1929-1940. i can identify & explain the economic factors that contributed to the stock market...
TRANSCRIPT
1929-1940
I can identify & explain the economic factors that contributed to the stock market crash of 1929 & the Great Depression.
I can explain the economic, environmental, & social impact of the Great Depression on American society.
I can evaluate the impact of the New Deal on various elements of American society.
Great Depression I Can
Statements
Stock market prices kept going up
The American economy boomed during the “Roaring 20s”
The GNP rose by 30% during the 1920s GNP—Gross National
Product: the total value of goods and services produced in a nation during a specific period
Helped drive the economy 1929, 1 in 5 Americans owned
a car Related industries (steel, oil,
rubber) also thrived Automobile & related industries
employed 4 million workers Unemployment very low
Averaged around 3% between 1923 & 1929
Stock Market Place were stocks are bought & sold Stock—ownership in a company & it is
sold in shares A person buys a piece of a corporation
by buying shares of stock If a corporation does well, the value of
its stock goes up If a corporation does badly, the value of
its stock goes down
Stock Market
Most stock prices kept going up during the 1920sMore people began investing in the stock market
Invest—to put money into stocks, land, etc. in the hope that the value of this money will grow
Business and government 1920s presidents
were pro-businessConservative
Republicans○ Warren Harding○ Calvin Coolidge
“The chief business of the American people is business”
○ Herbert Hoover
Election of 1928
Republicans nominated Herbert HooverDirector of Food Administration
during WWISecretary of Commerce under
Harding, CoolidgeQuaker, quiet, shy; favored
Prohibition
Election of 1928 Democrat—Al Smith
Outgoing & natural politician
CatholicAnti-ProhibitionGovernor of New York
Wealth Distribution Only a small number of people prospered
during the 1920s Wealthiest 1% income grew by 60% Most people’s income grew by 8% 5% of workers received 70% of country’s income Remaining 95% received only 30% of country’s
income People had used credit to purchase products
during the 1920s Credit was running out by end of the 1920s People quit buying as much
Credit & the stock market People were using credit to purchase stocks
Example: buy $1000 worth of stock with $500 & pay the stockbroker when the stock was sold
Buying on margin—buying stocks with loans from stockbrokers
1929 investors could buy with as little as 10% down
Margin Call—if the stock’s value fell below a certain point brokers could demand immediate repayment Investors were in big trouble if stocks lost value
suddenly
The central bank of the United States Takes actions & sets policies to regulate
the nation’s money supply Attempted to make buying on margin
more difficult Corporations provided brokers with money to
lend to investors & buying on margin continued
THE STOCK MARKET CRASH
Stock Market Crash
Stock market value increased a lot 50% gain in 1928; 27% in 1929
Some saw signs of trouble Sales of manufactured goods were sagging Rumors that big investors were ready to pull out Fears that stock prices could soon collapse
Thursday, October 24, 1929 Black Thursday Investors began selling, others joined, a huge
sell-off began & stock prices plunged
Stock Market Crash
Bankers stopped further collapse by buying up shares
Friday the market went back to normal
Monday investors lost confidence & prices began falling again
Black Thursday Front Page
Black Tuesday, Oct 29, 1929 Investors panicked
Dumped over 16 million shares of stock
Stock prices plungedEven stocks of solid
companies
October 1929 stock market dropped $16 billion in value
Stock Market Crash
A solemn crowd gathers outside the Stock Exchange after the crash. 1929.
Effects of the Crash
Sold Out (1929), cartoon by Rollin Kirby depicting the repercussions of the Stock Market Crash of 1929.
Effects of the Crash Downplayed by
President Hoover & many business leaders
On individualsMany were ruined,
bankrupted On banks
People withdrew money
Loans to stockbrokersForced to close
Effects of Crash On business
Money became scarce
Businesses couldn’t get loans
Consumers cut back on spending
Unemployment ○ 3 million lost jobs
within yearWages dropped
Effects of the crash
OverseasHurt WWI weakened economiesAmerican banks called in loans from WWIUS & other countries raised tariffs to protect
businesses○ Tariffs actually made things worse
World trade declined
Americans Face Hard Times
About 250,000 teenagers wandered the U.S. Some chose to
leave home Some were told to
leave home Hoboes—jobless,
homeless wanderers
Tramps in the Woods
Three hobos, Chicago, 1929. Text on image reads: Hoboe's 'Jungle' Under Loop Street.
Hobos
Man in hobo jungle killing turtle to make soup, Minneapolis, Minnesota. Sept. 1939
The most severe economic downturn in the history of the United States
Unemployed men vying for jobs at the American Legion Employment Bureau in Los Angeles during the Great Depression
Bank Failures• The months
following October 1929 bank runs struck across the country
• Hundreds of banks failed
• Deposits were not insured
Run on People’s Trust & Savings, Chicago, IL
Farm prices droppedLower income for farmersFarmers unable to repay loans1933 alone 364,000 farms bankrupt
or foreclosedForeclosure—when a bank takes
over ownership of a property from an owner who has failed to make loan payments
During the 30s, there were thousands of foreclosures. Farmers borrowed money from banks to buy more land or new machinery. Farmers pledged their assets as security on the loan. After the stock market crashed people could not pay their loans and lost everything.
By 1933 GNP dropped more than 40%Unemployment reached 25%
Competition for jobs was fierce Without jobs people slid into povertyPeople beggedPeople lost their homes
"Hoover blankets" were newspapers that homeless people used to protect themselves from the cold.
"Hoover flags" were pants pockets that had been turned inside out, symbolizing a lack of money.
"Hoover wagons" were old cars pulled by horses since their owners could no longer pay for gas.
Hoovervilles—shantytowns; neighborhoods of shacks on the outskirts of towns or in public parks
Upset at Hoover, people began to give items that represented the economic crisis negative nicknames.
"Hoover leather" was cardboard used to line a shoe with the sole worn through.
Hoover Wagon
Unemployed workers sold apples in large cities
Others took to the road searching for work
Hobos hopped trains & traveled from town to townOften met with
violenceMost hobos
were menMany left
families behind
Among hobos messages were routinely exchanged about where to find work, or hand out or perhaps mark a place that was not good for hobos. These messages were often written with a piece of coal or chalk on fences, signs, trees or just about any place a note was warranted
Not only is hopping a train illegal, it is extremely dangerous. Many hobos were killed or injured while trying to board or jump off a moving freight train. Others became locked inside box or refrigerator cars, their bodies found weeks later. Some hobos found places on trains to hide from the “bulls” who policed the cars, only to be crushed when the freight shifted .
Many unemployed saw it as personal failure
Accepting handouts hurt their pride
Many people were angry
Dust BowlDust Bowl
1931 Great Plains region had a drought 1931 Great Plains region had a drought which lasted several yearswhich lasted several years– Drought—period of below-average rainfallDrought—period of below-average rainfall
Careless farming practices made the Careless farming practices made the impact of the drought worseimpact of the drought worse– Topsoil was exposed & the winds blew it Topsoil was exposed & the winds blew it
awayaway– Created huge dust stormsCreated huge dust storms
Dust Bowl—Oklahoma, Kansas, Colorado, Dust Bowl—Oklahoma, Kansas, Colorado, New Mexico, & Texas hardest hit areasNew Mexico, & Texas hardest hit areas
Dust storm approaching Dust storm approaching Stratford, Texas. Stratford, Texas.
Abandoned farmstead in the Dust Bowl region of Abandoned farmstead in the Dust Bowl region of Oklahoma, showing the effects of wind erosion, Oklahoma, showing the effects of wind erosion,
1937.1937.
Fleeing the PlainsFleeing the Plains
Drought & dust storms robbed Drought & dust storms robbed farmers of their livelihoodfarmers of their livelihood
Many packed up & leftMany packed up & left– 2.5 million by end of the 1930s2.5 million by end of the 1930s– Many along Route 66 to CaliforniaMany along Route 66 to California– Okies—nickname given to the migrantsOkies—nickname given to the migrants
Inaccurate, they came from many statesInaccurate, they came from many states Meant to be derogatory & insultingMeant to be derogatory & insulting
– Okies were not welcomeOkies were not welcome
OkiesOkies
Writers & SongwritersWriters & Songwriters
John SteinbeckJohn Steinbeck– The Grapes of The Grapes of
WrathWrath Woody GuthrieWoody Guthrie
– songwritersongwriter
Herbert HooverFavored a federal
government that played as little role as possible in the affairs in business
Believed that unnecessary government could harm the spirit of the American people Rugged Individualism
Associative State
President Hoover’s belief that businesses should form voluntary associations that would voluntarily partner with government specialists
Hoover’s beliefs were tested with construction of the Hoover Dam
Hoover’s Response to the Great Depression
Believed government should not provide direct aid, but help people help themselves
Before the Crash, he pushed for a loan program to assist farmers in forming cooperatives Cooperative—an organization that is owned & controlled by its
members who work together for a common goal
After the Crash, he urged business leaders & government leaders not to lay off workers or cut wages
Hoover’s Response to the Great Depression
President Hoover did not get much cooperation from business Businesses cut jobs & wages State & local governments
stopped programs Consumers stopped spending
America plunged into the Great Depression
Hoover was persuaded to break with his beliefs
Hoover and his dog “King Tut”
Direct Action
1932 Hoover persuades Congress to create: Reconstruction Finance Corporation (RFC)
$2 billion in direct government loans to banks, insurance companies, & other institutions
Federal Home Loan Bank Encouraged home building & reduced foreclosures
Historic expansion of role of federal governmentMany people thought it too little, too late
Smoot-Hawley Tariff
Raised cost of imported goods to protect American goods
Historically high tariff rates It was a disaster European countries
responded with tariffs Trade plunged
1930 Smoot-Hawley Tariff Act
Hoover came under increasing attack for his handling of the Depression
His optimism undermined his credibility
His unwillingness to give direct aid to individuals made him seem uncompassionate
Bonus Army March—May 1932 15,000 World War I veterans in
Washington, D.C.Asking for early payment of WWI bonus
○ $1.25 for each day overseas○ Supposed to receive in 1945
Set up a huge camp near the Capital
Congress refused their demands Many veterans remained
"Bonus Army" WWI Veterans making camp in Washington, D.C., to protest unpaid pensions
World War I veterans block the steps of the Capitol during the Bonus March, July 5, 1932.
Bonus Army March
July 1932, Hoover ordered the army to remove the veteransViolence eruptedCamp caught on fireTwo veterans were killedHundreds were wounded
Americans were disturbed by the incident
Marchers' Camp Burned
The break-up of the Bonus Army in Washington was conducted by Army Chief of Staff and World War I veteran Douglas MacArthur, assisted by Majors George Patton and Dwight Eisenhower.
MacArthur is considered to have exceeded President Hoover's intentions [and possibly his explicit instructions] with his heavy-handedness.
1930 midterm congressional electionsDemocrats won a majority of the House
It was certain Hoover would be defeated in 1932Hoover didn’t even campaign until October