Crash & Depression
Chapter 32(Cont.)
4/2011
The Stock Market Crash
Section 1
1929
The “Roaring 20’s” was coming to an end.
Review: Stock Market Boom
Summary:Stock Market Bust
Black ThursdayOctober 24, 1929
o The Dow Jones Industrial Average peaked at $381 in September
o By October 24th, stock prices began to fall
o Example - GE went from $400 to $283
Black ThursdayOctober 24, 1929
The Market Crashes
Investors crowd the sidewalk
outside of the NYSE
Panic on Wall Street
Black Thursday - October 24, 1929
Pres. Hoover - business “is on a sound and prosperous basis”
Group of bankers bought shares to stabilize prices
Not enough to stop the panic
Monday October 28, 1929
Investors continued to sell Prices continued to drop
Investors continued to
panic
Black Tuesday – October 29, 1929
Tried to sell stocks at any priceBankers called in their margins Losses totaled $30 billion dollars
Low of $34
High of $381
The Ripple Effect of the Crash
Less people able to buy goods (decline of GNP)
Leads to contraction
Severe contraction = depression
This contraction was so severe, it is known as the Great Depression
The Great Depression -Stock Market Crash to WWII
Approximately 1/3 of US banks
failed
Unemployment reached 25%
GNP went from $103 billion to $56
billion
The Great Depression
The Great Depression
Photography by Dorothea Lange
The Worldwide Impact
Countries depended on the USA for capital, markets, and goods
Contractions began in Europe Result - they could not buy
American products (Germany was particularly hard
hit)
Underlying Causes of the Depression
All of the warning signs that were ignored from the 1920’s.
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 Midwest
Social Effects of the Depression
Social Effects of the Depression
Hoovervilles
Hobos - approx. 1 million
Farm distress
• low prices due to low demand
• evictions and foreclosures
Hoovervilles
Shantytown in Central Park
Hoovervilles
The Dust Bowl (1931-1940)
Drought and poor environmental practices
Effected Great Plains and the Midwest Hardest hit were Oklahoma, Kansas,
and Nebraska Top soil blew into the Atlantic Ocean Created a desert in the center of the
USA Displaced millions of farmers
The Dust Bowl
The Dust Bowl
Flooding in Tennessee
Poverty Increased Social Problems
Alcoholism, spousal abuse, child abuse, suicide, and violence increased
Health and nutrition decreased Hoover claimed that no one
starved but historians estimate as many as 1 million people died from the effects of the Depression
Poverty Increases Social Problems
Divorce, marriage, and birth rates declined
Homeless people moved in with relatives
“Last hired, first fired” Lynchings increased Japanese & Mexicans
were deported
Scottsboro Boys
March, 1931 - 9 African Americans were accused of raping two white women
They were convicted and sentenced to die without even seeing a defense attorney
They were later exonerated but not until four of them had spent many years in jailScottsboro Boys with National Guard
Surviving the Great Depression
Survival
Survival
People helped one another
States provided relief
Local charities assisted millions
Those that survived never completely forgot what it was like to live through the Great Depression
Surviving the Great Depression
People helped each other Farmers assisted each other
• Penny auctions • Violence prevented some foreclosures
Surviving the Great Depression
Estimated 1,000,000 hobos rode the rails
Approx. 250,000 of them teenagers
Hobos
Surviving the Great Depression
Hobo
Symbols
Surviving the Great Depression
Political movements like the Socialist and Communist Parties gained membership
Entertainment like this new board game provided a pleasant diversion
Dark Humo
r Helps
to Reliev
e Stress
Signs of Change
Prohibition was
repealed
in 1933
The Chrysler building was overshadowed by the Empire State Building in 1931
Signs of
Change
Signs of Change
By 1935 • Calvin Coolidge died• Al Capone was convicted of tax fraud• Babe Ruth retired• Lindbergh baby was kidnapped and found
dead
America’s heroes were changing
The Election of 1932
President Hoover:
Assured the American people the economy was improving
Insisted it was a normal business cycle
Thought direct relief should come from charity
Asked business leaders to maintain wages voluntarily
President Hoover’s Response
Agricultural Marketing Act of 1929 - was supposed to buy excess crops from farmers to increase demand
Hawley - Smoot Tariff - largest tariff in history (1930)
President Hoover’s Response
Reconstruction Finance Corp. - lent money to large corporations, banks, and insurance companies (1932)
Trickle down economics
President Hoover’s Response
Public 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 handouts Gave little direct relief until 1932
President Hoover’s Response
1932 signed the Home Loan Bank Act to lower interest rates on mortgages
1932 allowed the federal government to give money to the states for relief programs
President Hoover’s Response
Peoples’ Responses to Hoover
“Too little, too late”
People blamed him for the Depression
Called him heartless and cold
The Bonus Army
World War I veterans promised a bonus but not until 1945
1932 - 20,000 went to Washington to demand immediate payment
Stayed 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 marchers
The Bonus Army
The Bonus Army
US Army burned the shantytown and caused a riot
Foreign Policy 1928 – 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 economy
• Withdrew from Haiti & Nicaragua
• Less money for foreign aid to friendly governments
Election of 1932
“This campaign is more than a contest between two men….It is a contest between two philosophies of government.”
Herbert Hoover, October 1932
Election of 1932
Herbert Hoover
• “trickle down economics”
• rugged individualism
• normal business cycle
Franklin D. Roosevelt
• “prime the pump” (Keynes)
• organized relief efforts for the state of NY
• promised immediate aid and hope for the future
Election of 1932
Franklin D. Roosevelt won by 7,000,000 votes
Herbert Hoover only won 6 states FDR would start the New Deal
upon his inauguration in March, 1933
» The End
Recommended
