! March 1929-Pres. Herbert Hoover! Credit Credit reached $7 Billion Dollars Government encouraged borrowing by keeping low interest rates Experts warned: in an economic downturn, such debt would cripple consumers; but consumers ignored all warnings!
! Playing the Market Bull Market & Bear Market Buying and Selling for Quick Profits " Inflation of Stocks " Speculative Buying depends all on investor confidence Margin Buying (purchasing with borrowed money) Fall of 1929, some gloomy voices were heard!
! Black Thursday October 24, 1929 Shocked by rising interest rates Panic of Investors Selling kills confidence Prices begin to drop quickly! Black Tuesday October 29, 1929 Investors dropped stocks Everyone demanded money for loan payoff People forced to sell & suffered major loss Stock losses exceeded 30 Billion Dollars
! Banking Crisis Banks were suffering.why? People began defaulting loans WHY? Banks were forced to close WHY? People began to panic because of bank failures which led to more failures.why? 1930-1932 5,000 banks failed!
! Business Failures Businesses suffered losses from the stock market, banks, and consumers Consumers were no longer purchasing so many employees began to lay off people 1930 26, 000 Businesses Failed 1931 28,285 Businesses Failed
! Global Depression Many blamed the depression on WWI Massive war debts built up to where European countries could no longer trade Because the United States relied so heavily on foreign trade, we passed high tariffs like the Smoot-Hawley Tariff.which in turn only worsened the economy
! Depressions are inevitable because of the business cycle the regular ups and downs of business in a free enterprise economy Businesses Hire More Workers Surplus Goods become Sold Surpluses Pile Up (Overproduction) Underconsumption triggers recession or depression Cut Back on Production (Layoffs)
! Summer 1929 Dow Jones reached an all time HIGH!! Wednesday, Oct. 23 rd Drops 21 points (Why many investors began to sell)! Black Thursday Oct. 24 th! Monday, October 28 th DROPS MORE!! Black Tuesday Oct. 29 th 16 million shares were sold
! Stock Market Crash on Oct. 29, 1929! Uneven Distribution of Wealth- 1923-1929 Receiving Fair Wages would have made the depression less severe " (Rich 1%... increased by 63%) " (Poor 93%... decreased by 4%)! Massive Stock Market Speculation buying and selling to make a quick profit
! Excessive Use of Credit individual debt caused by installment buying in the 1920s. (Buying more than you can pay for)! Overproduction During the 1920s, Americans who could afford expensive products had already bought them in the earlier decade; surpluses piled up late in the 1920s.
! Effects Upon Society 25% of the workforce were unemployed Wages were as low as 10 cents per hour Black workers were often the first fired Women could be hired for less than men which caused the %age of women employed to increase Many individuals took to selling apples on the street
! Effects on Cities City governments tried to provide relief through agencies like the Red Cross and Salvation Army Breadlines were Common Shantytowns developed outside cities called Hoovervilles Poverty and crime spread in the United States
! Effects upon Farming Farmers had more than they could sell people could not afford their crops. Farmers were forced to let crops rot and slaughter livestock they could not afford to feed They could not afford their mortgages on their farms and banks started foreclosure on their property Neighbors would help each other out by bidding low on land and tools " An $800 farm sold for $1.90
! Effects on Families Families moved together Divorce rates rose Young people waited to get married and start families Women made their own bread, soap, sewed their own clothes out of flour sacks, etc. Many families would rent out a room in their home to boarders in order to raise money
! Effects on the Economy The Gross National Product fell from $103 billion in 1929 to $56 billion in 1933 GNP: all of the goods and services produced in a year Investors and businesses lose millions of dollars Plants closed and unemployment rose The collapse on one bank in NY wiped out $180 million in savings and affected more than 400,000 investors
! A temporary halt in the prosperity of a great people Herbert Hoover! Most people wanted the government to stay out of free enterprise; others said it was time to get involved! Hoover agreed that the way to economic recovery was through individual effort and not from government assistance
! Rugged Individualism success comes through individual effort and private enterprise! 1930- Hoover created the President s Committee for Unemployment Relief (PCUR) volunteers for unemployed Community Chest, Red Cross, Salvation Army, and YMCA
! Andrew Mellon proposed the laissezfaire approach Hoover rejected!! Stimulating the Economy: created public works programs Construction of the giant Boulder Dam-later named Hoover Dam-on the Colorado River 800 public buildings 37,000 miles of highway
! 1929-Agricultural Marketing Act which established the Federal Farm Board (FFB) Granted a budget of $500 Million Instructed government to buy all surplus foods; store and sell later at higher prices Farmers refused to stop planting!! Home Loan Bank Act Provided money to reduce foreclosures
! Reconstruction Finance Corporation (RFC) Lending up to $2 billion of taxpayer money to stabilize banks, insurance companies, etc. Failed to work because it wasn t put into place until after the depression!
! Bonus Army- Group of veterans (100,000) from WWI protesting in in Washington D. C. in May 1932 Fighting to have their payment of pension bonuses paid to them Congress rejected the idea and all but 2,000 returned home 2,000 remained refusing to leave and in an a clash, two veterans and two police officers were killed
! Bonus Army continued- By July, U.S. Army moved in with machine guns, tear gas, and tanks Army was commanded by General Douglas MacArthur Hundreds were injured and three died (including an 11-week-old baby Hatred across America grew against Hoover and the government
! Republican Candidate-Herbert Hoover! Democratic Candidate-Franklin D. Roosevelt (FDR)! Cousin: Theodore Roosevelt! Wife: Eleanor Roosevelt! 1921 Paralyzed from the waist down (Polio)
! Topic: Great Depression Hoover s policy of unfairly distributing wealth Government should be at the service of the people Spirit of Confidence and Optimism! Popular Votes: Hoover 16 million----roosevelt 23 million! Electoral Votes Hoover 59 votes---roosevelt 472 votes