1. Crash & Depression Chapter 32 (Cont.) 4/2011

2. The Stock Market Crash Section 1 1929

3. The “Roaring 20’s” was coming to an end.

4. Review: Stock Market Boom Stock Market “Boom” High paying factory jobs Stock speculation inflates prices Margin buying leads to greater demand – higher prices: notes payable on demand Middle class enters stock market without education or experience Government fails to monitor or regulate the market

5. Summary: Stock Market Bust Stock Market “Bust” Overproduction leads to falling wages and profits Experienced buyers quietly sell, leading to less demand and lower prices Panic results in inexperienced buyers selling at any price Banks begin to call in their notes “Snowball” Effect leads to the Great Depression

6. Black Thursday October 24, 1929 o The Dow Jones Industrial Average peaked at $381 in September o By October 24th, stock prices began to fall o Example - GE went from $400 to $283

7. Black Thursday October 24, 1929

8. The Market Crashes Investors crowd the sidewalk outside of the NYSE Panic on Wall Street

9. Black Thursday - October 24, 1929 Black Thursday - October 24, 1929  Pres. Hoover - business “is on a sound and prosperous basis”  Group of bankers bought shares to stabilize prices  Not enough to stop the panic

10. Monday October 28, 1929 b Investors continued to sell b Prices continued to drop Investors continued to panic

11. Black Tuesday – October 29, 1929 Black Tuesday – October 29, 1929 Tried to sell stocks at any price Bankers called in their margins Losses totaled $30 billion dollars

12. Low of $34 Low of $34 High of $381 High of $381

13. The Ripple Effect of the Crash b Less people able to buy goods (decline of GNP) b Leads to contraction b Severe contraction = depression b This contraction was so severe, it is known as the Great Depression

14. The Great Depression - Stock Market Crash to WWII b Approximately b Approximately 1/3 of US banks failed b Unemployment b Unemployment reached 25% b GNP b GNP went from $103 billion to $56 billion

15. The Great Depression

17. Photography by Dorothea Lange

18. The Worldwide Impact b Countries depended on the USA for capital, markets, and goods b Contractions began in Europe b Result - they could not buy American products b (Germany was particularly hard hit)

19. Underlying Causes of the Depression b All of the warning signs that were ignored from the 1920’s. b Lack of government oversight b Lack of government response Note: Natural disasters did not cause the Great Depression but effected severity of it

20. Natural Disasters From floods in the Northeast to droughts in the Midwest

21. Social Effects of the Depression

22. b Hoovervilles b Hobos - approx. 1 million b Farm distress low prices due to low demandlow prices due to low demand evictions and foreclosuresevictions and foreclosures

23. Hoovervilles Shantytown in Central Park

24. Hoovervilles

25. The Dust Bowl (1931-1940) b Drought and poor environmental practices b Effected Great Plains and the Midwest b Hardest hit were Oklahoma, Kansas, and Nebraska b Top soil blew into the Atlantic Ocean b Created a desert in the center of the USA b Displaced millions of farmers

27. The Dust Bowl

31. Flooding in Tennessee

32. Flooding in Pittsburgh

33. Poverty Increased Social Problems b Alcoholism, spousal abuse, child abuse, suicide, and violence increased b Health and nutrition decreased b Hoover claimed that no one starved but historians estimate as many as 1 million people died from the effects of the Depression

34. Poverty Increases Social Problems b Divorce, marriage, and birth rates declined b Homeless people moved in with relatives b “Last hired, first fired” b Lynchings increased b Japanese & Mexicans were deported were deported

35. Scottsboro Boys b March, 1931 - 9 African Americans were accused of raping two white women b They were convicted and sentenced to die without even seeing a defense attorney b They were later exonerated but not until four of them had spent many years in jail Scottsboro Boys with National Guard

36. Surviving the Great Depression

37. Survival

38. Survival b People b People helped one another b States b States provided relief b Local b Local charities assisted millions b Those b Those that survived never completely forgot what it was like to live through the Great Depression

39. Surviving the Great Depression b People helped each other b Farmers assisted each other Penny auctionsPenny auctions Violence prevented some foreclosuresViolence prevented some foreclosures

41. Surviving the Great Depression b Estimated 1,000,000 hobos rode the rails b Approx. 250,000 of them teenagers

42. Hobos

43. Surviving the Great Depression HoboSymbols

44. b Political movements like the Socialist and Communist Parties gained membership b Entertainment like this new like this new board game board game provided a provided a pleasant diversion pleasant diversion

45. Dark Humor Helps to Relieve Stress

46. Signs of Change Prohibition was repealed in 1933

47. The Chrysler building was overshadowed by the Empire State Building in 1931 The Chrysler building was overshadowed by the Empire State Building in 1931 Signs of Change

48. b By 1935 Calvin Coolidge diedCalvin Coolidge died Al Capone was convicted of tax fraudAl Capone was convicted of tax fraud Babe Ruth retiredBabe Ruth retired Lindbergh baby was kidnapped and found deadLindbergh baby was kidnapped and found dead b America’s heroes were changing

49. The Election of 1932

50. President Hoover: b Assured the American people the economy was improving b Insisted it was a normal business cycle b Thought direct relief should come from charity b Asked business leaders to maintain wages voluntarily

51. President Hoover’s Response b Agricultural Marketing Act of 1929 - was supposed to buy excess crops from farmers to increase demand b Hawley - Smoot Tariff - largest tariff in history (1930)

52. President Hoover’s Response b Reconstruction Finance Corp. - lent money to large corporations, banks, and insurance companies (1932) b Trickle down economics

53. President Hoover’s Response b Public works projects like new buildings, bridges, and roads b Boulder Dam is built, later renamed Hoover Dam (take as many dam pictures as you like)

54. b “Rugged individualism” b No (federal) government handouts b Gave little direct relief until 1932 President Hoover’s Response

55. b 1932 signed the Home Loan Bank Act to lower interest rates on mortgages b 1932 allowed the federal government to give money to the states for relief programs President Hoover’s Response

56. Peoples’ Responses to Hoover b “Too little, too late” b People blamed him for the Depression b Called him heartless and cold

57. The Bonus Army b World War I veterans promised a bonus but not until 1945 b 1932 - 20,000 went to Washington to demand immediate payment b Stayed in Washington in Hoovervilles to embarrass the President

60. b March to the White House led to a confrontation with the army b General Douglas MacArthur was called in to quell the uprising b He used tanks, gas, and 4 Calvary units against unarmed marchers The Bonus Army

61. b US Army burned the shantytown and caused a riot

62. Foreign Policy b 1928 – before taking office, toured Latin America on a Goodwill Tour (on-board a battleship!) b During Depression, ended intervention in several Latin American countries due to the economy Withdrew from Haiti & NicaraguaWithdrew from Haiti & Nicaragua Less money for foreign aid to friendly governmentsLess money for foreign aid to friendly governments

63. Election of 1932 “This campaign is more than a contest between two men….It is a contest between two philosophies of government.” Herbert Hoover, October 1932

64. Election of 1932 b Herbert Hoover “trickle down economics”“trickle down economics” rugged individualismrugged individualism normal business cyclenormal business cycle b Franklin D. Roosevelt “prime the pump” (Keynes) organized relief efforts for the state of NY promised immediate aid and hope for the future

65. Election of 1932 b Franklin D. Roosevelt won by 7,000,000 votes b Herbert Hoover only won 6 states b FDR would start the New Deal upon his inauguration in March, 1933 » The End