Chapter #22 “Crash & Depression” 1929 - 1933

Good videos 4 minute explanation https://www.youtube.com/watch?v=-b1dTvNaL0Q

Economy of Late 1920’s – “Irrational Exuberance” Healthy Economy? 1925: Stock market $27 Billion  1928: stock values rose $11.4 billion. The year described as “of unprecedented advance, of wonderful prosperity.” – New York Times Oct. 1929: stock values hit $87 Billion. Since 1914 workers wages  40%. Unemployment under 4%. 1929 article by John J. Raskob – “Everybody Ought to Be Rich” welfare capitalism: labor relations in which companies met some of their workers’ needs without prompting by unions.

Uneven Prosperity The Rich get richer! The Poor get poorer! Huge corporations 200 large companies controlled 49% of American industry. 24,000 families (0.1%) had incomes of more than $100,000 & held more than 34% of the country’s total savings. The Poor get poorer! 71% of individuals and families earned less than $2,500. 80% of families had no savings. Everyone in the family, including children, had to work to get by.

Other Economic Dangers Buying on Credit Increased personal debt. Installment plans made expensive items irresistible. Stock Market speculation: the practice of marking high-risk investments in hopes of getting a high gain. buying on margin: purchase a stock for only a fraction of its price and borrow the rest. Brokers charged high interest rates and could demand payment or loan at any time. Supply & Demand Warehouses full of unbought goods. Automobile industry. Housing construction fell 25% from 1928 – 1929. Farmers Prices for farm products plummeted after the wartime demand ended. (wheat & cotton) Farmers bought more land. Workers Most laborers did not benefit from prosperity of big business. 56 hour work week for 16 to 18 cents an hour = $10 a week.

Section #2: “The Stock Market Crash” Dow Jones Industrial Average: an average of stock prices of major industries. Early 1928 = 191. Hoover’s inauguration day, March 4, 1929 = 313. September 3rd, all time high at 381. The Market Crashes Black Thursday: October 24, 1929, worried investors began to sell and stock prices fell. (ex. GE $400 down to $283) Black Tuesday: October 29, 16.4 million shares were sold. By Nov. 13, 1929, the Dow Jones had fallen from 381 to 198.7 = losses totaling $30 billion. Known as the Great Crash. business cycle: the periodic growth and contraction of a nation’s economy. See page #636.

Stock market crash *In billions of dollars. Based on Standard and Poor’s index of common stocks. Source: Historical Statistics of the United States, Colonial Times to 1970.

Effects of the Crash Great Depression: a severe economic decline 1929 - 1941 when the US entered World War II Millions lost their jobs, homes, and farms. 1931 Henry Ford closed his Detroit plants - 75,000 unemployed Gross National Product (GNP): total value of goods &services a country produces annually. 1929 - $103 billion 1933 - $56 billion Bushel of wheat: $1.04 in 1929 …..only 38 cents in 1932. Banks close 5,000 banks closed. By 1933, 9 million savings accounts vanished.

Impact on the World When the world’s leading economy fell, the global economic system began to crumble. U.S. insisted that Britain and France repay war debts. Congress kept wartime tariffs high. Allies relying on Germany reparation payments for income. German banks failed when U.S. companies investments failed. Europeans could no longer afford American goods American stock market crash caused a global economic meltdown --- See graphic on p 708 in textbook

Causes & Effects of the Great Depression *The 1920’s economy is out of balance. *Americans are increasingly in debt. *Speculation is on the rise. *Overproduction slows industrial growth. *The federal government introduces a tight money policy in order to control credit. *The stock market crashes in October 1929. THE GREAT DEPRESSION Effects *Millions of workers lose their jobs. *Gross National Product falls dramatically. *Many banks fail. *Increased poverty leads to health and social programs. *Global economy suffers.

Section #3 Social Effects – Great Depression Immediate impact did not hit everyone But by 1931-32 all were effected. Professional, white collar, blue collar- ALL lost jobs, savings accounts, & homes. Poverty did not discriminate. “Hooverville” What environmental condition compounded the Great Depression?

Hoovervilles

Hoovervilles

Children eating their Christmas dinner during the Great Dep: turnips and cabbage.

Anxiety, Suicide, Family Stress Competition for scarce resources especially jobs increase in discrimination 56% of Blacks were unemployed in 1932 Less divorces… why? Suicide way up… why?

Section 3 - continued The Grapes of Wrath – John Steinbeck What was the Dust Bowl?

The Dust Bowl: 1930’s - “dirty thirties” Great Plains (average of 20 in. rain/year) TX, OK, KS, NM, CO Black blizzards Heights of 8,000 feet Single storms could carry more than 300 million lbs of dust Rabbits, birds, field mice suffocated “We live with the dust, eat it, sleep with it.” Destroyed 5 million acres of wheat Okies – dust bowl refugees Dams eventually help as does the gov’t (subsidies)

Section 4 - Surviving the Great Depression Determination and humor People helped each other Identify problems with social, political and economic systems However, some people (blacks, immigrants, Jews) were still discriminated against The Communist and Socialist Parties offered solutions to the problems of capitalism and democracy.

Signs of Change sec.4 cont. 1933, during the heart of the Depression, Prohibition was ended with the 21st Amendment. Empire State Building construction started in 1930. Why was it considered a symbol of hope?

What was Hoover doing?! Hoover’s response to the Depression – “world-wide economic conditions beyond our control” Voluntary action by businesses to keep wages up was Hoover’s “fix-it” plan; businesses did not continue to voluntarily help Gov’t stimulated the Depression economy with public works projects (i.e. Hoover Dam)

Hoover Dam!

Hoover Dam – Completed in 1936

Hoover’s demise . . . From ‘Great Humanitarian’ to cold & hard-hearted! Hoover’s RFC – gave gov’t credit to banks to extend loans gov’t seemed to help bankers and not ordinary people. (Reconstruction Finance Corporation – banks still failed) Hawley-Smoot tariff – the highest in history, backfired- Europe raised their tariffs – stifled trade. Propaganda efforts against Hoover aided in his political downfall, in addition to economic conditions not improving.

The Bonus Army – sec 5 cont. 1932 – 20,000 WWI veterans march on D.C. demanding their pensions payments. The H.O.R. agreed to pay, the Senate did not. President Hoover called in General MacArthur to drive the marchers out of D.C. – he turned the military against those who fought to defend freedom during WWI.

The New Deal & F.D.R (D) “Happy Days are here again!” Landslide for FDR/Eleanor – 7 million popular votes. More voted against Hoover. Many minorities favored FDR.