Chapter 25 Objectives

1. The main relationship was that there was not much diversification in the American
economy in the 1920’s. Prosperity had depended excessively on a few basic industries,
notably construction and automobiles. In the late 1920s, those industries began to decline.
Expenditures on construction fell from $11 billion to under between 1926 and 1929.

2. The misdistribution of purchasing power was a weakness in consumer demand. As

industrial and agricultural production increased, the proportion of the profits going to the
farmers, workers and other potential consumers was too small to create and adequate
market for the goods the economy was producing.

3. A collapse of much of the banking system followed the stock market crash. Over 9,000
American banks either went bankrupt or closed their doors to avoid bankruptcy between
1930 and 1933. Depositors lost over $2.5 billion in deposits. Partly as a result of these
banking closures, the nation’s money supply greatly decreased. The total money supply,
according to some measurements, fell by more than a third between 1930 and 1933.

4. An increasing number of families were turning to state and local public relief systems,
just to be able to eat. But that system, which in the 1920s had served only a small number
of indigents, was totally unequipped to handle the new demands being placed on it. In
many places, relief simply collapsed. Private charities attempted to supplement the public
relief efforts, but state governments felt pressure to expand their own assistance to the
unemployed; but tax revenues were declining along with everything else.

5. The Dust Bowl was an area stretching north from Texas to the Dakotas. It began to
experience a steady decline in rainfall and an accompanying increase in heat. The drought
continued for a decade, turning what had once been fertile farm land into virtual deserts.
In Kansas, the soil in some places was completely without moisture as far as three feet
below the surface.

6. African Americans for the most part had not shared very much in the prosperity of the
previous decade. But the Depression was devastating for them nevertheless. They
experienced more unemployment, homelessness, malnutrition, and disease than they had
in the past, and considerably more than most whites.

7. The economic crisis served in many ways to strengthen the widespread belief that a
woman’s proper place was in the home. Most men and many women believed that with
employment so scarce, what work there was should go to men. There was a particularly
strong belief that no woman whose husband was unemployed should accept a job.

8. Prosperity industrial growth had done much to shape American values in the 1920s.
Mainstream culture, at least, had celebrates affluence and consumerism and had stressed
the importance of personal gratification through both. Many Americans assumed,
therefore, that the experience of hard times would have profound effects on the nation’s
values. In general, however, American social values seemed to change relatively little in
response to the Depression.

9.