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Crash and the Great Depression
Chapter 14 1929-1941
Economics of the 20’sChapter 14 Section 1
Economy appears healthy in late twenties Increases in production
By early October 1929, stock values reach $87 billion
Everybody ought to be rich
Economic Troubles on the Horizon
Industries in trouble- railroads, textiles, steel, and barely made a profit
New forms of transportation (trucks, buses, autos)
New forms of energy challenged coal hydroelectric,fuel oil, natural gas=50% of energy use
Employers raised wages and benefits on their ( weakens labor unions) Union membership declined
More exports than imports – foreign nations sold huge bonds in New York Exchange
Herbert Hoover wins election in 1928 vs. Alfred Smith (traditionalist vs. modernist)
Warning signs – economy starts to slowUneven distribution of
wealthBull market = up 3004mill.Am. Owned stocksBuying on credit
Fueled by Ads Installment plans
Over productionAutomobile sales slumped after 1925Housing construction fell before 1929
Over speculation in the market – buying on margin
Growing unemployment
Farmers in troubleBorrowed to increase production during
WWI- low prices after war= ForeclosuresCoolidge vetoes McNary-Haugen price
supports Foreclosure
The Market Crashes DOW in early 1928 = 191 DOW in September 1929 = 381
Started to fall slowly Some brokers called in loans others lent more The week before the crash market fell 21 points an
hour Oct. 24 market took a plunge, investors dumped
shares
On October 29, 1929 over 16 million stocks were sold “Black Tuesday”16.4 million shares
dumpedMillions of shares had no
buyers By November 13 DOW
down to 198.7 $30 billion in losses(Amt. Spent in WWI)
Loans were called in by the Brokers and Banks, but no one had the cash to pay on them.
1929 – 600 banks failed
1933- 25,000 banks had failed
GNP cut in half
90,000 businesses failed
Unemployment 3%-25%
Causes: High Tariffs (Hawley-Smoot Tariff of 1930) and
war debts cut into foreign markets Over-speculation on unsecured loans/buying on
Margin Crisis in the farming sector Unequal distribution of the wealth Buying on credit and over-production Federal Reserve cut money supply in 1929 – too
little money in circulation to help economy recover after crash
Effects:Chapter 14 Section 2
Gross National Product (GNP) was cut in half from over $100 billion by 1933
Unpaid loans ruined many banks Low cash-on-hand to loan
ratios 5,500 banks failed 9 million accounts wiped
out
International Banking hit as hard as those in the US due to international trade Germany had to suspend reparations and
plunged into a deeper depression than in US
Allies also stopped payments on loan debts
Effects on farmers worsened 400,00 farms foreclosed Many lost farms during “DUST
BOWL” drought (black blizzards)
Continual plowing of soil
When the Oakies left Oklahoma and moved to California, it raised the I.Q. of both states. Will Rogers
Rock Candy Mt. Sunny Side
In the Cities: Unemployment hits new heights
Thousands become homeless“Hoovervilles” spring up
Soup lines become common place
Many of the photographs in this presentation were taken by Dorothea Lange
Hunger and health – especially the children were hit hard
Families were strained to the limits of survival Working women belittled for taking away jobs
from family men (AFL endorsed practice of firing married women)
Competition for jobs meant that discrimination increased.
56% of blacks unemployed
Other minorities deported
1933 Prohibition repealed (21st Amendment)Capone in jailBonnie and Clyde killed
Empire State Building (1930)4,000 jobs
Hoover Dam (1931)5,000 jobs (including some blacks)
Golden Gate Bridge (1933-37)About 2,000 jobs
Hoover fails to inspireChapter 14 Section 3
Voluntary controls not effective Hawley-Smoot tariff was an attempt to
protect American products – backfires Hoover’s popularity takes a dive Some endorsed massive public
spendingJohn Maynard Keynes (economist)
Pulling together Turning to communism – 100,000
moving to Russia Depression Humor
Hoover blanketsHoover flags
Bonus Army – 20,000 jobless WWI VetsPension bonus payments promised for
1945
Hoover Sends in the military
A “New Deal” for AmericaFranklin Delano RooseveltWins Democratic nomination
Harvard – NY Senator and past Governor
Wealthy family Polio victim in 1920 Nephew of Teddy