 March 1929-Pres. Herbert Hoover  Credit › Credit reached $7 Billion Dollars › Government encouraged borrowing by keeping low interest rates › Experts warned: in an economic downturn, such debt would cripple consumers; but consumers ignored all warnings!

 Playing the Market › Bull Market & Bear Market › Buying and Selling for Quick Profits  Inflation of Stocks  Speculative Buying depends all on investor confidence › Margin Buying (purchasing with borrowed money) › Fall of 1929, some gloomy voices were heard!

 Black Thursday—October 24, 1929 › Shocked by rising interest rates › Panic of Investors Selling kills confidence › Prices begin to drop quickly  Black Tuesday—October 29, 1929 › Investors dropped stocks › Everyone demanded money for loan payoff › People forced to sell & suffered major loss › Stock losses exceeded 30 Billion Dollars

 Banking Crisis › Banks were suffering….WHY? › People began defaulting loans…WHY? › Banks were forced to close…WHY? › People began to panic because of bank failures which led to more failures….WHY? › —5,000 banks failed!

 Business Failures › Businesses suffered losses from the stock market, banks, and consumers › Consumers were no longer purchasing so many employees began to lay off people › 1930—26, 000 Businesses Failed › 1931—28,285 Businesses Failed

 Global Depression › Many blamed the depression on WWI › Massive war debts—built up to where European countries could no longer trade › Because the United States relied so heavily on foreign trade, we passed high tariffs like the Smoot-Hawley Tariff ….which in turn only worsened the economy

 Depressions are inevitable because of the business cycle — the regular ups and downs of business in a free enterprise economy Businesses Hire More Workers Surpluses Pile Up (Overproduction) Cut Back on Production (Layoffs) Underconsumption triggers recession or depression Surplus Goods become Sold

 Summer 1929—Dow Jones reached an all time HIGH!  Wednesday, Oct. 23 rd —Drops 21 points › (Why many investors began to sell)  Black Thursday —Oct. 24 th  Monday, October 28 th —DROPS MORE!  Black Tuesday —Oct. 29 th —16 million shares were sold

 Stock Market Crash on Oct. 29, 1929  Uneven Distribution of Wealth- › Receiving Fair Wages would have made the depression less severe  (Rich 1%.... increased by 63%)  (Poor 93%.... decreased by 4%)  Massive Stock Market Speculation— buying and selling to make a quick profit

 Excessive Use of Credit— individual debt caused by installment buying in the 1920s. (Buying more than you can pay for)  Overproduction— During the 1920s, Americans who could afford expensive products had already bought them in the earlier decade; surpluses piled up late in the 1920s.

 Effects Upon Society › 25% of the workforce were unemployed › Wages were as low as 10 cents per hour › Black workers were often the first fired › Women could be hired for less than men which caused the %age of women employed to increase › Many individuals took to selling apples on the street

 Effects on Cities › City governments tried to provide relief through agencies like the Red Cross and Salvation Army › Breadlines were Common › Shantytowns developed outside cities called Hoovervilles › Poverty and crime spread in the United States

 Effects upon Farming › Farmers had more than they could sell—people could not afford their crops. › Farmers were forced to let crops rot and slaughter livestock they could not afford to feed › They could not afford their mortgages on their farms and banks started foreclosure on their property › Neighbors would help each other out by bidding low on land and tools  An $800 farm sold for $1.90

 Effects on Families › Families moved together › Divorce rates rose › Young people waited to get married and start families › Women made their own bread, soap, sewed their own clothes out of flour sacks, etc. › Many families would rent out a room in their home to boarders in order to raise money

 Effects on the Economy › The Gross National Product fell from $103 billion in 1929 to $56 billion in 1933—GNP: all of the goods and services produced in a year › Investors and businesses lose millions of dollars › Plants closed and unemployment rose › The collapse on one bank in NY wiped out $180 million in savings and affected more than 400,000 investors

 “A temporary halt in the prosperity of a great people”—Herbert Hoover  Most people wanted the government to stay out of free enterprise; others said it was time to get involved  Hoover agreed that the way to economic recovery was through individual effort and not from government assistance

 Rugged Individualism—success comes through individual effort and private enterprise  Hoover created the President’s Committee for Unemployment Relief (PCUR)—volunteers for unemployed › Community Chest, Red Cross, Salvation Army, and YMCA

 Andrew Mellon proposed the “laissez- faire” approach…Hoover rejected!  Stimulating the Economy: created public works programs › Construction of the giant Boulder Dam-later named Hoover Dam-on the Colorado River › 800 public buildings › 37,000 miles of highway

 1929-Agricultural Marketing Act which established the Federal Farm Board (FFB) › Granted a budget of $500 Million › Instructed government to buy all surplus foods; store and sell later at higher prices › Farmers refused to stop planting!  Home Loan Bank Act › Provided money to reduce foreclosures

 Reconstruction Finance Corporation (RFC) › Lending up to $2 billion of taxpayer money to stabilize banks, insurance companies, etc. › Failed to work because it wasn’t put into place until after the depression!

 Bonus Army- › Group of veterans (100,000) from WWI protesting in in Washington D. C. in May 1932 › Fighting to have their payment of pension bonuses paid to them › Congress rejected the idea and all but 2,000 returned home › 2,000 remained refusing to leave and in an a clash, two veterans and two police officers were killed

 Bonus Army continued- › By July, U.S. Army moved in with machine guns, tear gas, and tanks › Army was commanded by General Douglas MacArthur › Hundreds were injured and three died (including an 11-week-old baby › Hatred across America grew against Hoover and the government

 Republican Candidate- Herbert Hoover  Democratic Candidate- Franklin D. Roosevelt (FDR)  Cousin: Theodore Roosevelt  Wife: Eleanor Roosevelt  1921 Paralyzed from the waist down (Polio)

 Topic: Great Depression › Hoover’s policy of unfairly distributing wealth › Government should “be at the service of the people” › Spirit of Confidence and Optimism  Popular Votes: › Hoover 16 million----Roosevelt 23 million  Electoral Votes › Hoover 59 votes---Roosevelt 472 votes