Chapter 22 Crash Depression 1929 1933 Section 1

Chapter #22 “Crash & Depression” 1929 - 1933

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! • 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! • 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.

Other Economic Dangers ¬ Buying on Credit – Increased personal debt. – Installment plans made expensive items irresistible. ¬ Stock Market – speculation: the practice of marking high-risk investments in hopes of getting a high gain. – 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 3 rd, 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.

Stock market crash *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.

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 all were effected. ¬ Professional, white collar, blue collar-ALL lost jobs, savings accounts, & homes. Poverty did not discriminate. ¬ “Hooverville” ¬ What environmental condition compounded the Great Depression?

Hoovervilles

Hoovervilles

Section 3 - continued ¬ The Grapes of Wrath – John Steinbeck ¬ What was the Dust Bowl?

Anxiety, Suicide, Family Stress ¬ Competition for scarce resources especially jobs, caused an increase in discrimination ¬ 56% of Blacks were unemployed in 1932 ¬ Less divorces… why? ¬ Suicide way up… why?

Section 4 - Surviving the Great Depression ¬ 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 Boys Case ¬ The Communist and Socialist Parties offered solutions to the problems of capitalism and democracy.

Signs of Change sec. 4 cont. ¬ 1933, during the heart of the Depression, Prohibition was ended with the 21 st Amendment. ¬ Empire State Building construction started in 1930. Why was it considered a symbol of hope?

The Election of 1932 – F. D. R ¬ Hoover’s response to the Depression – “worldwide 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 – Completed in 1936

Hoover’s demise. . . 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.

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 Mac. Arthur 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