The Great Depression Begins Ch.14 1. Price support either a subsidy or a price control, both with the intended effect of keeping the market price of a good higher than the competitive equilibrium level During the 1920s when farmers struggled, President Coolidge vetoed price support bills twice 2. credit An agreement in which consumers can buy now and pay later 3. Alfred E. Smith Democratic candidate for the 1928 presidential election First Catholic to run for president; KKK campaigned against him by implying that the Pope would come and run the country 4. Dow Jones Industrial Average A measure based on the stock prices of 30 representative large firms trading on the New York Stock Exchange 5. speculation Buying stock and bonds on the chance of a quick profit 6. Buying on margin Paying a small percentage of a stocks price as a down payment and borrowing the rest 7. Black Tuesday October 29, 1929; day the stock market crashed beginning the worst economic depression in the nations history 8. Great Depression Period from 1929 to approximately 1942 in which economic growth was depressed and unemployment was high 9. Hawley-Smoot Tariff Act Passed in 1930 and established a high protective tariff 10. shantytown Little towns consisting of homemade shacks 11. Soup kitchen Place offering free or low-cost food 12. Bread line Lines of people waiting to receive food from charitable organizations or public agencies 13. Dust Bowl Region of the nation which experienced prolonged drought and high winds which blew away crops and created huge dust storms which reached 500 miles out in the Atlantic Ocean 14. Direct relief Cash payments or food provided by the government to the poor 15. Herbert Hoover President from Believed in limited government interference in the economy 16. Boulder Dam Public works project that provided thousands of jobs and also hydro- electricity, flood-control, and regular water to residents of California and Nevada 17. Federal Home Loan Bank Act Law which lowered mortgage rates and allowed farmers to refinance to avoid foreclosure 18. Reconstruction Finance Corporation Authorized up to $2 billion in emergency funding for banks, life insurance companies, railroads, and other large businesses 19. Bonus Army World War I veterans and their families who marched on Washington to try and get their war bonuses early Bonuses were supposed to be paid out in 1945 The Nations Sick Economy Section 1 Economic Troubles on the Horizon Key industries were barely making profits Railroads, textile, steel, housing starts declined Farmers Need a Lift Demand and crop prices fell after WWI Farmers grew more to make profits, which depressed prices Banks foreclosed on farm properties and many banks began to fail Congress tried to help but Coolidge vetoed their attempts Economic Troubles on the Horizon Rising prices, stagnant wages, and overbuying on credit meant consumers were spending less Living on Credit Living beyond their means meant piles of debt so many consumers cut spending Uneven Distribution of Income 70% of families earned less than $2,500 per year Families that made twice as much could not afford new conveniences Hoover Takes the Nation Election of 1928 Republican Hoover v. Democrat Alfred Smith We in America are nearer to the final triumph over poverty than ever before.- Hoover Dreams of Riches Many Americans bought stocks hoping to make fortunes Speculation and buying on margin fueled the rising prices Stock Market Crash Downturn in September Black Tuesday October 29, 1929 16.4 million shares were sold with additional millions unable to sell Financial Collapse Bank and Business Failures Money withdrawn from banks in panic Between 1929 and ,000 banks closed and 13 million people (25% of the workforce) were out of jobs Worldwide Shock Waves America couldnt import as many foreign goods Hawley-Smoot Tariff Act- highest protective tariff in U.S. history Causes of the Great Depression Tariffs and war debt policies, farm crisis, easy credit, unequal distribution of income Hardship and Suffering Section 2 Peoples Lives Devastated Cities Shantytowns sprang up (Hoovervilles) Soup kitchens and bread lines Racial discrimination increased Rural Areas Had the advantage of being able to grow their own food Dust Bowl Drought, overproduction, and wind Farm families followed Route 66 to California Effects on the Family Men in the Streets Trying to search for jobs; some gave up the search and left their families out of shame Women Struggle to Survive Canned food, sewed clothing, some worked outside the home and became targets of resentment Children Suffer Malnutrition, school closures, teenagers became Hoover tourists riding the rails Social and Psychological Effects Suicides increased, stopped going to the doctor or dentist, gave up getting married or going to college Saving became a habit for millions of Americans Hoover Struggles with the Depression Section 3 Hoover Tries to Reassure the Nation Hoovers Philosophy Government should encourage and facilitate cooperation Believed people should succeed on their own efforts and not count on the government to bail them out Hoover Takes a Cautious Step Asked employers not to cut wages or lay off workers Asked labor leaders not to demand higher wages or go on strike Hoover Tries to Reassure the Nation Boulder Dam Providing electricity, flood control, and a regular water supply to seven states Democrats win Congressional Elections (1930) Republicans lost their majority in the House and had a one vote majority in the Senate Farmers react Dumping milk, burning crops, and blocking roads all in the hopes of raising food prices Hoover Takes Action Backing Cooperatives Organizations that were created out of the cooperation of private entities Federal Farm Board- intended to raise farm prices by keeping crops off the market Direct Intervention Federal Home Loan Bank Act Lowered mortgage rate, allowed farmers to refinance to avoid foreclosures Reconstruction Finance Corporation Authorized $2 billion in loans to banks, life insurance companies, railroads, and other large businesses The Bonus Army Patman Bill Denied Authorized the payment of bonuses to WWI veterans to be paid out in 1945 Hoover provided food and supplies Disbanding the Bonus Army WWI veterans who marched on Washington to receive their bonus pay early Senate denied the bill and Hoover ordered the army to leave Hoover called out troops to burn the bonus armys encampment