Crash and the Great Depression Chapter 14 1929-1941.

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