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The Great Stock Market Crash
October 29, 1929 “Black Tuesday”$16.4 million shares of stock sold (average day =
$4 to $8 million)By November 1929 Dow Jones had fallen from
September ‘29 high of 381 to 198.7.
Result of Panic created on October 24, 1929 “Black Thursday”
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Headlines Oct. 30, 1929
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The Bear and the Bull
• Bear Market = exists when the stock market falls over a significant period of time.
• Bull Market = exists when the stock market rises over a significant period of time.
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Causes
Overspeculation during the 1920s
Overproduction of goods
Buying on margin
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Causes
Uneven distribution of wealth in the 1920s
Too much borrowing from banks
Stock prices grossly inflated; did not have “real” value
Decay of “backbone” industries
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Effects
Investors and businesses lose millions
Thousands of banks fail, savings are wiped out
Businesses cut production, lay off thousands of workers
GNP down from $103 billion in 1929 to $56 billion in 1933
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Market Crash
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Effects
Unemployment rises, consumer base drops further. By 1932, 12 million people unemployed
Economic contraction in the US spread to Europe
The Great Depression sets in
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Depression Food Lines
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Unemployment
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Social Effects
City Laborers - Many lost their jobs, became homeless, lived in
poverty, some resorted to living in “Hoovervilles”.
Hooverville – Shanty towns build by homeless with stacks of tar paper, cardboard, or scrap material to “mock” President Hoover.
Herbert Hoover – rugged individualism
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President Herbert Hoover
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Hoovervilles
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Social EffectsFarmers – In ‘29 a bushel of wheat sold for $1.18, in ‘32 it sold
for 49 cents.Cotton dropped from 19 to 6.5 cents a poundMany could not afford to keep their farms; Dust
Bowl forced thousands to migrate elsewhere
Dust Bowl – Between 1931-1940, so much soil blew out the of central and southern Great Plains that the region became known as the Dust Bowl.
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Dust Bowl
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Dust Bowl
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Dust Bowl
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Leaving Farms
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Social Effects
Women –
Had trouble finding work because so many men were unemployed.
More responsibility for survival of familyChange and equality gained from WWI and 20s
false?
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Psychological Effects
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Social Effects
Children –
Faced horrible health conditions through labor, lack of food; many could not go to school; could not be supported by their parents
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Social Effects
Men –
Psychologically felt like failures because of inability to find work
Many left home, to “ride the rails” (“Hobos”)
Suicide rate soars
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Unemployment
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Social Effects
Racial minorities –
Discrimination increased, work became harder to find for African Americans; many Hispanics and Asian Americans were deported; lynchings increased in the South
Nativism continued to grow
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Americans Pull Together
Farmers Stick togetherWorked together to minimize impact of Great DepressionThey held “penny auctions” to save the farms of other farmers in the communityLegislation was soon passed giving farmers more time to pay their debts
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Young people ride the railsYoung people left home in seek of a better lifeRail riders faced dangers along the way; “Hobos” faced injury, police arrests, angry farmersYoung people witnessed the Depression throughout the country and experienced loneliness
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Riding the Rails
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Hobos
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Seeking Political SolutionsMost US citizens kept faith in the democratic process despite hard timesSome citizens were attracted by reform and radical movementsCommunist and Socialist Parties grew in size and support
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Depression HumorHumor kept people laughing thorough troubled times“Hooverisms” became popular, like “Hoover Flags”Board Games like Monopoly are created
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Depression Humor
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Signs of Change
Prohibition is RepealedThe 21st Amendment 1933There was mixed reaction, but most Americans welcomed repealHoover regretted this
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18th Amendment Repealed
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Bars open for business
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Empire State BuildingThe building became a promising symbol of hopeThe 102-story building cost $41 million, soared 1250 feet in the sky, and had 67 elevators
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Construction of Empire State Building
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The End of an Era
The Symbols of the 1920s faded; Al Capone, Calvin Coolidge, Babe Ruth, and Henry Ford
The Lindbergh kidnapping echoed the nation’s distressed condition20s Hero’s infant son kidnapped and murdered
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The Election of 1932
Republican incumbent Herbert Hoover
Vs.
Democratic candidate Franklin Delano Roosevelt
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Franklin D. Roosevelt
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In wheelchair
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Herbert Hoover
Believed in minimal government actionStrict view of government (less is better)Advocated voluntary action by businesses and
citizens (“rugged individualism”)Believed in minimal government spending, but
some spending projects; Hoover Dam, Federal Farm Board
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Herbert Hoover
Believed that assistance to businesses and banks (at the top) would eventually help individuals and the economy as a whole
Hawley-Smoot Tariff 1930 (highest in history)Reconstruction Finance Corp. (RFC) –
Government credit to major industries (“Bail outs”) also lent money to banks
Home Loan Bank Act – discounting mortgage rates
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Franklin Delano Roosevelt
Willing to experiment with government roles (expand government)
Supported broadening the role of governmentWanted to do whatever possible to try to end
the DepressionFavored increased government spending and
government projectsIntroduces “The New Deal”
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Bonus Army Incident
Low Point for Hoover, summer of 193220,000 jobless, WWI veterans march and
encamped in Washington DCDemanded immediate payment of a pension
bonus they were promised for 1945. Not given, many left, some stayed in DC.
Although generally peaceful, some violence broke out
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Bonus Army encampment
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Outside capital building
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US Army brought in to drive the bonus army out of DC
Many were injured when tear gas was shotThis incident would defeat Hoover in ‘32
electionFDR wins election in landslide 472-59 electoral
votes, 22.8 million-15.7 million popular votes
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Election of ‘32 results