crash & depression chapter 32 (cont.) 4/2011. the stock market crash section 1 1929

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

Flooding in Pittsburgh

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