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CRASH AND DEPRESSION

THE GREAT CRASH

• September 1929 – the Dow Jones Industrial Average reached an all time high

• Black Tuesday (October 29, 1929) – most people sold their stocks at a tremendous loss

• Total losses = $30 billion• Beginning of the Great Depression (1929-1941)

CAUSES OF THE DEPRESSION

• Weakened industrial growth

• Farm crisis• Consumers buying less• Unequal distribution of

wealth• Tariffs & war debt policies• Buying on margin & credit

GLOBAL EFFECTS

Great Crash Investors

Businesses and WorkersInvestors

lose millions.

Businesses lose profits.

Consumer spending drops.

Workers are laid off.

Businesses cut investment and production. Some fail.

Banks

Businesses and workers cannot repay bank loans.

Savings accounts are wiped out.

Bank runs occur.

Banks run out of money and fail.

World Payments

Overall U.S. production plummets.

U.S. investors have little or no money to invest.

U.S. investments in Germany decline.

German war payments to Allies fall off.

Europeans cannot afford American goods.

Allies cannot pay debts to United States.

Great Crash Investors

Investors lose millions.

Businesses lose profits.

Great Crash Investors

Businesses and WorkersInvestors

lose millions.

Businesses lose profits.

Consumer spending drops.

Workers are laid off.

Businesses cut investment and production Some fail.

Banks

Businesses and workers cannot repay bank loans.

Savings accounts are wiped out.

Bank runs occur.

Banks run out of money and fail.

World Payments

Overall U.S. production plummets.

U.S. investors have little or no money to invest.

U.S. investments in Germany decline.

German war payments to Allies fall off.

Europeans cannot afford American goods.

Allies cannot pay debts to United States.

Great Crash Investors

Businesses and WorkersInvestors

lose millions.

Businesses lose profits.

Consumer spending drops.

Workers are laid off.

Businesses cut investment and production Some fail.

Banks

Businesses and workers cannot repay bank loans.

Savings accounts are wiped out.

Bank runs occur.

Banks run out of money and fail.

World Payments

Overall U.S. production plummets.

U.S. investors have little or no money to invest.

U.S. investments in Germany decline.

German war payments to Allies fall off.

Europeans cannot afford American goods.

Allies cannot pay debts to United States.

Great Crash Investors

Businesses and WorkersInvestors

lose millions.

Businesses lose profits.

Consumer spending drops.

Workers are laid off.

Businesses cut production or fail.

Banks

Businesses and workers cannot repay bank loans.

Savings accounts are wiped out.

Bank runs occur.

Banks run out of money and fail.

World Payments

Overall U.S. production plummets.

U.S. investors have little or no money to invest.

U.S. investments in Germany decline.

German war payments to Allies fall off.

Europeans cannot afford American goods.

Allies cannot pay debts to United States.

EFFECTS OF THE GREAT CRASH

• Businesses cut production or fail

• Pay cuts & reduced hours

• Unemployment rose to 25% by 1933

• Bank runs & closures

FAMILIES DISPLACED

• Homelessness & Hoovervilles• Severe drought & farming practices resulted in

Dust Bowl in the Great Plains• 60% of Dust Bowl families lost their farms

POVERTY STRAINS SOCIETY

• Starvation resulted in long-term health problems• Many men abandoned their families• Working women became targets of resentment• Competition for jobs produced hostility minorities

AMERICANS PULL TOGETHER

• People pulled together to help one another• Bidding low at penny auctions, neighbors could

return land and machines to the original owners

HOOVER’S RESPONSE

• Hawley-Smoot tariff resulted in slowdown of international trade

• Reconstruction Finance Corporation gave government credit to banks & industries

• Hoover feared federal public assistance would destroy people’s self-respect

• Bonus Army incident destroyed Hoover’s remaining popularity

THE BONUS ARMY

• Patman Bill proposed to pay military bonuses 12 years early

• Veterans camped near the Capitol to support the bill

• When the bill failed in Congress, Hoover ordered the army to remove vets

• Destroyed Hoover’s remaining popularity

ELECTION OF 1932

• Franklin D. Roosevelt promised a New Deal for the American people

• He was ready to experiment with government roles to end the Depression

• Wanted more controls on big business• FDR won 57% of the popular vote & almost 89%

of the electoral vote

FDR’S FIRST INAUGURAL ADDRESS

• Attempted to restore confidence in the American people

• “The only thing we have to fear is fear itself.”

• Asked for broad executive powers to combat the Depression