Causes & Early Effects of the Great Depression

1. What happened on "Black Tuesday"?
On Black Tuesday the Stock Market crashed.

2. How did the economic trends of the 1920s in industry, agriculture, and with consumers help cause the Great Depression? (Make sure you include significant details about each area in your answer. It should be at least a paragraph)
During the 1920s economic trends in industry helped to cause the Great Depression when key industries barely made a profit. Industries such as mining and lumbering, which once were in high demand during wartime, were no longer needed as greatly. New forms of energy such as hydroelectric, fuel oil, and natural gas gave coal mining stiff competition. Railroads lost business to new forms of transportation. Although the boom industries of automobiles, construction, and consumer goods became weakened too. A major indicator of an economic downturn would be the decline in new dwellings being built. A decline in this area affected jobs in other related areas such as lumbering and furniture manufacturing.
During the 1920s economic trends in agriculture helped to cause the Great Depression. During the World War I the prices and international demand for crops rose which caused farmers to take out more loans for land and equipment and plant more crops. However, once the war was over, the prices and demands dropped. Farmers thought the solution to this was to increase production and sell more crops but this put them in even more debt. Many couldn't pay off their loans and were forced to foreclose their farms and give them to banks as payment for the debt. When farmers began to default on their loans they caused many rural banks to fail. Congress tried to help farmers out by passing a bill, which called for federal price-supporters for key products but President Coolidge vetoed the bill twice.
During the 1920s economic trends with consumers helped to cause the Great Depression when they bought fewer goods and services. This was because of rising prices, unbalanced distribution of income, and overbuying of credit in previous years. The gap between the rich and the poor increased when production had expanded much faster than wages. Basically during the 1920s the rich got richer and the poor got poorer. An unequal distribution in income meant that most Americans could not fully participate in economic advances. Many people could not purchase the great amount of goods that the factories produced. Also consumers paid with credit which easily allowed debt to build up over time.

3. According to your reading, what are the major causes of the Great Depression?
The major causes of the Great Depression were the decline in demand for key industries and agriculture, consumers not buying products, the widening gap between the rich and poor, and people not being able to pay off their debts.

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4. What was Hoover’s philosophy of government?
Hoover’s philosophy of government was that it was the government's role to ecourage and facilitate cooperation between business and labor, and not to control it.

5. What was Hoover’s initial reaction to the stock market crash of 1929?
Hoover’s initial reaction to the stock market crash of 1929 wasto call together key leaders in fieldsof business, banking, andlabor, urging them to work together to find solutions to the nation's economic woes and to act in ways that would not make the bad situation at hand worse. He also created a special organization to help private charitiesgenerate contributions for the poor.

6. What was the nation’s economic situation in 1930?
The nation’s economic situation in 1930 was continuously getting worse

7. How did voters in 1930 respond to this situation?
Voters in 1930 responded to this situation by voting against Hoover and the Republicans. Democrats won more seats in Congress causing Republicans to lose control of the House of Representatives and their majority in Senate dwindle to one vote.

8. What did Hoover do about the economic situation?
Hoover began negotiations among private entities for the economic situation. Hoover also created the National Credit Corporation to prop up the banking system. as presidential elections were about to happen, Hoover pressed Congress to pass a series a measures that would reform banking, provide mortgage relief, and funnel more federal money into a business investment. Hoover then signed the Federal Home Loan Bank Act in 1932 which lowered mortgage rates for homeowners and allowed farmers to refinance their farm loans and avoid foreclosure. In January of 1932 Hoover's Reconstruction Finance Corporation was approved by Congress. The RFC was given up to $2 billion for emergency bank financing, life insurance companies, railroads, and other large businesses.

9. How did the economy respond to his efforts?
The economy responded to his efforts by still continuing to fail and decline.