Section Summary 8 CAUSES of the DEPRESSION SECTION 1

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CHAPTER Section Summary 8 CAUSES OF THE DEPRESSION SECTION 1

READING CHECK The Roaring Twenties were a Republican decade. Beginning in 1920, Republican Presidents led the nation and took credit for the good In 1928, how did Americans economic times. In 1928, the country continued to support the show their approval for the Republicans by electing Herbert Hoover President. However, the way Republicans handled the nation’s prosperity was not as deep or as sturdy as it appeared. economy? American farmers faced difficult times in the 1920s. They had borrowed money to buy land and machinery to increase the harvest yields during World War I. Although the demand for American crops fell after the war, farmers were still producing large harvests. Cheap food flooded the markets, lowering farmers’ profits and making debt repayment hard. Industrial workers, whose wages rose steadily, did better than farmers. The owners of companies did even better. They became VOCABULARY STRATEGY very rich. In fact, in 1929, the wealthiest 0.1 percent of the population earned about the same amount of money as the bottom 42 percent. What does the word converge However, the people with great wealth could not buy enough goods mean in the underlined sen- to keep the economy strong. Still, many workers took advantage of tence? What context clues can you find in the surrounding easy credit to buy products. This disguised the problem and helped words or phrases? Circle any the economy to grow. words or phrases in the para- By 1929, it became clear that too much money was being poured graph that help you figure out into stock speculation. Investors often borrowed money to buy what converge means. stocks, then sold them to turn a quick profit. Frantic buying and selling inflated the prices of stocks to unrealistic levels. Finally, all the problems began to converge. A sharp drop in stock prices led to pan- icked selling. Stock prices bottomed out on Black Tuesday, October 29, 1929, wiping out whole fortunes in hours. The stock market crash marked the beginning of the Great Depression, a period lasting from 1929 to 1941 in which the U.S. economy faltered and unemployment soared. Thousands of banks closed and many businesses failed. The government tried to boost the sale READING SKILL of American goods by passing the Hawley-Smoot Tariff, which Recognize Causes Look over placed high taxes on foreign goods. Foreign governments responded the concept web. Select a by placing tariffs on American goods. The result was closed markets cause of the Great Depression. and unsold goods, which destroyed international trade. Economists Explain how it contributed to the still disagree on what was the most important factor leading to the depression. Great Depression, which eventually affected the whole world. Review Questions 1. How did World War I affect farmers and help lead to the Great Depression?

2. Why was stock speculation a problem?

CHAPTER Section Summary 8 AMERICANS FACE HARD TIMES SECTION 2

READING CHECK The Great Depression deeply affected Americans. Some lost every- thing they had while others struggled simply to survive. In the cities, In what part of the country did Americans faced rampant unemployment. Between 1921 and 1929, the Dust Bowl occur? annual average unemployment rates never rose above 3.7 percent. By 1933, almost 25 percent of workers were without jobs. As unem- ployed families ran out of money, their hardship deepened. Drastic necessity forced them to sell their belongings. Sometimes a family’s only food came from a bread line, where people lined up for hand- outs from charities or public agencies. Many people were evicted from their homes. With no place else to go, they sometimes grouped together in Hoovervilles—makeshift shantytowns of tents and shacks built on public land or vacant lots. VOCABULARY STRATEGY Conditions were bad in rural America, too. Before the depression, farmers had already been struggling. During the depression, What does drastic mean in the their problems worsened. Crop prices dropped lower. Between 1930 underlined sentence? Read the and 1934, nearly one million farmers lost their homes for failure to underlined sentence aloud, but leave out the word drastic. What pay their mortgages. Some farmers stayed on the land as tenant word could you use in its place? farmers, working for bigger landowners rather than for themselves. Use this strategy to help you ﬁg- A severe drought and overfarming on the Great Plains turned the ure out the meaning of drastic. soil to dust, making farming impossible and creating huge dust storms. High plains regions in Texas, Oklahoma, Kansas, New Mexico, and Colorado became known as the Dust Bowl. Many farmers left the area and moved to California to look for work. Because some of these people were from Oklahoma, Dust Bowl refugees became known as Okies. Minorities were hit the hardest by the depression. African American sharecroppers were thrown off the land they had farmed and migrated north. In 1932, unemployment among African Ameri- cans was nearly double the national rate. In the Southwest, many READING SKILL white Americans urged repatriation of Mexican Americans. Repatri- Categorize Which of the follow- ation involved government efforts to send Mexican immigrants and ing were present in both urban their American children back to Mexico. and rural America? Circle your For many Americans, the depression was a time of great hope- answer. lessness and despair. • Hoovervilles • Unemployment Review Questions • Farm foreclosures 1. What were some of the problems that farmers faced during the depression?

2. What was repatriation, and who was most affected by it?

CHAPTER Section Summary 8 HOOVER’S RESPONSE FAILS SECTION 3

READING CHECK From big cities to small towns, the Great Depression spread misery across America. As the crisis deepened, Herbert Hoover struggled to Who led army troops against respond to the nation’s problems. protesters in Washington, D.C., At ﬁrst, Hoover felt that government should not interfere with during the summer of 1932? what he thought was the natural downswing of the business cycle. Soon, however, Hoover tried a different approach, called volunteerism. Hoover asked business leaders not to cut prices and wages. He called for the government to simultaneously reduce taxes, lower interest rates, and create public-works programs. He also asked the wealthy to give to the poor through charities. Finally, Hoover called for a policy of localism. This policy asked state and local governments to provide more jobs and relief measures. However, businesses cut wages and laid off workers, towns and states did not have the resources to respond to the crisis, and charities ran low on VOCABULARY STRATEGY money. The crisis demanded federal action. Next, the President decided to adopt a policy of trickle-down What does the word economics. The idea was that the government would provide loans simultaneously mean in the underlined sentence? Look for to bankers so they in turn could lend money to businesses. Busi- clues in the surrounding words, nesses would then hire workers, leading to increased production phrases, and sentences. Circle and consumption, and the end of the depression. At Hoover’s urg- the phrase below that has the ing, Congress created the Reconstruction Finance Corporation same meaning as simultaneously. (RFC) to provide loans to businesses. However, businesses that did • done at the same time receive loans did not always use them to hire workers. Hoover did • done one after the other have one success in the building of Hoover Dam. Construction of the dam on the Colorado River brought much-needed employment to the Southwest in the early 1930s. Americans became increasingly unhappy with Hoover’s han- dling of the depression. A group of almost twenty thousand unem- ployed World War I veterans known as the Bonus Army marched in protest and set up camps in Washington, D.C. They wanted early READING SKILL payment of a bonus promised them. Congress agreed, but Hoover Identify Supporting Details List vetoed the plan. When riots broke out in July 1932, Hoover called in the details that support the con- the military. General Douglas MacArthur led army troops against clusion that Hoover’s policy of the veterans. Many of the veterans were hurt, a situation that volunteerism failed. angered many Americans. Hoover had little hope of reelection. Review Questions 1. What was President Hoover’s ﬁrst response to the depression?

2. What was the Bonus Army?