Crash & Depression Chapter 32 (Cont.) 4/2011. The Stock Market Crash Section 1 1929.

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Crash & Depression

Crash & DepressionChapter 32(Cont.)4/2011The Stock Market CrashSection 1

1929The Roaring 20s was coming to an end.

Review: Stock Market Boom

Summary:Stock Market Bust

Black ThursdayOctober 24, 1929The Dow Jones Industrial Average peaked at $381 in SeptemberBy October 24th, stock prices began to fallExample - GE went from $400 to $283Black ThursdayOctober 24, 1929

The Market Crashes

Investors crowd the sidewalk outside of the NYSEPanic on Wall Street

Black Thursday - October 24, 1929Pres. Hoover - business is on a sound and prosperous basisGroup of bankers bought shares to stabilize prices Not enough to stop the panicMonday October 28, 1929Investors continued to sellPrices continued to drop

Investors continued to panic Black Tuesday October 29, 1929Tried to sell stocks at any priceBankers called in their margins Losses totaled $30 billion dollars

Low of $34 High of $381The Ripple Effect of the CrashLess people able to buy goods (decline of GNP)Leads to contractionSevere contraction = depressionThis contraction was so severe, it is known as the Great DepressionThe Great Depression -Stock Market Crash to WWIIApproximately 1/3 of US banks failedUnemployment reached 25%GNP went from $103 billion to $56 billion

The Great DepressionThe Great Depression

Photography by Dorothea Lange

The Worldwide ImpactCountries depended on the USA for capital, markets, and goodsContractions began in EuropeResult - they could not buy American products(Germany was particularly hard hit)Underlying Causes of the DepressionAll of the warning signs that were ignored from the 1920s.

Lack of government oversight

Lack of government response

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

From floods in the Northeast to droughts in the MidwestSocial Effects of the DepressionSocial Effects of the DepressionHoovervillesHobos - approx. 1 millionFarm distresslow prices due to low demandevictions and foreclosures

Hoovervilles

Shantytown in Central ParkHoovervilles

The Dust Bowl (1931-1940)Drought and poor environmental practicesEffected Great Plains and the MidwestHardest hit were Oklahoma, Kansas, and NebraskaTop soil blew into the Atlantic OceanCreated a desert in the center of the USADisplaced millions of farmers

The Dust BowlThe Dust Bowl

Flooding in TennesseeFlooding in Pittsburgh

Poverty Increased Social ProblemsAlcoholism, spousal abuse, child abuse, suicide, and violence increasedHealth and nutrition decreasedHoover claimed that no one starved but historians estimate as many as 1 million people died from the effects of the DepressionPoverty Increases Social ProblemsDivorce, marriage, and birth rates declinedHomeless people moved in with relativesLast hired, first firedLynchings increasedJapanese & Mexicans were deported

Scottsboro BoysMarch, 1931 - 9 African Americans were accused of raping two white womenThey were convicted and sentenced to die without even seeing a defense attorneyThey were later exonerated but not until four of them had spent many years in jail

Scottsboro Boys with National GuardSurviving the Great DepressionSurvival

SurvivalPeople helped one anotherStates provided reliefLocal charities assisted millionsThose that survived never completely forgot what it was like to live through the Great DepressionSurviving the Great DepressionPeople helped each otherFarmers assisted each otherPenny auctions Violence prevented some foreclosures

Surviving the Great DepressionEstimated 1,000,000 hobos rode the railsApprox. 250,000 of them teenagersHobos

Surviving the Great Depression

HoboSymbolsSurviving the Great DepressionPolitical movements like the Socialist and Communist Parties gained membership

Entertainment like this new board game provided a pleasant diversion

Dark Humor Helps to Relieve Stress

Signs of ChangeProhibition was repealed in 1933

The Chrysler building was overshadowed by the Empire State Building in 1931

Signs of ChangeSigns of ChangeBy 1935 Calvin Coolidge diedAl Capone was convicted of tax fraudBabe Ruth retiredLindbergh baby was kidnapped and found dead

Americas heroes were changingThe Election of 1932President Hoover:Assured the American people the economy was improvingInsisted it was a normal business cycleThought direct relief should come from charityAsked business leaders to maintain wages voluntarilyPresident Hoovers ResponseAgricultural Marketing Act of 1929 - was supposed to buy excess crops from farmers to increase demand

Hawley - Smoot Tariff - largest tariff in history (1930)President Hoovers ResponseReconstruction Finance Corp. - lent money to large corporations, banks, and insurance companies (1932)

Trickle down economicsPresident Hoovers ResponsePublic works projects like new buildings, bridges, and roads

Boulder Dam is built, later renamed Hoover Dam (take as many dam pictures as you like)

Rugged individualism No (federal) government handoutsGave little direct relief until 1932

President Hoovers Response1932 signed the Home Loan Bank Act to lower interest rates on mortgages1932 allowed the federal government to give money to the states for relief programsPresident Hoovers ResponsePeoples Responses to HooverToo little, too late

People blamed him for the Depression

Called him heartless and coldThe Bonus ArmyWorld War I veterans promised a bonus but not until 19451932 - 20,000 went to Washington to demand immediate paymentStayed in Washington in Hoovervilles to embarrass the President

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

General Douglas MacArthur was called in to quell the uprising

He used tanks, gas, and 4 Calvary units against unarmed marchersThe Bonus ArmyThe Bonus ArmyUS Army burned the shantytown and caused a riot

Foreign Policy1928 before taking office, toured Latin America on a Goodwill Tour (on-board a battleship!)During Depression, ended intervention in several Latin American countries due to the economyWithdrew from Haiti & NicaraguaLess money for foreign aid to friendly governmentsElection of 1932This campaign is more than a contest between two men.It is a contest between two philosophies of government.Herbert Hoover, October 1932Election of 1932Herbert Hoover

trickle down economics

rugged individualism

normal business cycleFranklin D. Roosevelt

prime the pump (Keynes)

organized relief efforts for the state of NY

promised immediate aid and hope for the futureElection of 1932Franklin D. Roosevelt won by 7,000,000 votesHerbert Hoover only won 6 statesFDR would start the New Deal upon his inauguration in March, 1933 The End

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