The Stock Market Crash &The Great Depression1929-1941

Election of 1928

Herbert Hoover (R) defeats Al Smith (D)

Hoover wins in response to the economy

Causes of the Depression

1. Stock Buying Spree• Faith in the “Bull” market (strong economy)• People buying stock on margin – people

would only have to put a small amount down to buy stock

• Example – Buy $100 worth of shares for $10 down, and pay back when the stock rises

• In Sept 1929, GE stock was $391 per share…by Oct 1929 - $180 per share…1932 - $9 per share

Causes of the Depression

2. Business• Overproduction of consumer goods• Profits went into market instead of wages

(less money for consumers to buy goods)

3. Gap Between the Rich and the Poor• Shrinking middle class• Unequal distribution of wealth

Causes of the Depression

4. Weak Banking System• Banks invested depositor’s funds into risky

stocks

• Runs on banks (panics where investors withdrew all their money at once)

Picture of a Run on a Bank

Causes of the Depression

5. Risky European Loans• Some 10 billion dollars loaned to European

nations during WWI and years after to help in the rebuilding

6. Farmers• Overproduction due to drop in world demand

(WWI over, no need to feed the world population anymore)

The CRASH!!!!

The stock market CRASHED on Tuesday October 29, 1929 – a.k.a. “Black Tuesday”

The Roaring ’20s came, literally, to a screeching halt!

Years of Suffering: The Great Depression

1. Hoover’s Response (or lack thereof) Hawley-Smoot Tariff – High tariff that seals

off American markets from other nations Made more than $1.5 million in loans to

businesses to keep them running.

Bonus Army – a group of unemployed U.S. WWI veterans who set up camp in Washington D.C. demanding the government pay their promised bonuses instead of in 1945. Hoover orders the army to disband the protest (hurts his reputation even more)

Hoover believed in Rugged Individualism where people help themselves – pull themselves up by their own boot straps.

Election of 1932

By 1932, Hoover’s popularity is at an all-time low

“Hoovervilles” – group of shacks near city dumps

“Hoover blanket” – old newspaper for “hobo” blankets

“Hoover flag” – an empty pocket turned out (no money)

Photo of a “Hooverville”

ROOSEVELT WINS!!!!

Franklin D. Roosevelt wins the 1932 election easily over Hoover

FDR immediately puts into place his plan for getting the United States out of the Depression (photo of Franklin and

his wife Eleanor)

FDR & the New Deal

2. FDR believed government should help people over come economic hardship unlike Hoover who believed everyone would benefit if business did

3. Roosevelt was inclined to help people directly by giving them government jobs Federal money would give people hope Would also put money into the economy

4. All FDR’s programs together are called the New Deal Promises action with strong emergency

powers of the president Gives fireside chats with radio audiences to

calm people down and to give them hope