3/25/2017 THE GREAT DEPRESSION. STOCK MARKET SPECULATION How it worked. STOCK MARKET SPECULATION How it worked. STOCK MARKET SPECULATION How it worked

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1 THE GREAT DEPRESSION It affected every region and state in the U.S. It began with SPECULATION, the buying and selling in hopes of turning a quick profit, in the stock market which led to the Crash of 1929 This led to a banking crisis which affected how companies were financed A lot of companies went bankrupt, laying off thousands of workers Urban areas had large numbers of unemployed workers STOCK MARKET SPECULATION How it worked Businesses would sell SHARES of stock in the company to raise investment CAPITAL, money, to improve and expand their business People who owned shares could sell their shares to other people for what people would be willing to pay The price of the stock would go up or down based upon earnings of the company, new developments in the industry, and simple faith in the company STOCK MARKET SPECULATION How it worked Most people would pay cash for shares of stocks on a STOCK EXCHANGE, where shares of stock are traded (bought and sold), such as the New York Stock Exchange on Wall Street in New York City Speculation began when the general mood of the nation s economy was on the upswing because of rapid industrial expansion with the growth of steel, oil, automobile and electric industries Stock prices began to rise rapidly as companies earned record profits STOCK MARKET SPECULATION How it worked BUYING ON THE MARGIN allowed small and large investors to buy large amounts of stock and turn a profit quickly for as little as 10% actual cash investment Company A s stock sells for $1 per share Buyer B has $1,000 to invest, but wants to buy 10,000 shares of Company A s stock Buyer B buys on the margin, which means he borrows $9,000 on a short term loan with interest from a broker 1

2 STOCK MARKET SPECULATION How it worked Price goes up to $2 per share in 2 weeks. Buyer B sells Company A s stock for $20,000, pays the broker $9,000 plus $900 in interest which makes Buyer B a net profit of $9,100! STOCK MARKET SPECULATION How it worked Buyer B takes the $10,000 and buys 100,000 shares of Company C borrowing $90,000 at 10% interest Buyer B sells 2 weeks later his shares of Company C for $2 per share for $200,000 paying the broker $99,000 and earning himself a net profit of $91,000! STOCK MARKET SPECULATION How it worked Buyer B invests his $100,000 in Company D at $1 per share, buying on the margin, 1,000,000 shares, making him a millionaire on paper! Banks would loan money to Buyer B based upon the value of his stock. Dividends, quarterly payments from the company based upon profits, would provide cash STOCK MARKET SPECULATION How it failed Eventually there would be a sell off of large quantities of stock for profit taking, in other words for cash The economic LAW of SUPPLY and DEMAND states that if the supply of an item is greater than the demand, then the price will fall to encourage demand for the available supply STOCK MARKET SPECULATION How it failed Buyer B s stock price begins to fall because of the large quantity of shares on market for Company C s stock Buyer B s stock falls to $.90 per share in 1 hour making his total value $900,000. He holds onto his stock expecting to rebound STOCK MARKET SPECULATION How it failed 2 hours into trading, the price falls to $.75 per share making his worth only $750,000. He decides to sell to cut his losses In the 3 rd hour, by selling his additional shares and everyone else panicking, the price reduces to $.10 per share earning him $100,000 2

3 STOCK MARKET SPECULATION How it failed He now owes the broker $990,000 for the short term loan plus the bank for his big house, fancy cars and other luxuries! He is BANKRUPT! (not enough money to cover debts) STOCK MARKET SPECULATION How it failed He and the broker have no money, so they buy no more goods, such as houses, cars, clothes, appliances, etc. Companies A, B, and C can t sell their products and must cut costs by laying off employees Employees can t afford to buy goods causing Companies D-Z to lay off workers, who then can t afford to buy things STOCK MARKET SPECULATION How it failed This leads to an economic DEPRESSION, drastic down turn in production and income, usually accompanied by high unemployment between 20-25%, for a nation HOW WAS MONTANA AFFECTED BY THE GREAT DEPRESSION? Montana was already in an agricultural depression DROUGHT returned to Montana in and again Worse than the one at the beginning of the 1920s HOW WAS MONTANA AFFECTED BY THE GREAT DEPRESSION? Farm prices continued to decline throughout the Depression Investments in heavy machinery caused farmers to carry large debts Many farmers and their families lived a SUBSISTENCE life-style, growing enough to live on HOW WAS MONTANA AFFECTED BY THE GREAT DEPRESSION? Montana s tax base couldn t provide enough relief for Montanans 1 out of 5 rural families needed relief aid 3 out of 10 city families needed relief aid Red Cross provided aid in drought ridden counties Seed loans 3

4 HOW WAS MONTANA AFFECTED BY THE GREAT DEPRESSION? By 1935 just under 20% of Montana families received public assistance Montana was SECOND in the nation per capita dollars spent by the federal government on relief aid NEW DEAL In 1932, FRANKLIN D. ROOSEVELT is elected president In 1933, Roosevelt begins the NEW DEAL that would provide federal assistance to get the economy going again NEW DEAL DOMESTIC ALLOTMENT PROGRAM Farmers received PAYMENTS from federal government for holding specified amounts of land out of production Helped to stabilize prices and improve land found its basis in Montana agricultural programs that developed new dryland farming techniques, crop rotation, farm production controls, and family farm management OTHER NEW DEAL PROGRAMS WORKS PROGRESS ADMINISTRATION (WPA) Built courthouses & schools around the state Built roads and bridges Provided work for writers & artists OTHER NEW DEAL PROGRAMS CIVILIAN CONSERVATION CORPS (CCC) Hired young men to work in national forests & rangeland Built cabins, outbuildings, trails, bridges and fought fires 4

5 OTHER NEW DEAL PROGRAMS PUBLIC WORKS ADMINISTRATION (PWA) Put people to work building federal buildings, COURTHOUSES, repairing roads and bridges, and other public works projects Replacement agency for the WPA when its program was declared unconstitutional OTHER NEW DEAL PROGRAMS Federal Emergency Relief Agency (FERA) Provided direct relief payments Agricultural Adjustment Administration (AAA) Provided farmers with loans, technical assistance, and price compensation payments OTHER NEW DEAL PROGRAMS RURAL ELECTRIFICATION ADMINISTRATION (REA) Formed non-profit rural electric cooperatives with low interest loans to build and maintain power lines Brought electricity to many of Montana s farms and ranches FORT PECK DAM Largest single federal project in Montana Located on Missouri River in northeast Montana Begun in 1933, took 6 years to complete Built to control FLOODING and improve downstream navigation by controlling the flow of the river FORT PECK DAM 10,000+ workers including laborers, engineers and construction specialists Public Works Administration project Built by the ARMY CORPS OF ENGINEERS 5

6 The river before flooding FORT PECK DAM 10,000+ workers including laborers, engineers and construction specialists Public Works Administration project Built by the ARMY CORPS OF ENGINEERS Clearing bottom land A local bridge across river before dam construction FORT PECK DAM 15 boom towns at or near the dam including Wheeler Delano Heights New Deal Square Deal Cactus Flats Fort Peck Glasgow MILLION DOLLAR bridge built for the railroad to bring in building materials 6

7 FORT PECK DAM 250 mile long, 154,000 volt power line built to supply electricity to the project Slide of 1938 destroyed 5% of the dam and killed 8 men $160 million total spent on the project First picture on the first issue of LIFE magazine FORT PECK DAM DIMENSIONS AND STATISTICS HYDRAULIC FILL DAM, Used water to moved building material 4 miles long 4,900 feet wide at base 50 feet wide at top 250 feet high Hydraulic Fill Dam construction FORT PECK DAM DIMENSIONS AND STATISTICS HYDRAULIC FILL DAM, 135 mile long lake created 1,600 miles of shoreline 19 million acre feet of water million cubic yards of fill, 97% hydraulic fill 4 million cubic yards of gravel, 500,000 cubic yards of quarry stone, 350,000 cubic yards of field stone 34 million pounds of steel for cutoff wall 250 feet high Base 4900 feet wide 7

8 Earth moving equipment Steel Sheet Pile Cut Off Wall Hydraulic Fill Dam construction Hydraulic Fill Dam construction The Big Slide 1938 The Big Slide

9 Excavation along the bank Town of Fort Peck Million Dollar Bridge Town of Fort Peck Fort Peck Hotel Fort Peck Theater Town of Wheeler 9

10 Buck Horn Club, Wheeler FORT PECK DAM DIMENSIONS AND STATISTICS FORT PECK NAVY 4 12,500 hp dredging units named the Missouri, Jefferson, Gallatin and Madison Could dig down 50 feet below water Pumped material through 20,000 feet of 28 inch diameter pipeline with a maximum lift of 250 feet Mixture of sand, water, clay, and silt Dredge Dredge Gallatin Dredge with sluice pipe Sluice pipe 10

11 Dredge cut Dredge cut Diversion Tunnels FORT PECK DAM DIMENSIONS AND STATISTICS DIVERSION TUNNELS 32 feet in diameter More than one mile in length Each tunnel could carry the entire flow of the Missouri River by itself Diversion tunnel inlet portals Diversion tunnel inlet portals 11

12 Diversion tunnel inlet portals Diversion tunnel construction Diversion tunnel construction Diversion Tunnel steel liner Powerhouse at end of tunnels Completed tunnels and powerhouse 12

13 Powerhouse turbines FORT PECK DAM DIMENSIONS AND STATISTICS SPILLWAY 800 feet wide ton gates 54,000 cubic yards of concrete 26,500 tons of steel Can discharge up to 250,000 cubic feet per second (normal river flow 18,000-20,000 fps) Located 3 miles east of the dam Spillway 80 ton steel gates Spillway construction Spillway construction Completed spillway 13

14 END OF THE DEPRESSION IN MONTANA WORLD WAR II Improved the economy throughout the United States Agriculture, coal, oil, lumber production, and general business activity increased across Montana Rains returned to Montana Montana specialized in wheat and beef to supply war needs New boom in copper for the Anaconda Company in Butte and Anaconda 14