The Great Stock Market Crash

October 29, 1929 “Black Tuesday”$16.4 million shares of stock sold (average day =

$4 to $8 million)By November 1929 Dow Jones had fallen from

September ‘29 high of 381 to 198.7.

Result of Panic created on October 24, 1929 “Black Thursday”

Headlines Oct. 30, 1929

The Bear and the Bull

• Bear Market = exists when the stock market falls over a significant period of time.

• Bull Market = exists when the stock market rises over a significant period of time.

Causes

Overspeculation during the 1920s

Overproduction of goods

Buying on margin

Causes

Uneven distribution of wealth in the 1920s

Too much borrowing from banks

Stock prices grossly inflated; did not have “real” value

Decay of “backbone” industries

Effects

Investors and businesses lose millions

Thousands of banks fail, savings are wiped out

Businesses cut production, lay off thousands of workers

GNP down from $103 billion in 1929 to $56 billion in 1933

Market Crash

Effects

Unemployment rises, consumer base drops further. By 1932, 12 million people unemployed

Economic contraction in the US spread to Europe

The Great Depression sets in

Depression Food Lines

Unemployment

Social Effects

City Laborers - Many lost their jobs, became homeless, lived in

poverty, some resorted to living in “Hoovervilles”.

Hooverville – Shanty towns build by homeless with stacks of tar paper, cardboard, or scrap material to “mock” President Hoover.

Herbert Hoover – rugged individualism

President Herbert Hoover

Hoovervilles

Social EffectsFarmers – In ‘29 a bushel of wheat sold for $1.18, in ‘32 it sold

for 49 cents.Cotton dropped from 19 to 6.5 cents a poundMany could not afford to keep their farms; Dust

Bowl forced thousands to migrate elsewhere

Dust Bowl – Between 1931-1940, so much soil blew out the of central and southern Great Plains that the region became known as the Dust Bowl.

Dust Bowl

Dust Bowl

Dust Bowl

Leaving Farms

Social Effects

Women –

Had trouble finding work because so many men were unemployed.

More responsibility for survival of familyChange and equality gained from WWI and 20s

false?

Psychological Effects

Social Effects

Children –

Faced horrible health conditions through labor, lack of food; many could not go to school; could not be supported by their parents

Social Effects

Men –

Psychologically felt like failures because of inability to find work

Many left home, to “ride the rails” (“Hobos”)

Suicide rate soars

Unemployment

Social Effects

Racial minorities –

Discrimination increased, work became harder to find for African Americans; many Hispanics and Asian Americans were deported; lynchings increased in the South

Nativism continued to grow

Americans Pull Together

Farmers Stick togetherWorked together to minimize impact of Great DepressionThey held “penny auctions” to save the farms of other farmers in the communityLegislation was soon passed giving farmers more time to pay their debts

Young people ride the railsYoung people left home in seek of a better lifeRail riders faced dangers along the way; “Hobos” faced injury, police arrests, angry farmersYoung people witnessed the Depression throughout the country and experienced loneliness

Riding the Rails

Hobos

Seeking Political SolutionsMost US citizens kept faith in the democratic process despite hard timesSome citizens were attracted by reform and radical movementsCommunist and Socialist Parties grew in size and support

Depression HumorHumor kept people laughing thorough troubled times“Hooverisms” became popular, like “Hoover Flags”Board Games like Monopoly are created

Depression Humor

Signs of Change

Prohibition is RepealedThe 21st Amendment 1933There was mixed reaction, but most Americans welcomed repealHoover regretted this

18th Amendment Repealed

Bars open for business

Empire State BuildingThe building became a promising symbol of hopeThe 102-story building cost $41 million, soared 1250 feet in the sky, and had 67 elevators

Construction of Empire State Building

The End of an Era

The Symbols of the 1920s faded; Al Capone, Calvin Coolidge, Babe Ruth, and Henry Ford

The Lindbergh kidnapping echoed the nation’s distressed condition20s Hero’s infant son kidnapped and murdered

The Election of 1932

Republican incumbent Herbert Hoover

Vs.

Democratic candidate Franklin Delano Roosevelt

Franklin D. Roosevelt

In wheelchair

Herbert Hoover

Believed in minimal government actionStrict view of government (less is better)Advocated voluntary action by businesses and

citizens (“rugged individualism”)Believed in minimal government spending, but

some spending projects; Hoover Dam, Federal Farm Board

Herbert Hoover

Believed that assistance to businesses and banks (at the top) would eventually help individuals and the economy as a whole

Hawley-Smoot Tariff 1930 (highest in history)Reconstruction Finance Corp. (RFC) –

Government credit to major industries (“Bail outs”) also lent money to banks

Home Loan Bank Act – discounting mortgage rates

Franklin Delano Roosevelt

Willing to experiment with government roles (expand government)

Supported broadening the role of governmentWanted to do whatever possible to try to end

the DepressionFavored increased government spending and

government projectsIntroduces “The New Deal”

Bonus Army Incident

Low Point for Hoover, summer of 193220,000 jobless, WWI veterans march and

encamped in Washington DCDemanded immediate payment of a pension

bonus they were promised for 1945. Not given, many left, some stayed in DC.

Although generally peaceful, some violence broke out

Bonus Army encampment

Outside capital building

US Army brought in to drive the bonus army out of DC

Many were injured when tear gas was shotThis incident would defeat Hoover in ‘32

electionFDR wins election in landslide 472-59 electoral

votes, 22.8 million-15.7 million popular votes

Election of ‘32 results