Chapter #22Chapter #22“Crash & Depression”“Crash & Depression”

1929 - 19331929 - 1933

Section #1: Then Economy of the Late Then Economy of the Late 1920’s1920’s

Section #2: The Stock Market CrashThe Stock Market CrashSection #3: Social Effects of the Social Effects of the

DepressionDepression

Section #4: Surviving the Great Surviving the Great DepressionDepression

Section #5: The Election of 1932The Election of 1932

Section #1“The Economy in the Late 1920’s”

Healthy Economy?– 1925: Stock market $27 Billion – 1928: stock values rose $11.4 billion.

The year was described as “of unprecedented advance, of wonderful prosperity.” – New York Times

– Oct. 1929: stock values hit $87 Billion.– Since 1914 workers wages 40%.– Unemployment under 4%.– Best selling book: “The Man Nobody

Knows (1925) – Bruce Barton– 1929 article by John J. Raskob –

“Everybody Ought to Be Rich”– welfare capitalism: An approach to

labor relations in which companies met some of their workers’ needs without prompting by unions.

Uneven Prosperity

The Rich get richer!The Rich get richer!• Huge corporations• 200 large companies

controlled 49% of American industry.

• 24,000 families (0.1%) had incomes of more than $100,000 & held more than 34% of the country’s total savings.

The Poor get poorer!The Poor get poorer!• 71% of individuals and

families earned less than $2,500.

• 80% of families had no savings.

• Everyone in the family, including children, had to work to get by.

Income Distribution, 1920

1%5%

29%65%

$10,000 and over

$5,000 - $9,999

$2,000 - $4,999

$1,999 and Under

Other Economic Dangers

Buying on Credit– Increased personal debt.– Installment plans made

expensive items irresistible.

Stock Market– speculation:speculation: the practice of

marking high-risk investments in hopes of getting a high gain.

– buying on margin:buying on margin: purchase a stock for only a fraction of its price and borrow the rest.

– Brokers charged high interest rates and could demand payment or loan at any time.

Supply & Demand– Warehouses full of unbought

goods.– Automobile industry.– Housing construction fell 25%

from 1928 – 1929.

Farmers– Prices for farm products

plummeted after the wartime demand ended. (wheat & cotton)

– Farmers bought more land.

Workers– Most laborers did not benefit

from prosperity of big business.– 56 hour work week for 16 to 18

cents an hour = $10 a week.

Section #2:“The Stock Market Crash”

Dow Jones Industrial Average: an average of stock prices of major industries.– Early 1928 = 191.– Hoover’s inauguration day, March 4, 1929 = 313.– September 3rd, all time high at 381.

The Market Crashes– Black Thursday: October 24, 1929, worried investors began to

sell and stock prices fell. (ex. GE $400 down to $283)– Black Tuesday: October 29, 16.4 million shares were sold.

– By Nov. 13, 1929, the Dow Jones had fallen from 381 to 198.7 = losses totaling $30 billion. Known as the Great Crash.

– business cycle: the periodic growth and contraction of a nation’s economy. See page #636.

*In billions of dollars. Based on Standard and Poor’s index of common stocks.Source: Historical Statistics of the United States, Colonial Times to 1970.

The Stock Market Crash

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1925 1926 1927 1928 1929 1930 1931 1932 1933

Year

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Effects of the Crash

Great Depression: a severe economic decline that lasted from 1929 until the United States’ entry into World War II in 1941.– Millions of Americans lost their jobs, homes, and farms.– 1931 Henry Ford closed down his Detroit plants, 75,000

unemployed.– Gross National Product (GNP): the total value of goods and

services a country produces annually.• $103 billion in 1929.• By 1933 it was only $56 billion.• Bushel of wheat went from $1.04 in 1929 to 38 cents in 1932.• Banks close

– 5,000 banks closed.– By 1933, 9 million savings accounts vanished.

Impact on the World

When the world’s leading economy fell, the global economic system began to crumble.– U.S. insisted that Britain and France repay war debts.– Congress kept wartime tariffs high.– Allies had to rely on Germany’s reparations payments for

income.– German banks failed when U.S. companies investments

failed.– Europeans could no longer afford to buy American made

goods.– American stock market crash caused a downward cycle in

the global economy.

Causes & Effects of the Great Depression

CAUSES*The 1920’s economy is out of balance.*Americans are increasingly in debt.

*Speculation is on the rise.*Overproduction slows industrial growth.

*The federal government introduces a tight money policy in order to control credit.*The stock market crashes in October 1929.

THE GREAT DEPRESSION

Effects*Millions of workers lose their jobs.

*Gross National Product falls dramatically.*Many banks fail.

*Increased poverty leads to health and social programs.*Global economy suffers.

Section #3 Social Effects – Great Depression

Immediate impact did not hit all – 1931-32 allall were effected.

Professional, white collar, blue collar-ALLALL lost jobs, savings accounts, & homes. Poverty did not discriminate.

Who were the hardest hit?What was a “Hooverville”?What environmental condition compounded the Great

Depression?Where was the large migration to and who captured it

in photographs? (page 595)

Hoovervilles

Hoovervilles

Section 3 - continuedThe Grapes of Wrath – John SteinbeckWhat was the Dust Bowl?

Anxiety, Suicide, Family StressChildren suffered the worst; divorces dropped. Why?

Competition for scarce resources especially jobs, caused an increase in discrimination

56% of Blacks were unemployed in 1932

Section 4 - Surviving the Great Depression

Americans survived the Great Depression with determination and humor.

They helped one another, looked for solutions, and worked to identify the problems within our social, political, and economic systems.

However, some people (blacks, immigrants, Jews) were still discriminated against Ex. Scottsboro Ex. Scottsboro Boys Case (be sure to read up on this!)Boys Case (be sure to read up on this!)

The Communist and Socialist Parties offered solutions to the problems of capitalism and democracy.

What were the “Hoover jokes” and what did Babe Ruth have to do with them?

Signs of Changesec.4 cont.

1933, during the heart of the Depression, Prohibition was ended with the 21st Amendment.

Empire State Building construction started in 1930. Why was it considered Why was it considered a symbol of hope?a symbol of hope?

The Election of 1932 – F.D.Rsec. 5

Hoover’s response to the Depression – “world-wide economic conditions beyond our control”

Voluntary action by businesses to keep wages up was Hoover’s “fix-it” plan; businesses did not continue to voluntarily help

Gov’t stimulated the Depression economy with public works projects (i.e. Hoover Dam)

Hoover Dam!Hoover Dam!

Hoover Dam – Completed in 1936

Hoover’s demise . . . Sec. 5 cont.From ‘Great Humanitarian’ to cold & hard-hearted!

Hoover’s RFC – gave gov’t credit to banks to extend loans – Trickle down theory of economics made the gov’t look like they were helping bankers and not ordinary people. (Reconstruction Finance Corporation – banks still failed)

Hawley-Smoot tariff – the highest in history, backfired- Europe raised their tariffs – stifled trade.

Propaganda efforts against Hoover aided in his political downfall, in addition to economic conditions not improving.

What did John Maynard Keynes believe?

The Bonus Army – sec 5 cont.

1932 – 20,000 WWI veterans march on D.C. demanding their pensions payments.

The H.O.R. agreed to pay, the Senate did not.

President Hoover called in General MacArthur to drive the marchers out of D.C. – he turned the military against those who fought to defend freedom during WWI.

The New Deal & F.D.R (D) “Happy Days are here again!”

Map on pg.652 – Landslide for FDR/Eleanor – 7 million popular votes

More voted against Hoover

Many minorities favored FDR

Be sure to read ahead in the next chapter so you can answer questions in the power point for bonus cards!!!!