What did it mean to buy stock on margin in the 1920s?
Paying a small part of the price and borrowing the rest
✓
Buying shares only in companies that paid dividends
Purchasing stock directly from a company at its founding
Trading shares only after the market had closed
Correct Answer
Paying a small part of the price and borrowing the rest
Buying on margin meant putting down a fraction of a stock's price and borrowing the remainder, betting that rising prices would cover the loan. When prices fell, lenders demanded repayment and investors were wiped out. Buying shares only in companies that paid dividends describes a cautious strategy, not margin. Purchasing stock directly from a company at its founding describes an initial offering. Trading shares only after the market had closed is not what margin buying meant.
Category: Causes of the Crash
Question 2
Black Tuesday, the day of the worst panic selling in the 1929 stock market crash, fell on which date?
October 24, 1929
October 29, 1929
✓
March 4, 1929
November 8, 1932
Correct Answer
October 29, 1929
On October 29, 1929, more than sixteen million shares changed hands as investors dumped stock at any price, and billions of dollars in value vanished. October 24, 1929, was Black Thursday, the first major day of panic. March 4, 1929, was the day Hoover was inaugurated. November 8, 1932, was the day Franklin Roosevelt won the presidency.
Category: The 1929 Crash
Question 3
What did the Hoover Moratorium of 1931 propose?
A permanent ban on buying stock with borrowed money
A halt to all immigration from Europe and Asia
A temporary pause on war debt and reparation payments
✓
A freeze on farm foreclosures by rural banks
Correct Answer
A temporary pause on war debt and reparation payments
Hoover proposed suspending German reparation payments and Allied war debt payments to ease the strain on the international economy. It met stiff opposition and did little to help. A permanent ban on buying stock with borrowed money was not part of it. A halt to all immigration from Europe and Asia was not part of it. A freeze on farm foreclosures by rural banks was a demand of protesting farmers, not Hoover's plan.
Category: Hoover's Foreign Policy
Question 4
How did the unequal distribution of income in the 1920s help bring on the Depression?
Labor unions had pushed factory wages far too high
Farmers earned more than the factories could pay
High income taxes drained the savings of the rich
Most families had too little money to keep buying goods
✓
Correct Answer
Most families had too little money to keep buying goods
A small share of Americans held a large share of the nation's wealth, while most families had little or no savings, so there were too few buyers to sustain demand once the boom faded. Labor unions were weak in the 1920s and had not pushed wages too high. Farmers struggled with low prices through most of the decade. Taxes on the wealthy were cut in the 1920s rather than raised.
Category: Causes of the Crash
Question 5
In the months after the crash, Hoover met with business leaders and asked them to do what?
Keep wages up and continue planned investment
✓
Cut wages to match falling consumer prices
Close their plants until demand recovered
Accept federal controls on prices and profits
Correct Answer
Keep wages up and continue planned investment
Hoover relied on voluntary cooperation, asking industrialists to maintain wages and pursue construction projects while labor leaders held off on wage demands. Cutting wages to match falling prices was the opposite of his request. Closing plants until demand recovered would have deepened unemployment. Accepting federal controls on prices and profits went against his belief in limited government.
Category: Hoover's Response
Question 6
What was the main purpose of the Reconstruction Finance Corporation, created in 1932?
To give cash relief payments directly to unemployed families
To lend federal money to banks and other large institutions
✓
To buy surplus crops from struggling farmers
To insure the savings of individual bank depositors
Correct Answer
To lend federal money to banks and other large institutions
The Reconstruction Finance Corporation lent federal funds to banks, insurance companies and similar institutions, on the theory that stabilizing them would help the wider economy. Giving cash relief directly to unemployed families was something Hoover opposed. Buying surplus crops was the work of Hoover's Federal Farm Board, not the RFC. Insuring individual bank deposits came later, under the New Deal.
Category: Hoover's Response
Question 7
What did the Bonus Army demand when it marched on Washington in 1932?
Pensions for widows of Civil War soldiers
Higher pay for soldiers then on active duty
Early payment of bonuses promised for World War I service
✓
Federal jobs building roads in the western states
Correct Answer
Early payment of bonuses promised for World War I service
The Bonus Army was made up of World War I veterans and their families who wanted the bonuses Congress had promised them paid at once rather than years later. Pensions for Civil War widows were not their cause. Higher pay for active-duty soldiers was not their demand. Federal road-building jobs were not what they asked for.
Category: Protest and Unrest
Question 8
Which general commanded the army troops Hoover sent to clear the Bonus Army camps in 1932?
John J. Pershing
George C. Marshall
Leonard Wood
Douglas MacArthur
✓
Correct Answer
Douglas MacArthur
General Douglas MacArthur led the troops, with Dwight Eisenhower and George Patton among his officers, and the soldiers burned the veterans' camps at Anacostia Flats. John J. Pershing had commanded U.S. forces in World War I. George C. Marshall became army chief of staff later, in 1939. Leonard Wood was an army leader of an earlier era.
Category: Protest and Unrest
Question 9
During the Depression, the number of working women grew partly because many women took what kind of work?
Pink-collar clerical and service jobs
✓
Heavy industrial work in steel mills
Skilled jobs in the building trades
Underground jobs in coal mines
Correct Answer
Pink-collar clerical and service jobs
Pink-collar jobs such as clerical, sales and service work were less hard-hit than heavy industry, so many women found work there even as some states restricted married women's employment. Heavy industrial work in steel mills was dominated by men and suffered deep layoffs. Skilled jobs in the building trades collapsed with construction. Underground coal mining jobs were held by men.
Category: Life in the Depression
Question 10
What was the goal of the penny auctions staged by members of the Farmers' Holiday Association?
To raise money for new farm machinery
To return foreclosed farms to their owners
✓
To sell surplus crops to city charities
To buy land cheaply for new settlers
Correct Answer
To return foreclosed farms to their owners
At a foreclosure sale, neighbors bid only pennies and kept other buyers away, then handed the farm back to the family that had lost it. Raising money for farm machinery was not the purpose. Selling surplus crops to charities was not the purpose. Buying land cheaply for new settlers would have defeated the point of the protest.
Category: Dust Bowl and Farms
Question 11
Which combination of factors produced the Dust Bowl on the Great Plains?
Heavy flooding and the spread of cotton farming
Forest fires and the decline of cattle ranching
Severe drought and the plowing up of prairie grasses
✓
Early frosts and the overuse of chemical fertilizer
Correct Answer
Severe drought and the plowing up of prairie grasses
Plains farmers had plowed up the native grasses whose roots held the soil, and when a long drought struck, high winds lifted the dry topsoil into huge dust storms. Heavy flooding was the opposite of the problem, and cotton was not the Plains crop at issue. Forest fires and the decline of cattle ranching were not causes. Early frosts and chemical fertilizer were not causes.
Category: Dust Bowl and Farms
Question 12
In 1932 the Supreme Court overturned the first convictions of the Scottsboro Boys on what grounds?
The accusers had been paid to testify
The trial had been held in the wrong state
The defendants were too young to be tried
The defendants had been denied adequate legal counsel
✓
Correct Answer
The defendants had been denied adequate legal counsel
The Court ruled that the young men had not received a fair defense, denying them due process. The case drew national and international attention to racial injustice in Southern courts. A finding that the accusers had been paid was not the basis of the ruling. The trials were held in Alabama, where the arrests took place. Age was not the ground for reversal.
Category: Life in the Depression
Question 13
What was one major effect of the Smoot-Hawley Tariff of 1930?
Other nations raised their own tariffs, shrinking world trade
✓
American exports rose sharply as foreign demand grew
The federal government ended its budget deficits
European nations quickly repaid their war debts
Correct Answer
Other nations raised their own tariffs, shrinking world trade
The tariff raised duties on thousands of imports, and trading partners retaliated with tariffs of their own, which cut U.S. exports and deepened the worldwide depression. American exports fell rather than rose. The tariff did not end federal deficits. European nations did not quickly repay their war debts.
Category: Hoover's Foreign Policy
Question 14
According to many historians, how did Federal Reserve policy in the 1920s help fuel the speculative boom?
High interest rates pushed savers into stocks
Low interest rates made borrowing easy
✓
A gold standard freeze stopped all lending
Strict reserve rules forced banks to sell stock
Correct Answer
Low interest rates made borrowing easy
After the recession of the early 1920s, the Federal Reserve kept interest rates low for much of the decade, and many historians argue that this cheap credit flowed into stocks and real estate. High interest rates would have discouraged borrowing. A freeze that stopped all lending did not happen. Strict reserve rules did not force banks to sell stock.
Category: Causes of the Crash
Question 15
What was "Brother, Can You Spare a Dime?"
A novel about migrant farmworkers
A radio address by President Hoover
A popular song that became a Depression anthem
✓
A film about corrupt bankers
Correct Answer
A popular song that became a Depression anthem
Written in 1932, the song told of a man who had built the nation and fought in its war, now reduced to begging, and it captured the mood of the early Depression. A novel about migrant farmworkers describes The Grapes of Wrath. A radio address by Hoover was not its form. A film about corrupt bankers was not its form.
Category: Life in the Depression
Question 16
What was one reason many banks failed in the years after the crash?
Federal law required them to close during the panic
They had refused to make loans in the 1920s
Their deposits were insured and payouts drained them
Many had invested depositors' money in the stock market
✓
Correct Answer
Many had invested depositors' money in the stock market
One reason was that many banks had put depositors' money into stocks or lent it to speculators, so the crash left them short of funds just as frightened depositors rushed to withdraw their savings. No federal law ordered banks to close during the panic. Banks had made loans freely in the 1920s rather than refusing. Federal deposit insurance did not yet exist.
Category: The 1929 Crash
Question 17
Why did a bank run make a bank more likely to fail?
Banks keep only part of their deposits on hand as cash
✓
Federal examiners closed any bank that lost customers
Withdrawals were taxed heavily during a panic
Banks were required to pay interest on withdrawals
Correct Answer
Banks keep only part of their deposits on hand as cash
A bank lends out or invests most of its deposits, so when frightened customers all demand their money at once, it runs out of cash and collapses, bringing about the failure the depositors feared. Federal examiners did not close banks simply for losing customers. Withdrawals were not taxed heavily. Banks paid no special interest on withdrawals.
Category: The 1929 Crash
Question 18
What did the Emergency Relief and Construction Act of 1932 do?
It created Social Security for retired workers
It expanded RFC lending and funded state public works
✓
It guaranteed every unemployed adult a federal job
It paid World War I veterans their bonuses in full
Correct Answer
It expanded RFC lending and funded state public works
The act let the Reconstruction Finance Corporation lend more and provided money to the states for public works, though Hoover limited it largely to projects that would pay for themselves, such as toll bridges. Social Security came later, under the New Deal. No federal job guarantee was created. The veterans' bonus was not paid early in 1932.
Category: Hoover's Response
Question 19
In the early 1930s, what did people mean by a "Hoover blanket"?
A government-issued cot in a relief shelter
A blanket donated by the Red Cross
Old newspapers used for warmth by homeless people
✓
A canvas tent in a migrant workers' camp
Correct Answer
Old newspapers used for warmth by homeless people
Homeless Americans wrapped themselves in newspapers to keep warm and bitterly named them after the president, just as shantytowns were called Hoovervilles and an empty pocket turned inside out was a Hoover flag. A government-issued cot was not the meaning. A Red Cross blanket was not the meaning. A canvas tent was not the meaning.
Category: Hoover's Response
Question 20
How did the unemployment relief committee Hoover set up in 1931, known as POUR, try to help the jobless?
By mailing federal relief checks to needy families
By hiring the jobless for federal building projects
By paying farmers to leave land unplanted
By assisting state and private relief agencies
✓
Correct Answer
By assisting state and private relief agencies
POUR gave no direct federal relief; it supported state and private relief agencies such as the Red Cross, the Salvation Army and the Community Chest, in keeping with Hoover's faith in voluntary aid. Mailing federal relief checks to needy families was the kind of direct relief Hoover opposed. Hiring the jobless for federal building projects was not its work. Paying farmers to leave land unplanted came later, under the New Deal.
Category: Hoover's Response