APUSH QUIZ #3 STUDY GUIDE

Here are the definitions for the terms related to the causes, immediate effects, and Hoover’s response to the Great Depression (GD), which are often covered in AP U.S. History:

Causes of the Great Depression:

1. 1929 Stock Market Crash: The dramatic collapse of stock prices on October 29, 1929, also known as "Black Tuesday," which led to widespread financial panic, loss of wealth, and the onset of the Great Depression.
   
   

2. Overproduction: The situation where businesses and farmers produced more goods than could be consumed, leading to a surplus. This resulted in falling prices, lower profits, and layoffs, contributing to economic instability.
   
   

3. Buying on Margin: A practice in which investors borrowed money from brokers to purchase stocks, often with only a small percentage of their own money. When stock prices fell, many people could not repay their loans, leading to widespread financial loss.
   
   

4. Speculation: The act of buying stocks, real estate, or other assets with the hope of making quick profits based on price increases, rather than on the underlying value. This created an unstable market bubble that eventually burst during the crash.
   
   

5. Bank Failures: The collapse of numerous banks during the Great Depression as a result of bank runs (people rushing to withdraw their money) and the inability to recover loans made to failing businesses and individuals. Bank failures eroded public trust in the financial system.
   
   

6. Hawley-Smoot Tariff (1930): A protectionist tariff law that raised U.S. import duties to record levels in an attempt to protect American businesses. However, it led to retaliatory tariffs from other nations, reducing international trade and worsening the depression.
   
   

7. Agricultural Overproduction: The overproduction of crops, especially during the 1920s, which led to falling prices for agricultural goods. Farmers were unable to make a profit, resulting in widespread farm bankruptcies and economic hardship in rural areas.
   
   

8. Dust Bowl: A severe drought in the 1930s that struck the Great Plains, exacerbating the agricultural crisis. The drought, combined with poor farming practices, led to massive dust storms and crop failures, displacing thousands of farmers.
   
   

Immediate Effects of the Great Depression:

1. Mass Unemployment: Unemployment reached as high as 25% during the Great Depression, with millions of Americans losing their jobs due to business closures and economic contraction.
   
   

2. Hoovervilles: Makeshift shantytowns built by homeless people during the Great Depression. These were often named after President Herbert Hoover, whom many blamed for the economic crisis.
   
   

3. Breadlines – Soup Kitchens: Charitable organizations and government efforts to provide food for the hungry. Breadlines were queues for free food, while soup kitchens offered hot meals to those in need.
   
   

4. Foreclosures: The process by which banks took possession of homes and farms when owners were unable to pay their mortgages. This contributed to the displacement of many families during the depression.
   
   

5. Deflation: A decrease in the general price level of goods and services, leading to economic contraction, as falling prices caused businesses to reduce wages and cut jobs, furthering the depression.
   
   

6. Bank Runs: A situation where large numbers of customers rush to withdraw their deposits from a bank due to fears of the bank’s insolvency, often leading to the collapse of the bank.
   
   

Hoover’s Response to the Great Depression:

1. Laissez-faire Economies: A policy approach where the government minimally interferes in economic activities, leaving businesses to operate freely. Hoover initially adhered to this approach, believing the economy would self-correct over time.
   
   

2. Rugged Individualism: Hoover believed in individual responsibility and that people should rely on their own efforts to recover from the depression, rather than depending on the government for assistance.
   
   

3. Reconstruction Finance Corporation (RFC): A government agency established in 1932 to provide financial aid to banks, insurance companies, and other businesses in danger of bankruptcy, in an effort to stabilize the economy.
   
   

4. Public Works Projects: Large-scale infrastructure projects funded by the government to create jobs and stimulate the economy. One of the most famous projects was the construction of the Hoover Dam.
   
   

5. Bonus Army 1932: A group of World War I veterans who marched on Washington, D.C., to demand early payment of bonuses promised to them. The protest was forcibly dispersed by the U.S. Army, which damaged Hoover’s public image.
   
   

6. Hawley-Smoot Tariff: The same tariff mentioned earlier, enacted under Hoover’s administration, which raised tariffs on imported goods and worsened the global economic downturn by stifling international trade.
   
   

7. Federal Farm Board: A government agency created in 1929 that aimed to stabilize farm prices by purchasing surplus crops. However, it was ultimately unsuccessful in reversing the agricultural crisis during the Great Depression.
   
   

These terms represent critical components of the economic collapse during the Great Depression and highlight the early responses of the U.S. government, particularly under President Hoover.