1. CRASH AND DEPRESSION 1929-1933

2.  The Economy in the Late 1920s. 2

3.  A. Wonderful Prosperity  1. Stock market rose  2. Workers wages had risen  B. Everybody Ought to be Rich  1. People had confidence  2. Americans trusted corporate leaders  C. Welfare Capitalism  1. To prevent unions, employers raised wages, provided benefits (paid vacations and health plans) 3

4.  A. Uneven prosperity  1. Small portion of population held most of nation’s wealth  B. Buying on Credit  1. Increase in personal debt  2. Installment plans gain popularity  C. Playing the Stock Market  1. “Get-Rich-Quick” mentality  2. Speculation – high risk investments leading to high gains  3. Buying on Margin – Investors purchase a stock for only a fraction of its price, borrowing the rest 4

5.  D. Too Many Goods, Too Little Demand  1. Assembly line created overproduction  E. Trouble for Farmers  1. After WWI, prices decreased  2. Farmers were unable to pay debt causing bank failures  3. President Coolidge vetoed bills to assist farmers  F. Trouble for Workers  1. Uneven wealth, wages were still too low, long hours 5

6.  The Stock Market Crash 6

7.  A. Dow Jones Industrial Average  1. Measure of average stock prices of major industries  2. Peak – September 3, 1929  3. Began to see stock prices fall slowly  B. Black Thursday  1. October 24, 1929 – Dow dropped drastically  2. Investors began to sell due to worries – stock prices fell  C. Black Tuesday  1. October 29, 1929 – Great Crash – new business cycle  2. Millions of shares sold – loses in the billions $$$ 7

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9.  A. Great Depression  1. A severe economic decline that lasted from 1929-1939+  2. Americans lost jobs, farms, homes – ripple effect  B. Impact on Workers and Farmers  1. Factories began to close – unemployment soared  2. Gross National Product (GNP)  a. Total value of goods and services a country produces annually  b. 1929 $103 Billion – 1933 $56 Billion  3. Already low farm prices fell even lower 9

10.  C. Banks close  1. People rushed to the bank to withdraw money  2. Unpaid loans  3. Banks couldn’t return depositors money – forced to close  D. Impact on the World  1. Interdependent – international banking, trade, industry  2. U.S. was leading economy – domino effect  3. Stock market crash started a downward cycle in global economy.  4. U.S. stopped investing in foreign countries (Germany forced to stop paying WWI debt) 10

11.  A. Great Crash was only the SPARK  B. Underlying Causes  1. Overspeculation  a. Stock market was based on borrowed money and optimism  b. Collateral – item of value that a borrow agrees to forfeit if unable to repay  2. Government Policies  a. Tight-money policy to control credit. Too little money.  3. An Unstable Economy  a. Uneven distribution of wealth. 11

12.  Social Effects of the Depression 12

13.  A. People at all levels of society faced:  1. Wage cuts and unemployment  B. Hoovervilles  1. Low-paid labors were the hardest hit. Lost their homes.  2. Hoovervilles – makeshift shelter of the homeless  C. Farm Distress  1. Farmers could not pay their mortgages – auctioned off 13

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27.  D. The Dust Bowl  1. Environmental disaster  2. Region in the Great Plains were drought and dust storms took place. 27

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29.  A. Photo Journalist  B. Photos of migrant workers helped win aid from (FSA) 29

30.  A. Physical and Psychological  1. Anxiety, depression, suicide  B. Impact on Health  1. Poor diet and inadequate medical care  C. Stresses on Families  1. Fewer divorces  2. Women were accused of taking jobs away from men 30

31.  D. Discrimination Increases  1. Many minorities lost their low-paying jobs to whites  2. Father Divine started the Harlem Soup Kitchen  3. “Scottsboro Boys” – denied defense attorney 31

32.  Surviving the Great Depression 32

33.  A. Depression Generation  1. Avoided buying on credit  2. People agreed to keep auction bids low  B. Seeking Political Solutions  1. The Socialist party “Communist” gained some support  2. Social justice  C. Depression Humor  1. To fight despair  a. Hoovervilles, Hoover-blankets, Hoover-flags 33

34.  A. Prohibition is Repealed  1. 21 st Amendment passed to curb gangsters  B. Empire State Building  1. Symbol of hope  2. World’s tallest building  C. End of an Era  1. Al Capone – arrested on tax evasion  2. Babe Ruth – retires  3. Henry Ford – labor’s prime enemy  4. “Lindbergh Baby” kidnapped and murdered 34

35.  The Election of 1932 35

36.  A. Voluntary Action Fails  1. Hoover believed the best way to end the Depression was voluntary controls by American businesses.  2. Key to recovery according to Hoover - confidence  B. The Government Acts  1. Government spent on public buildings, roads, parks, and dams. 36

37.  B. The Government Acts  2. Hawley-Smoot Act  a. Tariff is a tax on imports  b. Trying to protect domestic industries  c. Highest import tax in history  d. Backfired – Europeans raised their own tariffs  e. International Trade Slowed  3. Reconstruction Finance Corporation (RFC)  a. Provided banks government credits to give loan extentions  b. Banks continued to fail 37

38.  C. Hoover’s unpopularity grows  1. His attitude made him seem cold and hard-hearted  2. Economist – John Maynard Keynes supported more government spending  D. Veterans March on Washington  1. Bonus Army marched on Washington, DC wanting pension bonus pay  2. Hoover called in the U.S. Army, led by Gen. Douglas MacArthur – he used brutal force 38

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41.  A. Franklin Delano Roosevelt (FDR)  1. Democrat – Very optimistic  2. Disability – Polio, could not walk without aid  3. Warm Springs, GA  4. Wife – Eleanor Roosevelt – distant cousin, very politically active and a social reformer  5. Governor of New York – work for relief and jobless  6. Promised a “New Deal” for unemployment and relief 41

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43.  A. Republican Hoover(I) versus Democrat Roosevelt  B. Issue  Those that believed that the federal government could not and should not try to fix people’s problems,  And  Those who felt that large-scale problems such as the Depression required the government’s help  C. FDR won by a huge margin 43

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