Crash & DepressionCrash & Depression

Chapter 22Chapter 22

Review: Stock Market BoomReview: Stock Market BoomStock Market “Boom”

Stock speculation inflates prices

Margin buying leads to greater demand – higher prices: notes

payable on demand

Government fails to monitor or regulate the market

Summary:Summary:Stock Market BustStock Market Bust

Stock Market “Bust”

Overproduction leads to falling wages and profits

Experienced buyers quietly sell, leading to less demand and lower

prices

“Snowball” Effect leads to the Great

Depression

Black ThursdayBlack ThursdayOctober 24, 1929October 24, 1929

o The Dow Jones Industrial Average The Dow Jones Industrial Average peaked at $ in Septemberpeaked at $ in September

o By October 24th, stock prices By October 24th, stock prices began to fallbegan to fall

o Example - GE went from $400 to $Example - GE went from $400 to $

Black Thursday - October 24, Black Thursday - October 24, 19291929

Pres. Hoover - business “is on a Pres. Hoover - business “is on a sound and prosperous basis”sound and prosperous basis”

Group of bankers bought shares to Group of bankers bought shares to stabilize prices stabilize prices

Not enough to stop the panicNot enough to stop the panic

Monday Monday October 28, 1929October 28, 1929

Investors continued to sellInvestors continued to sell Prices continued to dropPrices continued to drop

Black Tuesday – Black Tuesday – October 29, 1929October 29, 1929

Tried to sell stocks at any priceTried to sell stocks at any price

Bankers called in theirBankers called in their

Losses totaled $ billion Losses totaled $ billion dollarsdollars

The Ripple Effect of the The Ripple Effect of the CrashCrash

Less people able to buy goods Less people able to buy goods (decline of GNP)(decline of GNP)

Leads to Leads to

Severe contraction = Severe contraction =

This contraction was so severe, it This contraction was so severe, it is known as the is known as the

The Great Depression -Stock The Great Depression -Stock Market Crash to WWIIMarket Crash to WWII

Approximately of US banks Approximately of US banks

failedfailed

Unemployment reached Unemployment reached

GNP went from $103 billion to $ billionGNP went from $103 billion to $ billion

The Worldwide ImpactThe Worldwide Impact

Countries depended on the USA for Countries depended on the USA for capital, markets, and goodscapital, markets, and goods

Contractions began in EuropeContractions began in Europe Result - they could not buy Result - they could not buy

American productsAmerican products (Germany was particularly hard (Germany was particularly hard

hit)hit)

Underlying Causes of the Underlying Causes of the DepressionDepression

All of the warning signs that were All of the warning signs that were ignored from the 1920’s.ignored from the 1920’s.

Lack of government oversight Lack of government oversight

Lack of government responseLack of government response

Note: Natural disasters did not cause Note: Natural disasters did not cause the Great Depression but effected the Great Depression but effected severity of it severity of it

Social Effects of the DepressionSocial Effects of the Depression

Section 2Section 2

Social Effects of the DepressionSocial Effects of the Depression

HoovervillesHoovervilles

Hobos - approx. 1 millionHobos - approx. 1 million

Farm distressFarm distress

• low prices due to low demandlow prices due to low demand

• evictions and foreclosuresevictions and foreclosures

The Dust BowlThe Dust Bowl (1931-1940)(1931-1940)

Drought and poor environmental Drought and poor environmental practicespractices

Effected Great Plains and the MidwestEffected Great Plains and the Midwest Hardest hit were Oklahoma, Kansas, Hardest hit were Oklahoma, Kansas,

and Nebraskaand Nebraska Top soil blew into the Atlantic OceanTop soil blew into the Atlantic Ocean Created a desert in the center of the Created a desert in the center of the

USAUSA Displaced millions of farmersDisplaced millions of farmers

Poverty Increased Social Poverty Increased Social ProblemsProblems

increasedincreased

Health and nutrition decreasedHealth and nutrition decreased

Hoover claimed that no one starved Hoover claimed that no one starved but historians estimate as many as but historians estimate as many as _____________ people died from the _____________ people died from the effects of the Depressioneffects of the Depression

Poverty Increases Social Poverty Increases Social ProblemsProblems

Divorce, marriage, and birth rates Divorce, marriage, and birth rates declineddeclined

Homeless people moved in with relativesHomeless people moved in with relatives

““Last hired, first fired”Last hired, first fired”

Lynchings increasedLynchings increased

Japanese & MexicansJapanese & Mexicans

were deportedwere deported

Scottsboro BoysScottsboro Boys

March, 1931 - 9 African Americans were March, 1931 - 9 African Americans were accused of raping two white womenaccused of raping two white women

They were convicted and sentenced to They were convicted and sentenced to die without even seeing a defense die without even seeing a defense attorneyattorney

They were later exonerated but not until They were later exonerated but not until four of them had spent many years in four of them had spent many years in jailjail

Surviving the Surviving the Great DepressionGreat Depression

Section 3Section 3

SurvivalSurvival

People helped one anotherPeople helped one another

States provided reliefStates provided relief

______________ assisted millions______________ assisted millions

Those that survived never Those that survived never completely forgot what it was like completely forgot what it was like to live through the Great to live through the Great DepressionDepression

Surviving the Great DepressionSurviving the Great Depression

People helped each otherPeople helped each other

Farmers assisted each otherFarmers assisted each other

• ____________________ ____________________

• Violence prevented some Violence prevented some ________________________________________________

Surviving the Great DepressionSurviving the Great Depression

Estimated 1,000,000 hobos rode Estimated 1,000,000 hobos rode the railsthe rails

Approx. 250,000 of them Approx. 250,000 of them teenagersteenagers

Surviving the Surviving the Great DepressionGreat Depression

Political movements like the Socialist Political movements like the Socialist and Communist Parties gained and Communist Parties gained membershipmembership

Entertainment Entertainment like this newlike this new board gameboard game provided aprovided a pleasant diversionpleasant diversion

Signs of ChangeSigns of Change

ProhibitioProhibition was n was

repealed repealed

in 1933in 1933

The The Chrysler Chrysler building was building was overshadowovershadowed by the ed by the Empire Empire State State Building in Building in 19311931

Signs of ChangeSigns of Change

By 1935 By 1935 • Calvin Coolidge diedCalvin Coolidge died• _____________ was convicted of tax fraud_____________ was convicted of tax fraud• Babe Ruth retiredBabe Ruth retired• Lindbergh baby was kidnapped and found Lindbergh baby was kidnapped and found

deaddead

America’s heroes were changingAmerica’s heroes were changing

The Election of 1932The Election of 1932

Section 4Section 4

President Hoover:President Hoover:

Assured the American people Assured the American people the economy was improvingthe economy was improving

Insisted it was aInsisted it was a Thought direct relief should Thought direct relief should

come from come from Asked business leaders to Asked business leaders to

maintain wages voluntarilymaintain wages voluntarily

President Hoover’s ResponsePresident Hoover’s Response

Agricultural Marketing Act of 1929 Agricultural Marketing Act of 1929 - was supposed to buy excess - was supposed to buy excess crops from farmers to increase crops from farmers to increase demand demand

Hawley - Smoot Tariff - largest Hawley - Smoot Tariff - largest tariff in history (1930)tariff in history (1930)

President Hoover’s ResponsePresident Hoover’s Response

Reconstruction Finance Corp. - Reconstruction Finance Corp. - (1932)(1932)

Trickle down economicsTrickle down economics

President Hoover’s President Hoover’s ResponseResponse

Public works Public works projects like new projects like new buildings, bridges, buildings, bridges, and roadsand roads

“ “ “ “

No (federal) government handoutsNo (federal) government handouts

Gave little direct relief until 1932Gave little direct relief until 1932

President Hoover’s President Hoover’s ResponseResponse

1932 signed the Home Loan Bank 1932 signed the Home Loan Bank Act to lower interest rates on Act to lower interest rates on mortgagesmortgages

1932 allowed the federal 1932 allowed the federal government to give money to the government to give money to the states for relief programsstates for relief programs

President Hoover’s ResponsePresident Hoover’s Response

Peoples’ Responses to Peoples’ Responses to HooverHoover

““Too little, too late”Too little, too late”

People blamed him for the People blamed him for the DepressionDepression

Called him heartless and Called him heartless and coldcold

The Bonus ArmyThe Bonus Army

World War I veterans promised a bonus World War I veterans promised a bonus but not until 1945but not until 1945

1932 - 20,000 went to Washington to 1932 - 20,000 went to Washington to demand immediate paymentdemand immediate payment

Stayed in Washington in Hoovervilles to Stayed in Washington in Hoovervilles to embarrass the Presidentembarrass the President

March to the White House led to a March to the White House led to a confrontation with the armyconfrontation with the army

________________________________ was ________________________________ was called in to quell the uprisingcalled in to quell the uprising

He used tanks, gas, and 4 Calvary He used tanks, gas, and 4 Calvary units against unarmed marchersunits against unarmed marchers

The Bonus ArmyThe Bonus Army

US Army burned the shantytown and caused a riotUS Army burned the shantytown and caused a riot

Election of 1932Election of 1932

““This campaign is more than a contest This campaign is more than a contest between two men….It is a contest between two men….It is a contest between two philosophies of between two philosophies of government.”government.”

Herbert Hoover, October 1932Herbert Hoover, October 1932

Election of 1932Election of 1932

Herbert HooverHerbert Hoover

•

•

•

Franklin D. Franklin D. RooseveltRoosevelt

•

•

•

Election of 1932Election of 1932

Franklin D. Roosevelt won by Franklin D. Roosevelt won by 7,000,000 votes7,000,000 votes

Herbert Hoover only won 6 statesHerbert Hoover only won 6 states FDR would start the New Deal FDR would start the New Deal

upon his inauguration in March, upon his inauguration in March, 19331933

» The EndThe End