1. UNIT 9: PROSPERITY TO DEPRESSION
11TH U.S. HISTORY
UNIT 9: PROSPERITY TO DEPRESSION
COACH STYLES

2. Note Packet 9-1
Flourishing business conditions and a rising standard of living contributed to the success of the Republican Party during the 1920s.
Election of 1928 (Hoover-R vs. Smith-D)
Hoover won 58% of the popular vote
Electoral vote: Hoover-444, Smith-87

3. Herbert Hoover, 31st President of the United States

4. Note Packet 9-1
With the election of the 3rd straight Republican president, Americans anticipated a continuation of the booming prosperity of the 1920s.
From 1922 to 1929, Americans made and spent money with ease.
1925: Market value of all stocks--$27 billion
Fall of 1929: Stock values hit $87 billion

5. Note Packet 9-1
Americans, rich and middle class alike, convinced they were entering “four more years” of prosperity, invested in the stock market at a rapid rate.
Speculation (def): Buying on the stock market based on the anticipation of continuing prosperity.

6. Note Packet 9-1
By October of 1929, overproduction and over speculation had caught up with the American economy.
Overproduction (def): Producing more goods than can profitably be sold.
A great number of stocks were either worthless or over-inflated.
The businesses behind such stocks either existed only on paper or their actual value was far less than the market value of the stock.

7. Note Packet 9-1
The trouble that occurred was not only with just the very wealthy…
To attract less-wealthy investors, stockbrokers encouraged a practice known as “buying on margin” (def): Allows investors to purchase a stock for only a fraction of its price and borrow the rest.

8. Note Packet 9-1
After a peak in September, stock prices began to fall slowly.
Some brokers began to call in their loans, but others, unconcerned with these warning signs, continued to lend more.
Wednesday, October 23, 1929, the Dow Jones Industrial Average (def: The average of the stock prices of selected major industries) had dropped 21 points by the time the stock market closed.

9. Note Packet 9-1
Thursday, October 24, 1929: The stock market was hit with a frantic rush of worried investors trying to unload stock.
President Hoover maintained that the nation’s business was “on a sound and prosperous basis.”
Several members of the stock exchange and leading New York City bankers met at the offices of J.P. Morgan investments and pooled about $30 million of their own money together in an attempt to “bolster” the market.

10. Note Packet 9-1
On Monday, the 28th of October, stock prices once again began to fall and once again there was a frantic rush to sell.
Tuesday, October 29, 1929: The stock market became liquidated of its assets, and in one day’s time, more than 16 million shares of stock were dropped on the market.

11. Note Packet 9-1
This day of the stock market crash, known as “Black Tuesday,” signified the beginning of the Great Depression.
Within 2 weeks of the crash, American investors had lost more than $30 billion.
Before the end of 1929, banks nationwide were closing their doors, businesses were forced to close down, as were numerous factories and mines.

12. Note Packet 9-1 Add to notes:
By April of 1930, 6 ½ million Americans were unemployed.
By 1932, 12 million Americans were out of work.
Because many Americans blamed President Hoover for the crisis, shelters of the homeless (usually groups of makeshift huts of scrap lumber, cardboard, plywood, and tin) came to be known as “Hoovervilles.”

13. Typical “Hooverville”