The Great Depression

1. 1929-1940 The Great Depression

2. Great Depression I Can Statements I can identify & explain the economic factors that contributed to the stock market crash of 1929 & the Great Depression. I can explain the economic, environmental, & social impact of the Great Depression on American society. I can evaluate the impact of the New Deal on various elements of American society.

3. Stock market prices kept going up The American economy boomed during the “Roaring 20s” The GNP rose by 30% during the 1920s GNP—Gross National Product: the total value of goods and services produced in a nation during a specific period Calm Before the Storm

6. Automobile industry • Helped drive the economy • 1929, 1 in 5 Americans owned a car • Related industries (steel, oil, rubber) also thrived • Automobile & related industries employed 4 million workers • Unemployment very low • Averaged around 3% between 1923 & 1929

7. Stock Market • Place were stocks are bought & sold • Stock—ownership in a company & it is sold in shares • A person buys a piece of a corporation by buying shares of stock • If a corporation does well, the value of its stock goes up • If a corporation does badly, the value of its stock goes down

8. Stock Market

9. Most stock prices kept going up during the 1920s More people began investing in the stock market Invest—to put money into stocks, land, etc. in the hope that the value of this money will grow Stock Market

10. Business and government • 1920s presidents were pro-business • Conservative Republicans • Warren Harding • Calvin Coolidge • “The chief business of the American people is business” • Herbert Hoover

11. Election of 1928 • Republicans nominated Herbert Hoover • Director of Food Administration during WWI • Secretary of Commerce under Harding, Coolidge • Quaker, quiet, shy; favored Prohibition

12. Election of 1928 • Democrat—Al Smith • Outgoing & natural politician • Catholic • Anti-Prohibition • Governor of New York

13. Economic Weaknesses • Wealth Distribution • Only a small number of people prospered during the 1920s • Wealthiest 1% income grew by 60% • Most people’s income grew by 8% • 5% of workers received 70% of country’s income • Remaining 95% received only 30% of country’s income • People had used credit to purchase products during the 1920s • Credit was running out by end of the 1920s • People quit buying as much

14. Economic Weaknesses • Credit & the stock market • People were using credit to purchase stocks • Example: buy $1000 worth of stock with $500 & pay the stockbroker when the stock was sold • Buying on margin—buying stocks with loans from stockbrokers • 1929 investors could buy with as little as 10% down • Margin Call—if the stock’s value fell below a certain point brokers could demand immediate repayment • Investors were in big trouble if stocks lost value suddenly

15. Federal Reserve System • The central bank of the United States • Takes actions & sets policies to regulate the nation’s money supply • Attempted to make buying on margin more difficult • Corporations provided brokers with money to lend to investors & buying on margin continued

16. The Stock Market Crash

17. Stock Market Crash • Stock market value increased a lot • 50% gain in 1928; 27% in 1929 • Some saw signs of trouble • Sales of manufactured goods were sagging • Rumors that big investors were ready to pull out • Fears that stock prices could soon collapse • Thursday, October 24, 1929 • Black Thursday • Investors began selling, others joined, a huge sell-off began & stock prices plunged

18. Stock Market Crash • Bankers stopped further collapse by buying up shares • Friday the market went back to normal • Monday investors lost confidence & prices began falling again Black Thursday Front Page

19. Black Tuesday, Oct 29, 1929 • Investors panicked • Dumped over 16 million shares of stock • Stock prices plunged • Even stocks of solid companies • October 1929 stock market dropped $16 billion in value

20. Stock Market Crash A solemn crowd gathers outside the Stock Exchange after the crash. 1929.

21. Effects of the Crash

22. Sold Out (1929), cartoon by Rollin Kirby depicting the repercussions of the Stock Market Crash of 1929.

23. Effects of the Crash • Downplayed by President Hoover & many business leaders • On individuals • Many were ruined, bankrupted • On banks • People withdrew money • Loans to stockbrokers • Forced to close

24. Effects of Crash • On business • Money became scarce • Businesses couldn’t get loans • Consumers cut back on spending • Unemployment • 3 million lost jobs within year • Wages dropped

28. Effects of the crash • Overseas • Hurt WWI weakened economies • American banks called in loans from WWI • US & other countries raised tariffs to protect businesses • Tariffs actually made things worse • World trade declined

29. Americans Face Hard Times • About 250,000 teenagers wandered the U.S. • Some chose to leave home • Some were told to leave home • Hoboes—jobless, homeless wanderers

30. Tramps in the Woods

31. Hobos Three hobos, Chicago, 1929. Text on image reads: Hoboe's 'Jungle' Under Loop Street.

32. Man in hobo jungle killing turtle to make soup, Minneapolis, Minnesota. Sept. 1939

33. Great Depression • The most severe economic downturn in the history of the United States Unemployed men vying for jobs at the American Legion Employment Bureau in Los Angeles during the Great Depression

34. Bank Failures • The months following October 1929 bank runs struck across the country • Hundreds of banks failed • Deposits were not insured

35. Run on People’s Trust & Savings, Chicago, IL

36. Farm Failures • Farm prices dropped • Lower income for farmers • Farmers unable to repay loans • 1933 alone 364,000 farms bankrupt or foreclosed • Foreclosure—when a bank takes over ownership of a property from an owner who has failed to make loan payments

37. During the 30s, there were thousands of foreclosures. Farmers borrowed money from banks to buy more land or new machinery. Farmers pledged their assets as security on the loan. After the stock market crashed people could not pay their loans and lost everything.

38. Farmer with horse-drawn plow, ca. 1930-1939.

39. Farm Foreclosure Sale in Iowa During the Great Depression

40. Farm foreclosure-circa 1933

41. By 1933 GNP dropped more than 40% Unemployment reached 25% Unemployment

42. Human Impact of the Great Depression • Competition for jobs was fierce • Without jobs people slid into poverty • People begged • People lost their homes

43. Upset at Hoover, people began to give items that represented the economic crisis negative nicknames. Hoovervilles—shantytowns; neighborhoods of shacks on the outskirts of towns or in public parks "Hoover blankets" were newspapers that homeless people used to protect themselves from the cold. "Hoover flags" were pants pockets that had been turned inside out, symbolizing a lack of money. "Hoover wagons" were old cars pulled by horses since their owners could no longer pay for gas. "Hoover leather" was cardboard used to line a shoe with the sole worn through.

44. Hooverville

45. Hoover Wagon

48. Unemployment • Unemployed workers sold apples in large cities

49. Hobos Others took to the road searching for work Hobos hopped trains & traveled from town to town Often met with violence Most hobos were men Many left families behind

50. Among hobos messages were routinely exchanged about where to find work, or hand out or perhaps mark a place that was not good for hobos. These messages were often written with a piece of coal or chalk on fences, signs, trees or just about any place a note was warranted