFC)?

No direct aid the the individual americans, we'll give money to projects that need to be completed and those will create jobs

How did the RFC align with Hoover's beliefs about addressing the economy?

Hoover didn't believe the role of the governement was to directly intervene in the lives of Americans, it was a "laissez-faire" approach

What was the War Adjusted Compensation Act (1924)?

Believing that US service members had not been sufficiently compensated for their service during WWI, Congress authorized a bonus be paid to veterans

What was the Bonus Army demanding in 1932?

Over 17,000 WWI veterans gathered in Washington, demanding cash payment of the bonus

How did Hoover's handling of the Bonus Army contribute to his presidential campaign in 1932?

Public relations to the Bonus Army nightmare for Hoover and his Presidential bid in 1932 and Roosevelt won by a landslide over Hoover

What was the 20th Amendment?

The inauguration of a newly elected President occurs in March of the year following the election

What was the purpose of the 20th amendment?

Changes the date of the inauguration, they have updated technology since the 1800s so they can move the new president in quicker, shortening the "lame duck period"

Did the 20th Amendment change anything in the transition from the Hoover to the Roosevelt administration?

No, the first election that it took it took effect in was the 1936 election

What was Roosevelt's Brain Trust?

Roosevelt gathered lawyers, economists, historians, and other experts to propose solutions for the economy and they began developing a plan for addressing the depression, a plan eventually known as the "New Deal" which Roosevelt had promised during his Presidential campaign