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U.S. History – A Chapter 14

The Great

Depression

Begins

462 C

HAPTER 14

than 40% of the

nation’s banks fail.

1930-1933

8.02 million

Americans are

unemployed.

1931

USA

WORLD

The

stock market

crashes.

1929

The

first

Academy

Awards are

presented.

1929

Jane

Addams shares the

Nobel Peace Prize.

1931

Army officers led by

José Uriburu seize control of

the government of Argentina.

1930

Japan

invades

Manchuria.

1931

462-463-Chapter 14 10/21/02 5:24 PM Page 462

Page 1 of 2

The Great Depression Begins 463

The Bonus

Army arrives in

Washington, D.C.

1932

Franklin

Delano Roosevelt

is elected president.

1932

Ibn Sa’ud

becomes king of

newly-united Saudi

Arabia.

1932

From prison,

Mohandas K. Gandhi

leads a protest

against British policies

in India.

1932

Women serve soup and slices of bread to

unemployed men in an outdoor breadline in Los

Angeles, California during the Great Depression.

Adolf Hitler

takes power in

Germany.

1933

Japan withdraws

from the League of

Nations.

1933

More than

13 million Americans

are unemployed.

1933

INTERACT

WITH HISTORY

The year is 1929. The U.S. economy

has collapsed. Farms, businesses, and

banks nationwide are failing, causing

massive unemployment and poverty.

You are out of work with little

prospect of finding a job.

What would you

do to feed your

family?

Examine the Issues

• What groups of people will be most

hurt by the economic crash?

• What can you do to find a paying

job?

• What can unemployed and impov-

erished people do to help each

other?

The Twenty-

first Amendment

ends Prohibition.

1933

“Century of Progress

Exposition” begins.

1933

Visit the Chapter 14 links for more information

related to The Great Depression Begins.

RESEARCH LINKS CLASSZONE.COM

462-463-Chapter 14 10/21/02 5:24 PM Page 463

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464 C

HAPTER 14

Terms & Names

MAIN IDEA

One American's Story

The Nation’s Sick

Economy

•price support

•credit

•Alfred E. Smith

•Dow Jones

Industrial

Average

•speculation

•buying on margin

•Black Tuesday

•Great Depression

•Hawley-Smoot

Tariff Act

As the prosperity of the

1920s ended, severe

economic problems gripped

the nation.

The Great Depression has had

lasting effects on how

Americans view themselves

and their government.

WHY IT MATTERS NOW

Gordon Parks, now a well-known photographer, author, and ﬁlm-

maker, was a 16-year-old high school student in the fall of 1929. He

supported himself as a busboy at the exclusive Minnesota Club,

where prosperous club members spoke conﬁdently about the econo-

my. Parks, too, looked forward to a bright future. Then came the

stock market crash of October 1929. In his autobiography, Parks

recalled his feelings at the time.

A PERSONAL VOICE GORDON PARKS

“ I couldn’t imagine such ﬁnancial disaster touching my small world;

it surely concerned only the rich. But by the ﬁrst week of November

. . . I was without a job. All that next week I searched for any kind of

work that would prevent my leaving school. Again it was, ‘We’re ﬁr-

ing, not hiring.’. . . I went to school and cleaned out my locker, know-

ing it was impossible to stay on. A piercing chill was in the air as I

walked back to the rooming house.

”

—A Choice of Weapons

The crash of 1929, and the depression that followed, dealt a crushing blow to

the hopes and dreams of millions of Americans. The high-ﬂying prosperity of the

1920s was over. Hard times had begun.

Economic Troubles on the Horizon

As the 1920s advanced, serious problems threatened economic prosperity.

Though some Americans became wealthy, many more could not earn a

decent living. Important industries struggled, and farmers grew more crops and

raised more livestock than they could sell at a proﬁt. Both consumers and

farmers were steadily going deeper into debt. As the decade drew to a close, these

slippages in the economy signaled the end of an era.

▼

Gordon Parks,

shown here in 1968

discussing the

movie version of his

autobiographical

novel, The Learning

Tree.

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Page 1 of 8

INDUSTRIES IN TROUBLE

The superﬁcial prosperity of the late 1920s shroud-

ed weaknesses that would signal the onset of the Great Depression. Key basic

industries, such as railroads, textiles, and steel had barely made a proﬁt. Railroads

lost business to new forms of transportation (trucks, buses, and private automo-

biles, for instance).

Mining and lumbering, which had expanded during wartime, were no longer

in high demand. Coal mining was especially hard-hit, in part due to stiff compe-

tition from new forms of energy, including hydroelectric power, fuel oil, and nat-

ural gas. By the early 1930s, these sources supplied more than half the energy that

had once come from coal. Even the boom industries of the 1920s—automobiles,

construction, and consumer goods—weakened. One important economic indica-

tor that declined during this time was housing starts—the number of new

dwellings being built. When housing starts fall, so do jobs in many related indus-

tries, such as furniture manufacturing and lumbering.

FARMERS NEED A LIFT

Perhaps agriculture suffered the most. During World

War I, prices rose and international demand for crops such as wheat and corn

soared. Farmers had planted more and taken out loans for land and equipment.

However, demand fell after the war, and crop prices declined by 40 percent

or more.

Farmers boosted production in the hopes of selling more crops, but this only

depressed prices further. Between 1919 and 1921 annual farm income declined

from $10 billion to just over $4 billion. Farmers who had gone into debt had dif-

ﬁculty in paying off their loans. Many lost their farms when banks foreclosed and

seized the property as payment for the debt. As farmers began to default on their

loans, many rural banks began to fail. Auctions were held to recoup some of the

banks’ losses.

Congress tried to help out farmers with a piece of legislation called the

McNary-Haugen bill. This called for federal price-supports for key products

such as wheat, corn, cotton, and tobacco. The government would buy surplus

crops at guaranteed prices and sell them on the world market.

President Coolidge vetoed the bill twice. He commented, “Farmers have

never made money. I don’t believe we can do much about it.”

CONSUMERS HAVE LESS MONEY TO SPEND

As farmers’ incomes fell, they

bought fewer goods and services, but the problem was larger. By the late 1920s,

Farm equipment

is auctioned off

in Hastings,

Nebraska.

▼

A. Answer The

older industries

such as textiles,

steel, and rail-

roads, which

were basic to

the fundamental

well-being of the

economy, were

barely proﬁtable.

MAIN IDEA

Identifying

Problems

What industrial

weakness signaled

a declining

economy in the

1920s?

464-471-Chapter 14 10/21/02 5:24 PM Page 465

Page 2 of 8

Americans were buying less—mainly because of rising

prices, stagnant wages, unbalanced distribution of income,

and overbuying on credit in the preceding years. Production

had also expanded much faster than wages, resulting in an

ever-widening gap between the rich and the poor.

LIVING ON CREDIT

Although many Americans appeared to

be prosperous during the 1920s, in fact they were living

beyond their means. They often bought goods on credit—

an arrangement in which consumers agreed to buy now

and pay later for purchases. This was often in the form of

an installment plan (usually in monthly payments) that

included interest charges.

By making credit easily available, businesses encour-

aged Americans to pile up a large consumer debt. Many

people then had trouble paying off their growing debts.

Faced with debt, consumers cut back on spending.

UNEVEN DISTRIBUTION OF INCOME

During the 1920s,

the rich got richer, and the poor got poorer. Between 1920

and 1929, the income of the wealthiest 1 percent of the

population rose by 75 percent, compared with a 9 percent

increase for Americans as a whole.

More than 70 percent of the nation’s families earned less

than $2,500 per year, then considered the minimum

amount needed for a decent standard of living. Even fami-

lies earning twice that much could not afford many of the

household products that manufacturers produced.

Economists estimate that the average man or woman

bought a new outﬁt of clothes only once a year. Scarcely half

the homes in many cities had electric lights or a furnace for

heat. Only one city home in ten had an electric refrigerator.

This unequal distribution of income meant that most Americans could not

participate fully in the economic advances of the 1920s. Many people did not

have the money to purchase the ﬂood of goods that factories produced. The pros-

perity of the era rested on a fragile foundation.

Hoover Takes the Nation

Although economic disaster was around the corner, the election of 1928

took place in a mood of apparent national prosperity. This election pitted

Republican candidate Herbert Hoover against Democrat Alfred E. Smith.

THE ELECTION OF 1928

Hoover, the secretary of commerce under

Harding and Coolidge, was a mining engineer from Iowa who had never

run for public ofﬁce. Smith was a career politician who had served four

terms as governor of New York. He was personable and enjoyed being in

the limelight, unlike the quiet and reserved Hoover. Still, Hoover had one

major advantage: he could point to years of prosperity under Republican

administrations since 1920. Many Americans believed him when he

declared, “We in America are nearer to the ﬁnal triumph over poverty

than ever before.”

It was an overwhelming victory for Hoover. The message was clear:

most Americans were happy with Republican leadership.

DREAMS OF RICHES IN THE STOCK MARKET

By 1929, some econ-

omists had warned of weaknesses in the economy, but most Americans

466 C

HAPTER 14

“ We in America

are nearer to the

ﬁnal triumph

over poverty than

ever before.”

HERBERT HOOVER

UNEVEN INCOME

DISTRIBUTION, 1929

The 1920s were an era that

favored big business. Life was

good for the rich. They made up

just 0.1 percent of the population

and had yearly incomes of more

than $100,000. Conversely,

much of the population had to

scrape to get by. Many earned so

little that everyone in the family,

including children, had to work.

Nearly 80 percent of all families

had no savings.

Source: Historical Statistics of the United States,

Colonial Times to 1970

$10,000

and over

$2,000 – $4,999

29%

$5,000 – $9,999

$1,999 and under

65%

B. Answer

Beneath the sur-

face prosperity

of the 1920s, the

economy was in

trouble.

MAIN IDEA

Forming

Generalizations

What did the

experience of

farmers and

consumers at this

time suggest

about the health

of the economy?

464-471-Chapter 14 10/21/02 5:24 PM Page 466

Page 3 of 8

maintained the utmost conﬁdence in the nation’s economic health. In increasing

numbers, those who could afford to invested in the stock market. The stock mar-

ket had become the most visible symbol of a prosperous American economy.

Then, as now, the Dow Jones Industrial Average was the most widely used

barometer of the stock market’s health. The Dow is a measure based on the stock

prices of 30 representative large ﬁrms trading on the New York Stock Exchange.

Through most of the 1920s, stock prices rose steadily. The Dow had reached

a high of 381 points, nearly 300 points higher than it had been ﬁve years earlier.

Eager to take advantage of this “bull market”—a period of rising stock prices—

Americans rushed to buy stocks and bonds. One observer wrote, “It seemed as if

all economic law had been suspended and a new era opened up in which success

and prosperity could be had without knowledge or industry.” By 1929, about 4

million Americans—or 3 percent of the nation’s population—owned stocks. Many

of these investors were already wealthy, but others were average Americans who

hoped to strike it rich.

However, the seeds of trouble were taking root. People were engaging in

speculation—that is, they bought stocks and bonds on the chance of a quick

proﬁt, while ignoring the risks. Many began buying on margin—paying a

small percentage of a stock’s price as a down payment and borrowing the rest.

With easy money available to investors, the unrestrained buying and selling

fueled the market’s upward spiral. The government did little to discourage such

buying or to regulate the market. In reality, these rising prices did not reﬂect com-

panies’ worth. Worse, if the value of stocks declined, people who had bought on

margin had no way to pay off the loans.

The Stock Market Crashes

In early September 1929, stock prices peaked and then fell. Conﬁdence in the

market started to waver, and some investors quickly sold their stocks and pulled

out. On October 24, the market took a plunge. Panicked investors unloaded their

shares. But the worst was yet to come.

The Great Depression Begins 467

Vocabulary

stock: a share of

ownership in a

company

Analyzing

DAY OF WRATH

After the apparent prosperity of the 1920s, virtually few were

prepared for the devastating effects of the stock market crash.

This cartoon by James N. Rosenberg, which shows Wall Street

crumbling on October 29, 1929, is titled Dies Irae, Latin for “day

of wrath.”

SKILLBUILDER

Analyzing Political Cartoons

What does the cartoonist suggest will happen to individuals

because of the crash?

How does the cartoonist convey the sense of fear and

shock?

What do the looks on people’s faces indicate about the

impact of the crash?

SEE SKILLBUILDER HANDBOOK, PAGE R24.

C. Answer They

caused over

investment as

people ignored

the risks and

bought more

than they could

pay for.

MAIN IDEA

Analyzing

Events

How did

speculation and

margin buying

cause stock prices

to rise?

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Page 4 of 8

BLACK TUESDAY

On October 29—now known as Black Tuesday—the bot-

tom fell out of the market and the nation’s conﬁdence. Shareholders frantically

tried to sell before prices plunged even lower. The number of shares dumped that

day was a record 16.4 million. Additional millions of shares could not ﬁnd buy-

ers. People who had bought stocks on credit were stuck with huge debts as the

prices plummeted, while others lost most of their savings.

468 C

HAPTER 14

A Pen and Paper Operation

In the 1920s, orders to buy or sell a stock arrived at brokers’

telephone booths located around the edge of the trading ﬂoor.

They were then carried by hand or sent by pneumatic tube to the

trading post where that stock would be traded.

NYSE employees called

reporters had to record

every transaction. For

each new sale, they

wrote out a slip of paper

containing the stock’s

abbreviation, the number

of shares, and the price,

and then transmitted it to

the ticker room. Market

information was typed

into a keyboard that

converted the keystrokes

into electrical impulses

that drove the clattering

print wheels in ticker

machines along the net-

work. People would read

the current display at the

trading posts.

Technological Changes

While still centered around human interaction, the exchange has

incorporated a number of computer technologies to keep up

with the times. For example, members now receive stock bids

and offers through an electronic delivery system known as

SuperDot, which enables them to make a trade in less than 12

seconds. Electronic communications networks now allow individ-

uals to buy and sell stocks themselves over the Internet at a

fraction of what it would cost to use a specialist. Such innova-

tion has prompted some to insist that

all future trading will be done via com-

puters, thus eliminating a need for

physical exchanges such as the NYSE.

SKILLBUILDER

Hypothesizing What scenarios

can you imagine that might prompt

someone to submit a market order

on a certain stock?

Comparing How has technology

on the trading ﬂoor changed since

the 1920s?

The trading ﬂoor in 2000.

▼

The trading ﬂoor in 1914.

NEW YORK STOCK

EXCHANGE

In the twenty-ﬁrst century, the New

Yor k S t o ck E xchange (NYSE)

remains at its core what it has

been since it opened its doors in

1792: the nation’s premier mar-

ketplace for the buying and selling

of stocks. There, stockbrokers

known as “members” take orders

from their customers to buy and

sell shares of stock in any one of

more than 3,000 companies.

To execute their cus t o mers’

orders, the members offer and

receive bids in what resembles a

loud and fast-paced auction. In

general, customers submit two

types of orders. A limit order tells

the broker to buy or sell only if

the stock reaches a certain price.

A market order tells the broker to

execute a transaction immediate-

ly, no matter what the price.

Despite remaining close to its

roots, the NYSE is today undergo-

ing perhaps the most signiﬁcant

changes in its long history, in

large part due to the growth of

computers and the Internet.

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Page 5 of 8

By mid-November, investors had lost about $30 billion, an amount equal to how

much America spent in World War I. The stock market bubble had ﬁnally burst. One

eyewitness to these events, Frederick Lewis Allen, described the resulting situation.

A PERSONAL VOICE FREDERICK LEWIS ALLEN

“ The Big Bull Market was dead. Billions of dollars’ worth of proﬁts—and paper

proﬁts—had disappeared. The grocer, the window cleaner, and the seamstress had

lost their capital [savings]. In every town there were families which had suddenly

dropped from showy afﬂuence into debt. . . . With the Big Bull Market gone and

prosperity going, Americans were soon to ﬁnd themselves living in an altered

world which called for new adjustments, new ideas, new habits of thought, and a

new order of values.

”

—Only Yesterday

Financial Collapse

The stock market crash signaled the beginning of the Great Depression—the

period from 1929 to 1940 in which the economy plummeted and unemployment

skyrocketed. The crash alone did not cause the Great Depression, but it hastened

the collapse of the economy and made the depression more severe.

BANK AND BUSINESS FAILURES

After the crash, many peo-

ple panicked and withdrew their money from banks. But some

couldn’t get their money because the banks had invested it in

the stock market. In 1929, 600 banks closed. By 1933, 11,000 of

the nation’s 25,000 banks had failed. Because the government

did not protect or insure bank accounts, millions of people lost

their savings accounts.

The Great Depression hit other businesses, too. Between

1929 and 1932, the gross national product—the nation’s total

output of goods and services—was cut nearly in half, from $104

billion to $59 billion. Approximately 90,000 businesses went

bankrupt. Among these failed enterprises were once-prosperous

automobile and railroad companies.

As the economy plunged into a tailspin, millions of workers

lost their jobs. Unemployment leaped from 3 percent (1.6 mil-

lion workers) in 1929 to 25 percent (13 million workers) in

1933. One out of every four workers was out of a job. Those who

kept their jobs faced pay cuts and reduced hours.

Not everyone fared so badly, of course. Before the crash,

some speculators had sold off their stocks and made money.

Joseph P. Kennedy, the father of future president John F.

Kennedy, was one who did. Most, however, were not

so lucky or shrewd.

WORLDWIDE SHOCK WAVES

The United States was not the only country

gripped by the Great Depression. Much of Europe, for example, had suffered

throughout the 1920s. European countries trying to recover from the ravages of

World War I faced high war debts. In addition, Germany had to pay war repara-

tions—payments to compensate the Allies for the damages Germany had caused.

The Great Depression compounded these problems by limiting America’s ability

to import European goods. This made it difﬁcult to sell American farm products

and manufactured goods abroad.

The Great Depression Begins 469

MAIN IDEA

Analyzing

Effects

What

happened to

ordinary workers

during the Great

Depression?

This British

election poster

shows that the

Great Depression

was a global

event.

▼

Image not available for

use on this CD-ROM.

Please refer to the image

in the textbook.

Page 6 of 8

470 C

HAPTER 14

Income and Spending

Source: Historical Statistics of the United States

$800

$600

$400

$200

1929 ’30 ’31 ’32 ’33

Average Yearly

Income

per Person

Average Consumer

Spending

per Person

Unemployment

People (in millions)

1928 ’29 ’30 ’31 ’32 ’33

Bank Failures

Banks (in thousands)

1928 ’29 ’30 ’31 ’32 ’33

Business Failures

Businesses (in thousands)

1928 ’29 ’30 ’31 ’32 ’33

SKILLBUILDER

Interpreting Graphs

In what year did the biggest jump in

bank failures occur?

What measure on the graphs seems

to indicate an improvement in the U.S.

economy during the Depression? What

might explain this?

Economic indicators are measures that

signal trends in a nation’s economy.

During the Great Depression several

trends were apparent. Those indicated

at the right are linked—the conditions of

one can affect another. For instance,

when banks fail , some businesses

may have to close down , which can

cause unemployment to rise . Thus,

people have less money and spending

declines .

1 2

3 4

Depression Indicators

Skillbuilder Answers

1. 1933

2. Business failures dropped in 1933. There

were fewer businesses remaining.

Distraught men try to withdraw their savings from a failing bank.

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Page 7 of 8

The Great Depression Begins 471

In 1930, Congress passed the Hawley-Smoot Tariff

Act, which established the highest protective tariff in

United States history. It was designed to protect American

farmers and manufacturers from foreign competition. Yet it

had the opposite effect. By reducing the ﬂow of goods into

the United States, the tariff prevented other countries from

earning American currency to buy American goods. The tar-

iff made unemployment worse in industries that could no

longer export goods to Europe. Many countries retaliated

by raising their own tariffs. Within a few years, world trade

had fallen more than 40 percent.

CAUSES OF THE GREAT DEPRESSION

Although histori-

ans and economists differ on the main causes of the Great

Depression, most cite a common set of factors, among them:

•tariffs and war debt policies that cut down the foreign

market for American goods

•a crisis in the farm sector

•the availability of easy credit

•an unequal distribution of income

These factors led to falling demand for consumer

goods, even as newly mechanized factories produced more

products. The federal government contributed to the crisis

by keeping interest rates low, thereby allowing companies

and individuals to borrow easily and build up large debts.

Some of this borrowed money was used to buy the stocks

that later led to the crash.

At first people found it hard to believe that economic

disaster had struck. In November 1929, President Hoover

encouraged Americans to remain confident about the

economy. Yet, the most severe depression in American his-

tory was well on its way.

MAIN IDEA

2. TAKING NOTES

In a diagram like this, record the

causes of the 1929 stock market

crash.

Which do you see as the biggest

cause? Why?

CRITICAL THINKING

3. MAKING INFERENCES

How did the economic trends of the

1920s help cause the Great

Depression? Think About:

• what happened in industry

• what happened in agriculture

• what happened with consumers

4. DRAWING CONCLUSIONS

Judging from the events of the late

1920s and early 1930s, how

important do you think public

conﬁdence is to the health of the

economy? Explain. Think About:

• what happened when overconﬁ-

dence in the stock market led

people to speculate and buy

on margin

• how conﬁdence affects

consumer borrowing

cause

cause cause

cause

Stock Market Crash

GLOBAL EFFECTS OF THE

DEPRESSION

As the American economy col-

lapsed, so too did Europe’s. The

world’s nations had become

interdependent; international

trade was important to most

countries. However, when the

U.S. economy failed, American

investors withdrew their money

from European markets.

To ke e p U . S . d ollars in Ame r i c a,

the government raised tariffs on

goods imported from other coun-

tries. World trade dropped.

Unemployment rates around the

world soared. Germany and

Austria were particularly hard hit.

In 1931 Austria’s largest bank

failed. In Asia, both farmers and

urban workers suffered as the

value of exports fell by half

between 1929 and 1931. The

crash was felt in Latin America

as well. As U.S. and European

demand for Latin American prod-

ucts like sugar, beef, and copper

dropped, prices collapsed.

E. Answer

World trade

dropped, causing

unemployment to

rise globally.

MAIN IDEA

Summarizing

How did the

Great Depression

affect the world

economy?

1. TERMS & NAMES For each term or name, write a sentence explaining its signiﬁcance.

•price support

•credit

•Alfred E. Smith

•Dow Jones Industrial

Average

•speculation

•buying on margin

•Black Tuesday

•Great Depression

•Hawley-Smoot Tariff Act

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Page 8 of 8

472 C

HAPTER 14

Terms & Names

MAIN IDEA

One American's Story

Hardship and Suffering

During the Depression

•shantytown

•soup kitchen

•bread line

•Dust Bowl

•direct relief

During the Great Depression

Americans did what they had

to do to survive.

Since the Great Depression,

many Americans have been

more cautious about saving,

investing, and borrowing.

WHY IT MATTERS NOW

Ann Marie Low lived on her parents’ North Dakota farm when the

stock market crashed in 1929 and the Great Depression hit. Hard

times were familiar to Ann’s family. But the worst was yet to come.

In the early 1930s, a ravenous drought hit the Great Plains, destroying

crops and leaving the earth dry and cracked. Then came the deadly dust

storms. On April 25, 1934, Ann wrote an account in her diary.

A PERSONAL VOICE ANN MARIE LOW

“ [T]he air is just full of dirt coming, literally, for hundreds of miles. It sifts

into everything. After we wash the dishes and put them away, so much

dust sifts into the cupboards we must wash them again before the next

meal. . . . Newspapers say the deaths of many babies and old people are

attributed to breathing in so much dirt.

”

—Dust Bowl Diary

The drought and winds lasted for more than seven years. The

dust storms in Kansas, Colorado, New Mexico, Nebraska, the

Dakotas, Oklahoma, and Texas were a great hardship—but only one

of many—that Americans faced during the Great Depression.

The Depression Devastates People’s Lives

Statistics such as the unemployment rate tell only part of the story of the Great

Depression. More important was the impact that it had on people’s lives: the

Depression brought hardship, homelessness, and hunger to millions.

THE DEPRESSION IN THE CITIES

In cities across the country, people lost their

jobs, were evicted from their homes and ended up in the streets. Some slept in

parks or sewer pipes, wrapping themselves in newspapers to fend off the cold.

BROKE, BUT NOT

BROKEN

Ann Marie Low

Remembers the

Dust Bowl

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Page 1 of 6

Others built makeshift shacks out of

scrap materials. Before long, numerous

shantytowns—little towns consisting

of shacks—sprang up. An observer

recalled one such settlement in

Oklahoma City: “Here were all these

people living in old, rusted-out car

bodies. . . . There were people living in

shacks made of orange crates. One fami-

ly with a whole lot of kids were living in

a piano box. . . . People were living in

whatever they could junk together.”

Every day the poor dug through

garbage cans or begged. Soup kitchens

offering free or low-cost food and bread

lines, or lines of people waiting to

receive food provided by charitable orga-

nizations or public agencies, became a

common sight. One man described a

bread line in New York City.

A PERSONAL VOICE HERMAN SHUMLIN

“ Two or three blocks along Times Square, you’d see these men, silent, shufﬂing

along in a line. Getting this handout of coffee and doughnuts, dealt out from great

trucks. . . . I’d see that ﬂat, opaque, expressionless look

which spelled, for me, human disaster. Men . . . who had

responsible positions. Who had lost their jobs, lost their

homes, lost their families . . . They were destroyed men.

”

—quoted in Hard Times

Conditions for African Americans and Latinos were

especially difﬁcult. Their unemployment rates were higher,

and they were the lowest paid. They also dealt with

increasing racial violence from unemployed whites com-

peting for the same jobs. Twenty-four African Americans

died by lynching in 1933.

Latinos—mainly Mexicans and Mexican Americans

living in the Southwest—were also targets. Whites

demanded that Latinos be deported, or expelled from the

country, even though many had been born in America. By

the late 1930s, hundreds of thousands of people of

Mexican descent relocated to Mexico. Some left voluntari-

ly; others were deported by the federal government.

THE DEPRESSION IN RURAL AREAS

Life in rural areas

was hard, but it did have one advantage over city life: most

farmers could grow food for their families. With falling

prices and rising debt, though, thousands of farmers lost

their land. Between 1929 and 1932, about 400,000 farms

were lost through foreclosure—the process by which a

mortgage holder takes back property if an occupant has not

made payments. Many farmers turned to tenant farming

and barely scraped out a living.

The Great Depression Begins 473

Unemployed people built shacks in a

shantytown in New York City in 1932.

ANOTHER

AN AFRICAN-AMERICAN

VIEW OF THE DEPRESSION

Although the suffering of the

1930s was severe for many peo-

ple, it was especially grim for

African Americans. Hard times

were already a fact of life for

many blacks, as one African-

American man noted:

“The Negro was born in depres-

sion. It didn’t mean too much to

him, The Great American

Depression. . . . The best he

could be is a janitor or a porter

or shoeshine boy. It only

became ofﬁcial when it hit the

white man.”

Nonetheless, the African-

American community was very

hard hit by the Great Depression.

In 1932, the unemployment rate

among African Americans stood

at over 50 percent, while the

overall unemployment rate was

approximately 25 percent.

▼

Background

Relief programs

largely discriminated

against African

Americans. However,

some black organ-

izations, like the

National Urban

League, were able to

give private help.

A. Answer

African

Americans and

Latinos suffered

from unemploy-

ment, low pay,

and racial

violence.

MAIN IDEA

Summarizing

How did the

Great Depression

affect minorities?

472-477-Chapter 14 10/21/02 5:25 PM Page 473

Page 2 of 6

THE DUST BOWL

The drought that began in

the early 1930s wreaked havoc on the Great

Plains. During the previous decade, farmers from

Texas to North Dakota had used tractors to break

up the grasslands and plant millions of acres of

new farmland. Plowing had removed the thick

protective layer of prairie grasses. Farmers had

then exhausted the land through overproduc-

tion of crops, and the grasslands became unsuit-

able for farming. When the drought and winds

began in the early 1930s, little grass and few trees

were left to hold the soil down. Wind scattered the topsoil, exposing sand and grit

underneath. The dust traveled hundreds of miles. One windstorm in 1934 picked

up millions of tons of dust from the plains and carried it to East Coast cities.

The region that was the hardest hit, including parts of Kansas, Oklahoma,

Texas, New Mexico, and Colorado, came to be known as the Dust Bowl. Plagued

by dust storms and evictions, thousands of farmers and sharecroppers left their

land behind. They packed up their families and few belongings and headed west,

following Route 66 to California. Some of these migrants—known as Okies (a

term that originally referred to Oklahomans but came to be used negatively for

all migrants)—found work as farmhands. But others continued to wander in search

of work. By the end of the 1930s, hundreds of thousands of farm families had

migrated to California and other Paciﬁc Coast states.

Effects on the American Family

In the face of the suffering caused by the Great Depression, the family stood as a

source of strength for most Americans. Although some people feared that hard

times would undermine moral values, those fears were largely unfounded. In gen-

474 C

HAPTER 14

ATLANTIC

OCEAN

PACIFIC

OCEAN

N. MEX.

OREG.

IDAHO

TEXAS

LA.

ARK.

MO.

KANS.

OKLA.

NEBR.

IOWA

ILL.

IND.

MICH.

OHIO

KY.

TENN.

N.C.

VA.

PA.

N.Y.

N.H.

VT.

MASS.

CONN.

R.I.

N.J.

MD.

MAINE

W. VA.

MISS.

COLO.

WYO.

S. DAK.

N. DAK.

MONT.

MINN.

WIS.

40°N

30°N

70°W

Area of Dust Bowl

Area of damage

Area covered by

May 1934 dust storm

0 150 300 kilometers

150 300 miles

GEOGRAPHY SKILLBUILDER

Region Which states were in the region

known as the Dust Bowl?

Movement Why might most of the migrants

who left the Dust Bowl have traveled west?

The Dust Bowl, 1933–1936

▼

A farmer and his

sons brave a dust

storm in 1936.

Chicago, Nov. 1933

Crowds at Chicago

Exposition world’s

fair are caught in

50 mph gale of dust.

Boston, May 1934

Midwestern dust is

found on airplanes

landing in Boston;

it collected on the

planes at altitudes of

up to 20,000 ft.

Nebraska, 1935–1937

Over two years, federal workers help

soil conservation by planting 360,000

trees and completing 62 dams, 517

ponds, and 500 acres of terracing.

Tucumcari, N. Mex.

March 30, 1936

Clouds of dust blown by

50-mph winds cause

complete darkness.

New York City, May 12, 1934

Dust lowers humidity from nor-

mal 57% to 34%. Dust is

reported on ships 500 miles

out to sea.

Beaver, Okla., March 24, 1936

Grain-elevator operators estimate

that 20% of wheat crop has been

blown away by dust storms.

Background

The most severe

storms were called

“black blizzards.”

They were said to

have darkened

the sky in New

Yor k City a nd

Washington, D.C.

Skilbuilder

Answers

1. Colorado,

Kansas,

Oklahoma,

Texas, and

New Mexico.

2. The dust was

blowing to the

east.

472-477-Chapter 14 10/21/02 5:25 PM Page 474

Page 3 of 6

eral, Americans believed in traditional values and empha-

sized the importance of family unity. At a time when

money was tight, many families entertained themselves by

staying at home and playing board games, such as

Monopoly (invented in 1933), and listening to the radio.

Nevertheless, the economic difficulties of the Great

Depression put severe pressure on family life. Making ends

meet was a daily struggle, and, in some cases, families broke

apart under the strain.

MEN IN THE STREETS

Many men had difﬁculty coping

with unemployment because they were accustomed to

working and supporting their families. Every day, they

would set out to walk the streets in search of jobs. As

Frederick Lewis Allen noted in Since Yesterday, “Men who

have been sturdy and self-respecting workers can take

unemployment without ﬂinching for a few weeks, a few

months, even if they have to see their families suffer; but it

is different after a year . . . two years . . . three years.” Some

men became so discouraged that they simply stopped try-

ing. Some even abandoned their families.

During the Great Depression, as many as 300,000 tran-

sients—or “hoboes” as they were called—wandered the

country, hitching rides on railroad boxcars and sleeping

under bridges. These hoboes of the 1930s, mainly men,

would occasionally turn up at homeless shelters in big

cities. The novelist Thomas Wolfe described a group of

these men in New York City.

A PERSONAL VOICE THOMAS WOLFE

“ These were the wanderers from town to town, the riders of freight trains, the

thumbers of rides on highways, the uprooted, unwanted male population of

America. They . . . gathered in the big cities when winter came, hungry, defeated,

empty, hopeless, restless . . . always on the move, looking everywhere for work,

for the bare crumbs to support their miserable lives, and ﬁnding neither work nor

crumbs.

”

—You Can’t Go Home Again

During the early years of the Great Depression, there was no federal system

of direct relief—cash payments or food provided by the government to the

poor. Some cities and charity services did offer relief to those who needed it, but

the beneﬁts were meager. In New York City, for example, the weekly payment was

just $2.39 per family. This was the most generous relief offered by any city, but it

was still well below the amount needed to feed a family.

WOMEN STRUGGLE TO SURVIVE

Women worked hard to help their families

survive adversity during the Great Depression. Many women canned food and

sewed clothes. They also carefully managed household budgets. Jeane Westin, the

author of Making Do: How Women Survived the ’30s, recalled, “Those days you did

everything to save a penny. . . . My next door neighbor and I used to shop togeth-

er. You could get two pounds of hamburger for a quarter, so we’d buy two pounds

and split it—then one week she’d pay the extra penny and the next week I’d pay.”

Many women also worked outside the home, though they usually received less

money than men did. As the Depression wore on, however, working women became

the targets of enormous resentment. Many people believed that women, especially

married women, had no right to work when there were men who were unemployed.

The Great Depression Begins 475

HISTORICAL

B. Answer

Many men were

disheartened by

their inability to

support their

families and so

abandoned

them. Others

hoped to ﬁnd

work and send

money home to

their families.

MAIN IDEA

Analyzing

Causes

Why did so

many men leave

their homes during

the Depression?

HOBO SYMBOLS

Hoboes shared a hidden language

that helped them meet the chal-

lenges of the road. Over time a set

of symbols developed for hoboes

to alert each other as to where

they could get food or work or a

place to sleep, and what houses

to avoid. They often marked the

symbols, such as those shown

below, on the sides of houses and

fences near railroad yards.

Sit down meal

Only bread

given here

Good place for

a handout

Sleep in barn

Good water

Danger

472-477-Chapter 14 10/21/02 5:25 PM Page 475

Page 4 of 6

In the early 1930s, some cities refused to hire married women as schoolteachers.

Many Americans assumed that women were having an easier time than men

during the Great Depression because few were seen begging or standing in bread

lines. As a matter of fact, many women were starving to death in cold attics and

rooming houses. As one writer pointed out, women were often too ashamed to

reveal their hardship.

A PERSONAL VOICE MERIDEL LE SEUER

“ I’ve lived in cities for many months, broke, without help, too timid to get in

bread lines. I’ve known many women to live like this until they simply faint in the

street. . . . A woman will shut herself up in a room until it is taken away from her,

and eat a cracker a day and be as quiet as a mouse. . . . [She] will go for weeks

verging on starvation, . . . going through the streets ashamed, sitting in libraries,

parks, going for days without speaking to a living soul, shut up in the terror of her

own misery.

”

—America in the Twenties

CHILDREN SUFFER HARDSHIPS

Children also suffered during the 1930s.

Poor diets and a lack of money for health care led to serious health problems. Milk

consumption declined across the country, and clinics and hospitals reported a

dramatic rise in malnutrition and diet-related diseases, such as rickets. At the

same time, child-welfare programs were slashed as cities and states cut their bud-

gets in the face of dwindling resources.

Falling tax revenues also caused school boards to shorten the school year

and even close schools. By 1933, some 2,600 schools across the nation had

shut down, leaving more than 300,000 students out of school. Thousands of

children went to work instead; they often labored in sweatshops under hor-

rendous conditions.

Many teenagers looked for a way out of the suffering. Hundreds of thou-

sands of teenage boys and some girls hopped aboard America’s freight trains

to zigzag the country in search of work, adventure, and an escape from

poverty. These “wild boys” came from every section of the United States,

from every corner of society. They were the sons of poor farmers, and

out-of-work miners, and wealthy parents who had lost everything.

“Hoover tourists,” as they were called, were eager to tour America for free.

From the age of eleven until seventeen, George

Phillips rode the rails, ﬁrst catching local freights out

of his home town of Princeton, Missouri.

“There is no feeling in the world like sitting in a

side-door Pullman and watching the world go by, lis-

tening to the clickety-clack of the wheels, hearing that

old steam whistle blowing for crossings and towns.”

While exciting, the road could also be deadly.

Many riders were beaten or jailed by “bulls”—armed

freight yard patrolmen. Often riders had to sleep

standing up in a constant deafening rumble. Some

were accidentally locked in ice cars for days on end.

Others fell prey to murderous criminals. From 1929 to

1939, 24,647 trespassers were killed and 27,171

injured on railroad property.

Background

Rickets is caused

by a vitamin D

deﬁciency and

results in

defective bone

growth.

Two young boys, ages 15 and 16, walk beside freight

cars in the San Joaquin Valley.

“ If I leave my

mother, it will

mean one less

mouth to feed.”

EUGENE WILLIAMS,

AGE 13

▼

C. Answers

Women: Many

women had to

manage tight

household bud-

gets; women

encountered

opposition in

holding jobs out-

side the home;

Children: Many

children suffered

from poor diets

and inadequate

health care;

many child wel-

fare programs

and even

schools were

shut down.

MAIN IDEA

Analyzing

Effects

How did the

Great Depression

affect women and

children?

472-477-Chapter 14 10/21/02 5:25 PM Page 476

Page 5 of 6

SOCIAL AND PSYCHOLOGICAL

EFFECTS

The hardships of the

Great Depression had a tremen-

dous social and psychological

impact. Some people were so

demoralized by hard times that

they lost their will to survive.

Between 1928 and 1932, the sui-

cide rate rose more than 30 per-

cent. Three times as many people

were admitted to state mental hos-

pitals as in normal times.

The economic problems forced

many Americans to accept com-

promises and make sacriﬁces that

affected them for the rest of their

lives. Adults stopped going to the

doctor or dentist because they

couldn’t afford it. Young people gave up their dreams of going to college. Others

put off getting married, raising large families, or having children at all.

For many people, the stigma of poverty and of having to scrimp and save

never disappeared completely. For some, achieving ﬁnancial security became the

primary focus in life. As one woman recalled, “Ever since I was twelve years old

there was one major goal in my life . . . one thing . . . and that was to never be

poor again.”

During the Great Depression many people showed great kindness to strangers

who were down on their luck. People often gave food, clothing, and a place to stay

to the needy. Families helped other families and shared resources and strength-

ened the bonds within their communities. In addition, many people developed

habits of saving and thriftiness—habits they would need to see themselves

through the dark days ahead as the nation and President Hoover struggled with

the Great Depression. These habits shaped a whole generation of Americans.

The Great Depression Begins 477

▼

This Ozark

sharecropper

family was

photographed in

Arkansas during

the 1930s by the

artist Ben Shahn.

Vocabulary

stigma: a mark

or indication of

disgrace

•shantytown

•soup kitchen

•bread line

•Dust Bowl

•direct relief

1. TERMS & NAMES For each term or name, write a sentence explaining its signiﬁcance.

MAIN IDEA

2. TAKING NOTES

In a Venn diagram, list the effects

that the Great Depression had on

farmers and city dwellers. Find the

differences and the similarities.

Which group do you think suffered

less?

CRITICAL THINKING

3. CONTRASTING

How was what happened to men

during the Great Depression

different from what happened to

women? children? Think About:

• each group’s role in their families

• the changes each group had to

make

• what help was available to them

4. ANALYZING EFFECTS

How did Dust Bowl conditions in the

Great Plains affect the entire

country?

5. DRAWING CONCLUSIONS

In what ways did the Great

Depression affect people’s outlook?

Both

Farmers

City

Dwellers

472-477-Chapter 14 10/21/02 5:25 PM Page 477

Page 6 of 6

478 C

HAPTER 14

Terms & Names

MAIN IDEA

One American's Story

Hoover Struggles

with the Depression

•Herbert Hoover

•Boulder Dam

•Federal Home

Loan Bank Act

•Reconstruction

Finance

Corporation

•Bonus Army

President Hoover’s

conservative response

to the Great Depression

drew criticism from many

Americans.

Worsening conditions in the

country caused the government

to become more involved in the

health and wealth of the people.

WHY IT MATTERS NOW

Oscar Ameringer was a newspaper editor in

Oklahoma City during the Great Depression. In

1932, he traveled around the country collecting

information on economic and social conditions.

Testifying in unemployment hearings that same

year, Ameringer described desperate people who

were losing patience with the government. “Unless

something is done for them and done soon you will

have a revolution on hand.” Ameringer told the fol-

lowing story.

A PERSONAL VOICE OSCAR AMERINGER

“ The roads of the West and Southwest teem with hungry hitchhikers. . . .

Between Clarksville and Russellville, Ark., I picked up a family. The woman was

hugging a dead chicken under a ragged coat. When I asked her where she had

procured the fowl, ﬁrst she told me she had found it dead in the road, and then

added in grim humor, ‘They promised me a chicken in the pot, and now I got mine.’

”

—quoted in The American Spirit

The woman was recalling President Hoover’s empty 1928 campaign pledge:

“A chicken in every pot and a car in every garage.” Now many Americans were

disillusioned. They demanded that the government help them.

Hoover Tries to Reassure the Nation

After the stock market crash of October 1929, President Herbert Hoover tried

to reassure Americans that the nation’s economy was on a sound footing. “Any

lack of conﬁdence in the economic future . . . is foolish,” he declared. In his view,

the important thing was for Americans to remain optimistic and to go about their

business as usual. Americans believed depressions were a normal part of the busi-

ness cycle. According to this theory, periods of rapid economic growth were nat-

urally followed by periods of depression. The best course in a slump, many

▼

A Depression-era

family from

Arkansas walks

through Texas,

looking for work

in the cotton

ﬁelds along the

Rio Grande.

478-483-Chapter 14 10/21/02 5:25 PM Page 478

Page 1 of 6

experts believed, was to do nothing and let the economy ﬁx itself. Hoover took a

slightly different position. He felt that government could play a limited role in

helping to solve problems.

HOOVER’S PHILOSOPHY

Herbert Hoover had been an engineer, and he put

great faith in the power of reason. He was also a humanitarian, as he made clear

in one of his last speeches as president.

A PERSONAL VOICE HERBERT HOOVER

“ Our ﬁrst objective must be to provide security from poverty and want. . . . We

want to see a nation built of home owners and farm owners. We want to see their

savings protected. We want to see them in steady jobs. We want to see more and

more of them insured against death and accident, unemployment and old age. We

want them all secure.

”

—“Challenge to Liberty,” October 1936

Like many Americans of the time, Hoover believed that one of government’s chief

functions was to foster cooperation between competing groups and interests in

society. If business and labor were in a conﬂict, for example, government should

step in and help them ﬁnd a solution that served their mutual interests. This

cooperation must be voluntary rather than forced, he said. Government’s role was

to encourage and facilitate cooperation, not to control it.

On the other hand, Americans also valued “rugged

individualism”—the idea that people should succeed

through their own efforts. They should take care of them-

selves and their families, rather than depend on the gov-

ernment to bail them out. Thus, Hoover opposed any form

of federal welfare, or direct relief to the needy. He believed

that handouts would weaken people’s self-respect and

“moral ﬁber.” His answer to the needy was that individuals,

charities, and local organizations should pitch in to help

care for the less fortunate. The federal government should

direct relief measures, but not through a vast federal

bureaucracy. Such a bureaucracy, he said, would be too

expensive and would stiﬂe individual liberties.

However, when the Depression took hold, moral ﬁber

wasn’t what people were worried about. Hoover’s response

shocked and frustrated suffering Americans.

HOOVER TAKES CAUTIOUS STEPS

Hoover’s political

philosophy caused him to take a cautious approach to the

depression. Soon after the stock market crash, he called

together key leaders in the ﬁelds of business, banking, and

labor. He urged them to work together to ﬁnd solutions to

the nation’s economic woes and to act in ways that would

not make a bad situation worse. For example, he asked

employers not to cut wages or lay off workers, and he asked

labor leaders not to demand higher wages or go on strike.

He also created a special organization to help private chari-

ties generate contributions for the poor.

None of these steps made much of a difference. A year

after the crash, the economy was still shrinking, and unem-

ployment was still rising. More companies went out of busi-

ness, soup kitchens became a common sight, and general

misery continued to grow. Shantytowns arose in every city,

and hoboes continued to roam.

The Great Depression Begins 479

A. Answer

Hoover believed

that reason

could solve

problems, that

government

should foster

cooperation

between com-

peting groups,

and that individ-

uals, charities,

and private

organizations

should help

care for the less

fortunate.

MAIN IDEA

Summarizing

What were

some of Hoover’s

key convictions

about government?

HERBERT HOOVER

1874–1964

Born to a Quaker family in Iowa,

Herbert Hoover was orphaned

at an early age. His life was a

rags-to-riches story. He worked

his way through Stanford

University and later made a for-

tune as a mining engineer and

consultant in China, Australia,

Europe, and Africa. During and

after World War I, he coordinated

U.S. relief efforts in Europe, earn-

ing a reputation for efﬁciency and

humanitarian ideals.

As president, Hoover asserted,

“Every time we ﬁnd solutions

outside of government, we have

not only strengthened character,

but we have preserved our

sense of real government.”

478-483-Chapter 14 10/21/02 5:25 PM Page 479

Page 2 of 6

480 C

HAPTER 14

BOULDER DAM

One project that

Hoover approved did make a differ-

ence. Years earlier, when Hoover

served as secretary of commerce, one

of his earliest proposed initiatives was

the construction of a dam on the

Colorado River. Aiming to minimize

federal intervention, Hoover proposed

to ﬁnance the dam’s construction by

using proﬁts from sales of the electric

power that the dam would generate.

He also helped to arrange an agree-

ment on water rights among the seven

states of the Colorado River basin—

Arizona, California, Colorado,

Nevada, New Mexico, Utah, and

Wyoming.

By the time the massive pro-

ject won congressional approval in

1928, as part of a $700 million public

works program, Hoover occupied the

White House. In the fall of 1929,

nearly one year into his presidency,

Hoover was finally able to authorize

construction of Boulder Dam (later

called Hoover Dam). At 726 ft. high

and 1,244 ft. long it would be the

world’s tallest dam and the second

largest. In addition to providing elec-

tricity and flood control, the dam also

provided a regular water supply,

which enabled the growth of

California’s massive agricultural

economy. Today, the dam also helps to provide water for cities such as Los

Angeles and Las Vegas.

DEMOCRATS WIN IN 1930 CONGRESSIONAL ELECTIONS

As the country’s

economic difﬁculties increased, the political tide turned against Hoover and the

Republicans. In the 1930 congressional elections, the Democrats took advantage

of anti-Hoover sentiments to win more seats in Congress. As a result of that elec-

tion, the Republicans lost control of the House of Representatives and saw their

majority in the Senate dwindle to one vote.

As Americans grew more and more frustrated by the Depression, they

expressed their anger in a number of ways. Farmers stung by low crop prices

burned their corn and wheat and dumped their milk on highways rather than sell

it at a loss. Some farmers even declared a “farm holiday” and refused to work their

ﬁelds. A number blocked roads to prevent food from getting to market, hoping

that food shortages would raise prices. Some farmers also used force to prevent

authorities from foreclosing on farms.

By 1930, people were calling the shantytowns in American cities

“Hoovervilles”—a direct slap at the president’s policies. Homeless people called the

newspapers they wrapped themselves in “Hoover blankets.” Empty pockets turned

inside out were “Hoover ﬂags.” Many Americans who had hailed Hoover as a great

humanitarian a few years earlier now saw him as a cold and heartless leader.

▼

This 1930s

postcard,

displaying a hand-

colored

photograph,

shows the

mammoth scale

of Boulder

Canyon and

Boulder Dam.

478-483-Chapter 14 10/21/02 5:25 PM Page 480

Page 3 of 6

Despite public criticism, Hoover contin-

ued to hold ﬁrm to his principles. He refused

to support direct relief or other forms of fed-

eral welfare. Some Americans were going

hungry, and many blamed Hoover for their

plight. Criticism of the president and his

policies continued to grow. An anonymous

ditty of the time was widely repeated.

“ Mellon pulled the whistle

Hoover rang the bell

Wall Street gave the signal

And the country went to hell.

”

Hoover Takes Action

As time went on and the depression deep-

ened, President Hoover gradually softened

his position on government intervention in

the economy and took a more activist

approach to the nation’s economic troubles.

HOOVER BACKS COOPERATIVES

Hoover’s view, Boulder Dam was a model of

how the federal government could encour-

age cooperation. His attempts to relieve the

depression involved negotiating agreements among private entities, again reﬂect-

ing his belief in small government. For example, he backed the creation of the

Federal Farm Board, an organization of farm cooperatives. The Farm Board was

intended to raise crop prices by helping members to buy crops and keep them off

the market temporarily until prices rose.

In addition, Hoover tried to prop up the banking system by persuading the

nation’s largest banks to establish the National Credit Corporation. This organi-

zation loaned money to smaller banks, which helped them stave off bankruptcy.

DIRECT INTERVENTION

By late 1931, however, many people could see that these

measures had failed to turn the economy around. With a presidential election loom-

ing, Hoover appealed to Congress to pass a series of measures to reform banking,

provide mortgage relief, and funnel more federal money into business investment.

In 1932, Hoover signed into law the Federal Home Loan Bank Act, which low-

ered mortgage rates for homeowners and allowed farmers to reﬁnance their farm

loans and avoid foreclosure. It was not until Hoover’s time in ofﬁce was over that

Congress passed the Glass-Steagall Banking Act, which separated investment from

commercial banking and would, Congress hoped, prevent another crash.

Hoover’s most ambitious economic measure, however, was the

Reconstruction Finance Corporation (RFC), approved by Congress in January

1932. It authorized up to $2 billion for emergency ﬁnancing for banks, life insur-

ance companies, railroads, and other large businesses. Hoover believed that the

money would trickle down to the average citizen through job growth and higher

wages. Many critics questioned this approach; they argued that the program would

beneﬁt only corporations and that the poor still needed direct relief. Hungry peo-

ple could not wait for the beneﬁts to trickle down to their tables.

In its ﬁrst ﬁve months of operation, the RFC loaned more than $805 million to

large corporations, but business failures continued. The RFC was an unprecedented

example of federal involvement in a peacetime economy, but in the end it was too

little, too late.

The Great Depression Begins 481

Vocabulary

reﬁnance: to

provide new

ﬁnancing; to

discharge a

mortgage with a

new mortgage

obtained at a

lower interest rate

B. Possible

Answer

Americans look

to their leaders

for results, and

Hoover wasn’t

getting results.

MAIN IDEA

Making

Inferences

Why do you

think people

blamed Hoover for

the nation’s

difﬁculties?

▼

In this cartoon, Americans point their ﬁngers

at a beleaguered President Hoover.

MAIN IDEA

Evaluating

Decisions

What were

some of the

projects proposed

by Hoover, and

how effective

were they?

C. Answers

Federal Farm

Board; National

Credit

Corporation;

Federal Home

Loan Bank Act;

Reconstruction

Finance

Corporation.

These projects

and measures

were not able to

turn the econo-

my around.

478-483-Chapter 14 10/21/02 5:25 PM Page 481

Page 4 of 6

Gassing the Bonus Army

In 1932, an incident further damaged Hoover’s image and

public morale. That spring, between 10,000 and 20,000

World War I veterans and their families arrived in

Washington, D.C., from various parts of the country. They

called themselves the Bonus Expeditionary Force, or the

Bonus Army.

THE PATMAN BILL DENIED

Led by Walter Waters, an

unemployed cannery worker from Oregon, the Bonus Army

came to the nation’s capital to support a bill under debate

in Congress. The Patman Bill authorized the government to

pay a bonus to World War I veterans who had not been

compensated adequately for their wartime service. This

bonus, which Congress had approved in 1924, was sup-

posed to be paid out in 1945 in the form of cash and a life

insurance policy, but Congressman Wright Patman believed

that the money—an average of $500 per soldier—should be

paid immediately.

Hoover thought that the Bonus Marchers were “com-

munists and persons with criminal records” rather than

veterans. He opposed the legislation, but he respected the

marchers’ right to peaceful assembly. He even provided

food and supplies so that they could erect a shantytown

within sight of the Capitol. On June 17, however, the

Senate voted down the Patman Bill. Hoover then called on

DIFFICULT

HOOVER AND FEDERAL

PROJECTS

On the one hand, President

Hoover opposed federal welfare

and intervention in the economy.

On the other, he felt that govern-

ment had a duty to help solve

problems and ease suffering.

The question was, What kind of

assistance would be proper and

effective?

1. Consider the pros and cons of

Hoover’s actions during the

Depression. Did he do enough

to try to end the Depression?

Why or why not?

2. If you had been president dur-

ing the Great Depression,

what policies would you have

supported? Explain the

approach you would have

taken.

▼

In 1932, these

veterans from

Muncie, Indiana,

decided to remain

in the capital

until their bonus

was paid to them.

478-483-Chapter 14 10/21/02 5:25 PM Page 482

Page 5 of 6

•Herbert Hoover

•Boulder Dam

•Federal Home Loan Bank

Act

•Reconstruction Finance

Corporation

•Bonus Army

1. TERMS & NAMES For each term or name, write a sentence explaining its signiﬁcance.

MAIN IDEA

2. TAKING NOTES

In a cluster diagram, record what

Hoover said and did in response to

the Great Depression.

Which response was most helpful?

Explain your choice.

CRITICAL THINKING

3. ANALYZING ISSUES

How did Hoover’s belief in “rugged

individualism” shape his policies

during the Great Depression?

Think About:

• what his belief implies about his

view of people

• how that translates into the role

of government

• Hoover’s policies

4. DRAWING CONCLUSIONS

When Franklin Delano Roosevelt

heard about the attack on the

Bonus Army, why was he so certain

that he would defeat Hoover?

Think About:

• the American public’s impression

of Hoover

• Hoover’s actions to alleviate the

Great Depression

• how people judged Hoover after

the attack

The Great Depression Begins 483

the Bonus Army marchers to leave. Most did, but approximately 2,000, still hop-

ing to meet with the president, refused to budge.

HOOVER DISBANDS THE BONUS ARMY

Nervous that the angry group could

become violent, President Hoover decided that the Bonus Army should be dis-

banded. On July 28, a force of 1,000 soldiers under the command of General

Douglas MacArthur and his aide, Major Dwight D. Eisenhower, came to roust the

veterans. A government ofﬁcial watching from a nearby ofﬁce recalled what hap-

pened next.

A PERSONAL VOICE A. EVERETTE MCINTYRE

“ The 12th infantry was in full battle dress. Each had a gas mask and his belt was

full of tear gas bombs. . . . At orders, they brought their bayonets at thrust and

moved in. The bayonets were used to jab people, to make them move. Soon,

almost everybody disappeared from view, because tear gas bombs exploded. The

entire block was covered by tear gas. Flames were coming up, where the soldiers

had set ﬁre to the buildings to drive these people out. . . . Through the whole

afternoon, they took one camp after another.

”

—quoted in Hard Times

In the course of the operation, the infantry gassed more than 1,000 people,

including an 11-month-old baby, who died, and an 8-year-old boy, who was par-

tially blinded. Two people were shot and many were injured. Most Americans

were stunned and outraged at the government’s treatment of the veterans.

Once again, President Hoover’s image suffered, and now an election was near-

ing. In November, Hoover would face a formidable opponent, the Democratic

candidate Franklin Delano Roosevelt. When Roosevelt heard about the attack on

the Bonus Army, he said to his friend Felix Frankfurter, “Well, Felix, this will elect

me.” The downturn in the economy and Hoover’s inability to deal effectively

with the Depression had sealed his political fate.

Hoover’s Responses

D. Answer

As veterans of

WWI they had

been promised a

cash bonus.

MAIN IDEA

Summarizing

What did the

Bonus Army want?

478-483-Chapter 14 10/21/02 5:25 PM Page 483

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