Stock market crashED Nobody realized at first how serious it would be Money “disappeared” Many found being broke humiliating.

The Roaring 20’s The new concept of “credit” People were buying: –Automobiles –Appliances –Clothes Fun times reigned –Dancing –Flappers –Drinking

Why was this bad? Credit system –People didn’t really have the money they were spending WWI –In addition, the U.S. was a major credit loaner to other nations after WW I –These nations could not pay us back

The Stock Market People thought stocks would always be going up So people bought stocks on margins –If a stock is $100 you can pay $10 now and the rest later when the stock rose This was also on borrowed money

So What was the problem? When stock prices fall –Now the person has less than $100 and no money to pay back –If borrowed money, also must pay that back!

And then…. With people panicking about their money, investors then tried to sell their stocks –Everybody selling, nobody buying –This leads to a huge decline in stock prices –Stocks were worthless now

Result… People who bought on “margins” now could not pay Investors were average people that were now broke

Banks Begin to Fail Banks were the first thing hit by the stock market crash as numerous banks closed their doors When the stock prices fell, many banks lost money on their investments. People who had deposits in these banks lost all their savings. Others took their deposits out as quickly as possible, creating “runs.”

Other Causes Farmers that were able to grow things grew too much and prices paid to them Corporations made too many goods and couldn’t sell them

Herbert Hoover was president at the start Philosophy: We’ll make it! What He Did: Nothing much The poor were looking for help and nobody knew what to do

Hoover Responds  Hoover met w/bankers, businessmen,& labor leaders.  He asked employers not to fire workers or lower their pay.  He asked labor leaders not to ask for higher pay or to strike.

Reconstruction Finance Corps The Reconstruction Finance Corporation was the government agency that gave $2 billion in aid to state and local governments and made loans to banks, railroads, farm mortgage associations, and other businesses. The main purpose of the RFC was to create jobs for Americans who wanted to work – Didn’t work – corporations used for own needs

The Hoover Dam Hoover used the Boulder Dam project as a model of how federal government could encourage cooperation b/w private groups Part of a public works program intended to stimulate business and provide jobs.

Hoover believed that charities or state and local governments - not the federal government – provide food & shelter to people who were poor or out of work. Relief line waiting for commodities, San Antonio, Texas. Hoover Philosophy

Despite Hoover’s hope, the economy continued to shrink & unemployment continued to go up Unemployed workers sit in front of a shack with Christmas tree, New York City, in December, The Depression Worsens

Farmers were already feeling the effects –Prices of crops went down –Many farms foreclosed People could not afford luxuries –Factories shut down –Businesses went out Banks could not pay out money People could not pay their taxes –Schools shut down due to lack of funds Many families became homeless and had to live in shanties

Many waited in unemployment lines hoping for a job.

People in cities would wait in line for bread to bring to their family.

Some families were forced to move because they had no money – often to California in search of jobs..

“Hooverville” Some families were forced to live in shanty towns –A grouping of shacks and tents in vacant lots They were referred to as “Hooverville” because of President Hoover’s lack of help during the depression.

Free Write President Herbert Hoover did not believe in government programs to help the poor. He believed that they and private charities should do the job. Do you agree or disagree with Hoover? Why or why not?

A drought across the nation destroyed crops…and lead to dust storms in the Great Plains. “The Dust Bowl”

Because of drought and dust No crops could grow Homes buried Fields blown away Dust Bowl the #1 weather crisis of the 20th century

Two Families During the Depression

A Farm Foreclosure