Download Chapter 23, Section 1 “Hoover and the Crash”

“Hoover and the Crash”
Vocabulary Terms

 overproduction- (pg. 771)
 bankruptcy- (pg. 772)
 default- (pg. 772)
 bonus- (pg. 775)
Signs of Economic Weakness

 Older industries were in decline. (Ex. coal mining,
railroads).
 Declines in agriculture.
 Risk taking in the stock market. (ex. buying on
margin.
Stock Market Crash

 Eventual decreases in stock prices led to losses of
approximately $4 billion.
 Brokers who had lent money to buy on margin now
began to recall those loans.
 Investors who could not pay, had to sell their stocks
causing prices to drop further.
 On October 29, 1929, the stock market crashed. This
was known as Black Tuesday.
Troubled Industries

 The stock market crash caused a 12 year
economic/social disaster known as the Great
Depression.
 One major cause of the Great Depression was
overproduction.
 Also, housing, and the automobile industry were in
decline.
 A nationwide banking crisis also contributed to the
Great Depression.
 With people unable to buy what factories were
producing, workers lost their jobs.
Problems Continued

 The Great Depression spread worldwide. Many
European nations still owed America huge sums of
money following World War I.
The Effect of Society

 Unemployment raised to 25%.
 Poverty was everywhere.
 American families were suffering.
Hoovervilles

 Makeshift towns were called Hoovervilles because
people blamed the President for failing to solve the
crisis that was at hand.
Government Aid

 Hoover felt that business leaders and local
governments should take the lead, not the federal
government.
 Hoover encouraged city and state governments to
create public works projects to employ jobless
people.
Govt. Aid Continued

 In 1932, Hoover formed the Reconstruction Finance
Corporation (RFC) which funded critical businesses
and gave money to local governments to fund public
works projects.
 However, the depression continued to get worse.
The Bonus Army

 In 1932, a protest began by veterans because they
were promised a $1,000 bonus following World War
I. that they never received.
 Hoover refused making the payment, which led to a
ruthless march on Washington by this “Bonus
Army”.
 To clear out the demonstration, government forces
used tear gas, tanks, and machine guns. Many
veterans were injured.
 Many Americans were outraged by this.