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