The Stock Market Crashes

October 29, 1929

Black Tuesday

Result – The Great Depression

Begins in America

The Great Depression lasts from 1929 until the U.S. enters WWII in 1941.

President Herbert Hoover

31st President, 1929 – 1933

• Shanty Towns – shacks of

tar paper or scrap material

became known as

“Hoovervilles”

• Many blamed him for the

lack of response by the

government during the

Depression

• Hoover insisted state and

local governments handle

relief, not federal gov’t

The Long Bull Market

• The Market soared so investors

bought stock on margin-small cash

down payment (10%) and borrowed

the rest

• September 1929- investors sensed

danger and began to sell

• October 24, 1929-(Black Thursday)

the market plummeted

• October 29, 1929-(Black Tuesday) 30

billion dollars was lost

Crowds clog Wall Street during the stock market crash of 1929

Crowd After Stock Market Crash

Original caption: 10/24/1929-New York, NY: Photograph shows the street scene on

Black Thursday, the day the New York stock market crashed, and the day that led

to the Great Depression

Investors Crowd Wall Street

The planked surface of Wall Street was a scene of near panic here, as hundreds of

bewildered investors milled about after the stock market crash on Black Friday. A

record 16,000,000 shares changed hands that day, and the decline in stock value by

the end of the year was estimated at $15,000,000,000. Two years later, stock losses

were estimated at $50,000,000,000.

New York Stock Exchange

New York Stock Exchange on Wall Street during the 1929 stock market crash.

CAUSES OF THE GREAT CRASH, 1929

Overproduction of goods

Buying on margin

Uneven distribution of wealth

in the 1920’s

Too much borrowing

From the banks

Stock prices grossly inflated;

did not have “real” value

Overproduction of Goods

• More factories than needed and

people quit buying products

• Farmers flourished during WWI

– after war no demand for crops

• Dust Bowl – over farming and

drought in the Mid West – head

to California on Route 66

Family Packed In Car, On Way To The West

Original caption: The automobile was often the only hope for the future to many

families fleeing from the Dust Bowl in the Southwest during the depression years of

the 1930's. Many of these families left their homes in Oklahoma, Kansas, Arkansas,

etc., for a better life in California. Here migrant cotton field worker and family on the

way to the West (OK, AZ, and CA were often their itinerary). Photograph, early

1930's.

Two men heading to California, 1937

Buying on Margin

• Buying on credit with as little as

10% down

• High interest – when the loan was

“called” they couldn't pay it back

Uneven Distribution of Wealth in

the 1920s

• Money remained in the hands of a

few

• In 1929, 1% of America

possessed 58% of the nations

wealth

• Rich getting richer

Too much borrowing from the

banks

• Banks would lend with expectation that

they might not repay loan – they could

seize the stock and sell it for instant

cash

• Result – stocks were worthless

Business Cycle

• Business cycle–

span in which the

economy grows

like the 1920s and

then contracts like

the 1930s

A – Contraction – Dwindling

business activity, unemployment

B – Trough

C – Peak

D – Recession

E – Expansion – Increasing

employment, income, and

general prosperity.

Businesses and Workers

Consumer Spending

Drops

Businesses cut

investments

and production

– some

businesses fail

Workers

laid off

BanksBusinesses and workers

cannot repay bank loan

Banks run out of

money and fail

Bank runs occur.

People want their money

Savings accounts and

Checking accounts

Are all cleared out

Run on Bowery Savings Bank

Original caption: 1930-New York, NY- Run on Bowery Savings Bank. Photo shows

depositors lining up to withdraw their money.

Crowd Of People Outside Bank 1929

Original caption: 1929-Passaic, NJ: Depositors besiege Merchants Bank in Passaic NJ.

World PaymentsOverall USA production plummets

U.S. investors have

little money to invest

U.S. investments in other

country’s markets decline

Ex. - Germany

German war payments to

Allies fall off

Europeans cannot afford

American goods

Allies cannot

pay debts to U.S.

The Great Depression(Causes)

• More goods and services were produced than

people were able or willing to buy

– Result – recession (a period of slow economic

activity)

• Falling demand in some industries caused

unemployment

– Result – starts the multiplier effect (one person’s

income is another persons income)

• Decreases in spending by unemployed

workers caused further unemployment

• Decreases in the money supply

–Federal Reserve raised interest

rates in the early 30s( they had

lowered them in the 20s)

• Result – less money in circulation

• The Hoover Administration tax hikes

–Hoover’s tax hikes were given to

balance the federal budget instead

of helping the American people

Hawley-Smoot Tariff

Key Players of the Great Depression

• Consumers/People – drop in spending, too many goods to be bought which led to unemployment, taxes were raised

• Government – raised taxes on consumers and businesses, wanted to balance federal budget

• Businesses – started to cut back and multiplier effect began, eventually businesses failed

• Foreign Investors – high tariffs kept foreign products out

• Federal Reserve – raised interest rates which decreased money supply, resulted in banks to fail

Social Effects of the Depression

• Poverty

• Hoovervilles – homeless people built

shantytowns out of what ever they found

• Dust Bowl – extreme drought and poor

farming practices create a huge dust

bowl in the Mid West causing farmers to

move westward

• Hobos – drifters riding the rails around

the country

Hobos Riding Freight Car to California

Several hobos ride a freight car hanging over the side while others lay in the

shade behind them. These hobos ride empty freight carts to Southern

California.

1. Good road to follow

2. Religious talk will get you a free meal

3. These people are rich (Silk hat and pile of

gold)

4. Camp here

5. You may sleep in the hayloft here

6. Warning: Barking Dog

7. House is well-guarded

Hobo Signs

A Hooverville in New York City, 1931

In 1936, John Steinbeck conducted

research on people who had moved to

California from Arkansas and Oklahoma.

He toured the Dust Bowl in 1937. He

wrote The Grapes of Wrath in 1939 from

those experiences. It is still one of the

most highly praised pieces of American

literature.

Dust Bowl Farm

Loose soil, blown by dust bowl winds, piling up in large drifts on a farm.

Near Liberal, Kansas, March 1936.

Great Depression Pastimes

• Miniature golf

• Card playing

• Jigsaw puzzles

• Board games – Monopoly and Scrabble

• Radio – popularized in the 1920s

– FDR’s “Fire Side” Chats

– “Lone Ranger” & “Amos & Andy”

• Movies – sound added to films in the 1920s

– 5-25 cents a movie

– Classics – King Kong, Wizard of Oz, Snow White

and the Seven Dwarfs, Gone with the Wind

Monopoly Scrabble

President Roosevelt giving a fireside chat

Empire State

Building

First full length animated film

Signs of Change

• Prohibition is repealed

– 21st Amendment repealed Prohibition in 1933

– Mixed reaction, but most Americans welcomed

the repeal

• The Empire State Building

– Promising symbol of hope

• The end of an Era

– Symbols of the 1920s had faded – Al Capone,

Calvin Coolidge, Babe Ruth, and Henry Ford

– The Lindbergh kidnapping echoed the nation’s

distressed condition

President Franklin D. Roosevelt

32nd President, 1933 – 1945

• Election of 1932 –offered the “New Deal”, Song – “Happy Days are here Again”

• Inaugural Speech – “So first let me assert my firm belief that the only thing we have to fear is fear itself.”

• Closes the banks – gold standard out

• New Deal Agencies implemented – “Alphabet Soup”

Migrant Mother by Dorothea

Lange

A poverty-stricken migrant mother

with three young children gazes

off into the distance. This

photograph, commissioned by the

FSA, came to symbolize the

Great Depression for many

Americans.

Chuck Wagon

A man and a child near an old chuck wagon on a grazing project. The wagon once

housed a family of fourteen. Oneida County, Idaho, May 1936.

Migrant Family on Road

Migrant family walking on the highway from Idabel, Oklahoma to Krebs,

Oklahoma. June 1938.

Unemployment Line In New York City

Original caption: New York, NY: The Great Depression: Unemployment line

up at the City Welfare Bureau to register for city jobs.

Family on Relief

A family on relief living in a shanty in

a municipal landfill. Herrin, Illinois,

January 1939.

Unemployed Men in Bread Line

Unemployed men wait in long lines for bread and handouts during the Great Depression.

Row of Slums

A row of slums. Washington, DC, November 1935.

Destitute Family of Nine

A destitute family with seven children during the Great Depression in the United States.