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Saturday, January 26, 2013

Ch. 15 Notes



DEFINE: Bull Market, Bear Market, Margin Buying, Gross National Product, Business Cycle, Great Depression, Black Thursday, Black Tuesday, Mutualistas, Breadlines, Shantytowns, Rugged Individualism
1. Great Depression: A severe worldwide ECONOMIC DEPRESSION
2. It began with the STOCK MARKET CRASH of 1929
3. UNEMPLOYMENT soared and international TRADE plunged
4. Depression era UNEMPLOYMENT levels did not end until the beginning of WW2
1930s: A decade of economic depression that led gov to take a more active role in US life:
1. The Stock Market Crash
2. Why did the prosperity of the 1920s ended so suddenly? Poor distribution of wealth, cutting off of immigration
3. Why the Depression lasted as long as it did? Government needed to act more aggressively
4. The Depression's HUMAN TOLL: Loss of jobs
5. POLICIES were adopted to combat the crisis
1. 25%: During the early stages of the Depression 25% of the workforce was JOBLESS
2. INADEQUATE PURCHASING POWER: A MAJOR cause of the Great Depression
3. DUST BOWL: EROSION and WIND STORMS that devastated AGRICULTURE in the MIDWEST during the 1930s
4. EFFECT ON FAMILIES: The Great Depression caused couples to put off MARRIAGE and have FEWER CHILDREN
5. The LONGEST, most WIDESPREAD, and DEEPEST depression of the 20th century
SECTION 1: PROSPERITY SHATTERED
FACTORS THAT CAUSED THE STOCK MARKET CRASH:
                  - Economic factors such as rising interest rates worry investors
                  - Investors sell stock
                  - Stock prices plunge
                  - Heavy sales continue… then the crash
ECONOMIC TROUBLES: Early warnings (agriculture, industry) but few seemed to care
                  - Interest rates were kept LOW to encourage consumers to use credit (Pg. 442)
                                    - However, too many became increasingly reliant on credit
                  - STOCK MARKET
                                    - More and more purchased; No “Bear Market” fears
                                    - STOCK SPECULATION: Rapid buying inflated prices too much (Pg. 443)
                                    - MARGIN BUYING: Buying stocks on CREDIT (Pg. 443)
STOCK MARKET CRASHES:
                  - BLACK THURSDAY: Oct. 24, 1929 (Pg.  443)
                                    - Nervous investors dumped lots of shares; PRICES (Plunged/Rose)
                  - BLACK TUESDAY: Oct. 29, 1929 (Pg. 444)
                                    - Prices sank to a NEW LOW (16 mill. shares sold)
                                                      - More and more owed $ for stocks bought “ON MARGIN” (Pg. 444)
                                                      - Most sold at huge losses ($30 bill. lost)
                                                      - Only a (big/small) % of people invested, but HUGE CONSEQUENCES
THE DEPRESSION BEGINS:
                  - BANKING CRISIS
                                    - Large BANKS suffered significant losses from crash (Pg. 444)
                                    - Borrowers then began TO DEFAULT (Investors could not repay loans)
                                    - Banks began to FAIL (CLOSE) w/ dwindling $ reserves; Widespread fear
- Many tried to WITHDRAW their $, causing more panic, when not all banks had $ for customers to withdraw
                  - BUSINESS FAILURES
- Companies suffered from the crash AND CONSUMERS were unable or unwilling to buy products; People scared to use credit (Pg. 445)
- Cut production and fired workers
- GNP cut in half
- UNEMPLOYMENT rose from 3.2% to 23.6% (BAD!!!) (Pg. 445)
CAUSES:
                  - GLOBAL DEPRESSION (ECON trouble throughout the world)
                                    - Poor global FINANCES after WW1; Massive war debts (Pg. 445)
                                    - Foreigners were unable to PURCHASE American goods.
                                    - US did not help by placing HIGH TARIFFS on IMPORTED goods
                                                      - SMOOT-HAWLEY TARIFF: Highest ever (Pg. 446)
                                                      - Eliminated US market for foreign goods (accelerated problems)
                  - INCOME GAP and CONSUMER DEBT
                                    - Rich got richer, poor got poorer
                                    - Most people did not have the PURCHASING POWER to boost the ECONOMY
                                    - Gov raised INTEREST RATES (on credit) and people could not PAY debts
SECTION 2: HARD TIMES
UNEMPLOYMENT:
                  - INCREASING JOBLESSNESS
                                    - 1.5 (1929) to 15 million UNEMPLOYED (1933)
                                    - WAGES and HOURS fell dramatically for employed (Pg. 448)
                                    - IMMIGRATION decreased
                  - WORKERS
                                    - Many lost jobs, but especially AFRICAN AMERICANS (men and women)
                                    - WOMEN workers (increased/decreased); cheaper
                                    - Many “self-employed” for extra $
CITY LIFE: (BAD!!!)
                  - Many faced UNEMPLOYMENT and POVERTY (Pg. 449)
                  - Gov did little to help; Red Cross, Salvation Army, and churches stepped in
                  - Mex. Amer. Formed MUTUALISTAS
                  - Many waited on BREADLINES
                  - THE HOMELESS flocked to SHANTYTOWNS (aka HOOVERVILLES)
LIFE ON THE FARM: (BAD!!!)
                  - SHRINKING DEMAND caused PRICES to (rise/drop); Surpluses mounted (Pg. 451)
                  - People went hungry in the cities and farmers had to let crops (rot/prosper)
                  - Farm FORECLOSURES b/c farmers could make their MORTGAGE payments
                  - COTTON/FOOD prices fell
                  - MIGRANT WORKERS lost jobs (not much better for those who had work)
FAMILY LIFE: (BAD!!!)
                  - Farmers and families shared (homes, food, etc)
- People moved back home w/ parents
                  - MARRIAGE RATE DECLINED and BIRTHRATES (declined/rose) (Pg. 452-453)
                  - Women’s roles stretched
- Mood of the country became depressed
POPULAR CULTURE: People looked to pop culture and entertainment for an escape
                  - MOVIES: (Cheap/Expensive) and fun; “Talkies” (Pg. 454)
                                    - Gangster films, strong women roles, Disney cartoons
                  - RADIO: (Paid/Free) entertainment @home (Pg. 455)
                                    - # of radios owned more than 2X
                                    - Lone Ranger, Little Orphan Annie
                  - LITERATURE
                                    - COMICS (Expensive/Inexpensive); Tarzan, Flash Gordon (Pg. 455)
- NOVELS: Some were an ESCAPE and others portrayed the BAD TIMES
SECTION 3: HOOVER’S POLICIES

HOOVER and the GREAT DEPRESSION

EFFORT
DESCRIPTION
EFFECTIVENESS
PUBLIC-WORKS PROGRAMS
Poured $ into public construction projects such as the Boulder Dam
Failed to affect the entrenched depression
AGRICULTURAL EFFORTS
Created the Federal Farm Board; Made loans; Estab. Co-ops; Bought surplus goods
Helped some farmers take advantage of co-ops and avoid foreclosure, but failed to end the farm crisis
RECONSTRUCTION FINANCE CORPORATION
Loaned taxpayer $ to stabilize industries
Helped some companies avoid bankruptcy; Used $ for businesses, not people
RUGGED INDIVIDUALISM: H believed that they way too economic recovery was through INDIVIDUAL EFFORT and not from GOV ASSISTANCE (shaping the economy and boosting confidence through a HANDS-OFF approach)
                  - Opposed DIRECT AID (RELIEF), with VOLUNTEERING preferable to gov aid
- Hoover did provide aid for public works programs, farmers, banks, railroads, and insurance companies and inadvertently, the government became more (active/hands-off) than ever before
                                    - In the end, Hoover could not fix the problems was blamed
                  - PROTESTS (Radicals and WW1 vets) against the gov
1932 ELECTION: Hoover (R) vs. Franklin D. Roosevelt (D)
                  - Hoover did not have much public and intra-party support
                  - FDR seemed optimistic against Hoover’s gloom
                  - FDR wins (#32) and Dems capture both houses; FDR promises a “NEW DEAL”
- (R) took the blame for bad economy in the 1930s after being praised in the 20s
UNDERSTANDING MAIN IDEAS: CH. 15
1. (Sect. 1) How did the business practices of the 1920s contribute to the stock market crash of 1929? Created a heavy surplus and encouraged consumers to use CREDIT
2. (Sect. 1) How did the crash, the banking crisis, and the global depression all contribute to the Great Depression? The crash hurt individuals and banks; The banking crisis hurt individuals, banks, and business; The global depression hurt the US
3. (Sect. 2) How did urban and rural residents organize to survive? URBAN: charitable organizations and mutual aid societies; RURAL: neighbors protected each other against foreclosure
4. (Sect. 2) How did popular culture provide an escape from the psychological burdens of the depression? Popular culture provided an ESCAPE from the physical strain(s) caused by the Great Depression.
5. (Sect. 3) Why did Pres. Hoover oppose direct federal aid for the unemployed? Pres. Hoover believed that people had the responsibility to help (themselves/others) rather than rely on the government for assistance
REVIEWING THEMES: CH. 15
1. (Economics) What were the multiple factors that contributed to the Great Depression? Factors that contributed to the Great Depression included: 1. The (global/local) economic crisis and the national income gap deprived American businesses of customers and 2. Consumer (debt/income) lessened disposable income and increased financial instability
2. (Geography) How did the hardships of the depression differ for rural and urban residents? Hardships for (Rural/Urban) residents: unable to sell their crops and faced homelessness; Hardships for (Rural/Urban) residents: experienced homelessness and hunger
3. (Culture) How did racial prejudices magnify the effects of the depression for African and Mexican Americans? Discrimination and racial prejudices in the workplace meant that African and Mexican Americans experienced (higher/lower) wages and (higher/lower) levels of unemployment

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