the stock market crashes october 29, 1929 black...
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The Stock Market Crashes
October 29, 1929
Black Tuesday
Result – The Great Depression
Begins in America
The Great Depression lasts from 1929 until the U.S. enters WWII in 1941.
President Herbert Hoover
31st President, 1929 – 1933
• Shanty Towns – shacks of
tar paper or scrap material
became known as
“Hoovervilles”
• Many blamed him for the
lack of response by the
government during the
Depression
• Hoover insisted state and
local governments handle
relief, not federal gov’t
The Long Bull Market
• The Market soared so investors
bought stock on margin-small cash
down payment (10%) and borrowed
the rest
• September 1929- investors sensed
danger and began to sell
• October 24, 1929-(Black Thursday)
the market plummeted
• October 29, 1929-(Black Tuesday) 30
billion dollars was lost
Crowd After Stock Market Crash
Original caption: 10/24/1929-New York, NY: Photograph shows the street scene on
Black Thursday, the day the New York stock market crashed, and the day that led
to the Great Depression
Investors Crowd Wall Street
The planked surface of Wall Street was a scene of near panic here, as hundreds of
bewildered investors milled about after the stock market crash on Black Friday. A
record 16,000,000 shares changed hands that day, and the decline in stock value by
the end of the year was estimated at $15,000,000,000. Two years later, stock losses
were estimated at $50,000,000,000.
CAUSES OF THE GREAT CRASH, 1929
Overproduction of goods
Buying on margin
Uneven distribution of wealth
in the 1920’s
Too much borrowing
From the banks
Stock prices grossly inflated;
did not have “real” value
Overproduction of Goods
• More factories than needed and
people quit buying products
• Farmers flourished during WWI
– after war no demand for crops
• Dust Bowl – over farming and
drought in the Mid West – head
to California on Route 66
Family Packed In Car, On Way To The West
Original caption: The automobile was often the only hope for the future to many
families fleeing from the Dust Bowl in the Southwest during the depression years of
the 1930's. Many of these families left their homes in Oklahoma, Kansas, Arkansas,
etc., for a better life in California. Here migrant cotton field worker and family on the
way to the West (OK, AZ, and CA were often their itinerary). Photograph, early
1930's.
Buying on Margin
• Buying on credit with as little as
10% down
• High interest – when the loan was
“called” they couldn't pay it back
Uneven Distribution of Wealth in
the 1920s
• Money remained in the hands of a
few
• In 1929, 1% of America
possessed 58% of the nations
wealth
• Rich getting richer
Too much borrowing from the
banks
• Banks would lend with expectation that
they might not repay loan – they could
seize the stock and sell it for instant
cash
• Result – stocks were worthless
Business Cycle
• Business cycle–
span in which the
economy grows
like the 1920s and
then contracts like
the 1930s
A – Contraction – Dwindling
business activity, unemployment
B – Trough
C – Peak
D – Recession
E – Expansion – Increasing
employment, income, and
general prosperity.
Businesses and Workers
Consumer Spending
Drops
Businesses cut
investments
and production
– some
businesses fail
Workers
laid off
BanksBusinesses and workers
cannot repay bank loan
Banks run out of
money and fail
Bank runs occur.
People want their money
Savings accounts and
Checking accounts
Are all cleared out
Run on Bowery Savings Bank
Original caption: 1930-New York, NY- Run on Bowery Savings Bank. Photo shows
depositors lining up to withdraw their money.
Crowd Of People Outside Bank 1929
Original caption: 1929-Passaic, NJ: Depositors besiege Merchants Bank in Passaic NJ.
World PaymentsOverall USA production plummets
U.S. investors have
little money to invest
U.S. investments in other
country’s markets decline
Ex. - Germany
German war payments to
Allies fall off
Europeans cannot afford
American goods
Allies cannot
pay debts to U.S.
The Great Depression(Causes)
• More goods and services were produced than
people were able or willing to buy
– Result – recession (a period of slow economic
activity)
• Falling demand in some industries caused
unemployment
– Result – starts the multiplier effect (one person’s
income is another persons income)
• Decreases in spending by unemployed
workers caused further unemployment
• Decreases in the money supply
–Federal Reserve raised interest
rates in the early 30s( they had
lowered them in the 20s)
• Result – less money in circulation
• The Hoover Administration tax hikes
–Hoover’s tax hikes were given to
balance the federal budget instead
of helping the American people
Hawley-Smoot Tariff
Key Players of the Great Depression
• Consumers/People – drop in spending, too many goods to be bought which led to unemployment, taxes were raised
• Government – raised taxes on consumers and businesses, wanted to balance federal budget
• Businesses – started to cut back and multiplier effect began, eventually businesses failed
• Foreign Investors – high tariffs kept foreign products out
• Federal Reserve – raised interest rates which decreased money supply, resulted in banks to fail
Social Effects of the Depression
• Poverty
• Hoovervilles – homeless people built
shantytowns out of what ever they found
• Dust Bowl – extreme drought and poor
farming practices create a huge dust
bowl in the Mid West causing farmers to
move westward
• Hobos – drifters riding the rails around
the country
Hobos Riding Freight Car to California
Several hobos ride a freight car hanging over the side while others lay in the
shade behind them. These hobos ride empty freight carts to Southern
California.
1. Good road to follow
2. Religious talk will get you a free meal
3. These people are rich (Silk hat and pile of
gold)
4. Camp here
5. You may sleep in the hayloft here
6. Warning: Barking Dog
7. House is well-guarded
Hobo Signs
In 1936, John Steinbeck conducted
research on people who had moved to
California from Arkansas and Oklahoma.
He toured the Dust Bowl in 1937. He
wrote The Grapes of Wrath in 1939 from
those experiences. It is still one of the
most highly praised pieces of American
literature.
Dust Bowl Farm
Loose soil, blown by dust bowl winds, piling up in large drifts on a farm.
Near Liberal, Kansas, March 1936.
Great Depression Pastimes
• Miniature golf
• Card playing
• Jigsaw puzzles
• Board games – Monopoly and Scrabble
• Radio – popularized in the 1920s
– FDR’s “Fire Side” Chats
– “Lone Ranger” & “Amos & Andy”
• Movies – sound added to films in the 1920s
– 5-25 cents a movie
– Classics – King Kong, Wizard of Oz, Snow White
and the Seven Dwarfs, Gone with the Wind
First full length animated film
Signs of Change
• Prohibition is repealed
– 21st Amendment repealed Prohibition in 1933
– Mixed reaction, but most Americans welcomed
the repeal
• The Empire State Building
– Promising symbol of hope
• The end of an Era
– Symbols of the 1920s had faded – Al Capone,
Calvin Coolidge, Babe Ruth, and Henry Ford
– The Lindbergh kidnapping echoed the nation’s
distressed condition
President Franklin D. Roosevelt
32nd President, 1933 – 1945
• Election of 1932 –offered the “New Deal”, Song – “Happy Days are here Again”
• Inaugural Speech – “So first let me assert my firm belief that the only thing we have to fear is fear itself.”
• Closes the banks – gold standard out
• New Deal Agencies implemented – “Alphabet Soup”
Migrant Mother by Dorothea
Lange
A poverty-stricken migrant mother
with three young children gazes
off into the distance. This
photograph, commissioned by the
FSA, came to symbolize the
Great Depression for many
Americans.
Chuck Wagon
A man and a child near an old chuck wagon on a grazing project. The wagon once
housed a family of fourteen. Oneida County, Idaho, May 1936.
Migrant Family on Road
Migrant family walking on the highway from Idabel, Oklahoma to Krebs,
Oklahoma. June 1938.
Unemployment Line In New York City
Original caption: New York, NY: The Great Depression: Unemployment line
up at the City Welfare Bureau to register for city jobs.
Family on Relief
A family on relief living in a shanty in
a municipal landfill. Herrin, Illinois,
January 1939.
Unemployed Men in Bread Line
Unemployed men wait in long lines for bread and handouts during the Great Depression.
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