Road to the Great Depression

Economy Appears Healthy  As Hoover takes office, the economy looks to be in fine shape  By 1929, stock values hit 87 billion  In realty the economy is headed toward disaster

Uneven Prosperity  Rich got richer, poor got poorer  Top 1% (24,000) of the population incomes rose by 75%  70% of the population made less then 2,500 a year (minimum amount for a decent standard of living)  80% had no savings

Buying on Credit  People bought radios, refrigerators, and other new products they could not afford  Installment plans made expensive items look irresistible  There was a huge increase in personal debt

Playing the Stock Market  People began (speculating) playing the stock market  Many bought on margin- Purchase a stock for only a fraction of its price (10%) and borrow the rest  Brokers charged a HIGH interest rates and could demand repayment at any time

Too many Goods, too little Demand  Country’s warehouses held piles of unbought consumer goods  Overproduction caused some industries to slow in the late 1920’s  Over production led to layoffs  Housing market slows to a stand still

Hardships of Farmers and Workers  Prices of wheat, cotton, and other farm goods plummeted making it hard for farmers to repay loans they took out during WWI  McNary-Haugen Bill (price-supports) is vetoed by Coolidge

Stock Market Crashes 1929 Dow Jones Industrial Average was the most widely used barometer of the health of economy Investors start to pull sell stock sending out a panic among rest of the investors Overall losses is 30 billion dollars Some people lose all of their life savings 1/2 of all banks close due to bankruptcy!

Crash of 1929 A Social Phenomenon

The Stock Market Crashes!  Stock prices begin to fall slowly, people get nervous!  Black Thursday(10/24/29)- first day of decline (people slowly begin to panic)  Black Tuesday (10/29/29)-a record of 16.4 million shares were sold (people panic)  Example-GE was $400 a share and dropped to $283  Overall losses, 30 billion dollars

Great Depression Begins Will be a severe economic decline that will last from 1929 until WWII throughout the world

Indicators

Social Effect on the Great Depression

Brother, Can You Spare a Dime," lyrics by Yip Harburg, music by Jay Gorney (1931) They used to tell me I was building a dream, and so I followed the mob, When there was earth to plow, or guns to bear, I was always there right on the job. They used to tell me I was building a dream, with peace and glory ahead, Why should I be standing in line, just waiting for bread? Once I built a railroad, I made it run, made it race against time. Once I built a railroad; now it's done. Brother, can you spare a dime? Once I built a tower, up to the sun, brick, and rivet, and lime; Once I built a tower, now it's done. Brother, can you spare a dime? Once in khaki suits, gee we looked swell, Full of that Yankee Doodly Dum, Half a million boots went slogging through Hell, And I was the kid with the drum! Say, don't you remember, they called me Al; it was Al all the time. Why don't you remember, I'm your pal? Buddy, can you spare a dime? Once in khaki suits, gee we looked swell, Full of that Yankee Doodly Dum, Half a million boots went slogging through Hell, And I was the kid with the drum! Say, don't you remember, they called me Al; it was Al all the time. Say, don't you remember, I'm your pal? Buddy, can you spare a dime ?

Interesting factoids The life expectancy in 1900 was just 47 years. In medieval Italy, if a man was caught kissing a woman in public, he had to marry her whether he liked it or not Beethoven, was told by a music teacher that he had no talent for music. In fact, this teacher once remarked, “As a composer he is hopeless.”

Poverty Spreads h“Hoovervilles”-many of the people that lost their jobs, lost their homes hMost homeless people built shanty towns hPeople stop using banks, scared they will lose their money

Dust Bowl Farm families lost their farms to the bank because of low food prices A drought hits Great Plaines causing families to sell their farms or see them taken away In 1932 many farmers dumped thousands of gallons of milk and destroyed other crops because it was too expensive to bring the products to the market

Strain on Society Hoover claims, “no one has starved” Children suffer the most because of poor diets and inadequate medical care Suicide rate rises (among men) Women and African Americans are discriminated against for taking jobs!! Charities are overwhelmed

Are you sure Hoover?

The Election of 1932  Hoover believed that voluntary actions by the U.S. businesses were the best way to end the economic crisis (until his last year)  People thought the government should do more (John Maynard Keynes=Gov involvement)  The 1932 presidential election served as a turning point in the way Americans viewed the responsibilities of the federal government!

Bonus Army WWI veterans and their families encamped in Washington D.C. demanding pension Government denied them and many set up Hoovervilles in front of the capital Hoover sent General McArthur to force them out