The Stock Market Crash By 1929, the rising U.S. stock market
dominated the news in America. By September 3, the Dow Jones
Industrial Average, an average of the stock prices of major
industries, had reached an all- time high. Prices peak in
September, began slowly falling, and some brokers called in the
loans of those who had bought on the margin. This began a panic as
worried stockholders began to sell.
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Tuesday October 29, 1929 Panic climaxed 16.4 million shares
were sold. Black Tuesday, saw a complete collapse of the stock
marketnow known as the Great Crash. By the end of the day,
investors had lost over $30 billion. Although the effects of the
Great Crash were initially felt by the actual investors (some of
whom lost everything), the effects soon rippled throughout the
whole economy.
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Banks Fail Banks depend on their investmentsspecifically, the
interest they make on loansto survive. When investors cannot repay
the bank, the bank cannot survive. As banks closed, there came
another panic as customers went to withdraw their money and banks
did not have the money to give them. Bank failures caused Americans
to lose their life savings
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Bank Panic
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Production of Goods Slows Secondly, because businesses could no
longer borrow money to produce more goods, and few people had the
money to buy them anyway, the production of goods slowed So b/c not
producing goods, they couldnt pay salaries, millions of people lost
their jobs. Because fewer people had money, fewer goods were
produced, resulting in even more job loss.
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Great Crash Investors Businesses and Workers Investors lose
millions. Businesses lose profits. Consumer spending drops. Workers
are laid off. Businesses cut investment and production. Some fail.
Banks Businesses and workers cannot repay bank loans. Savings
accounts are wiped out. Bank runs occur. Banks run out of money and
fail. World Payments Overall U.S. production plummets. U.S.
investors have little or no money to invest. U.S. investments in
Germany decline. German war payments to Allies fall off. Europeans
cannot afford American goods. Allies cannot pay debts to United
States. Great Crash Investors Investors lose millions. Businesses
lose profits. Great Crash Investors Businesses and Workers
Investors lose millions. Businesses lose profits. Consumer spending
drops. Workers are laid off. Businesses cut investment and
production Some fail. Great Crash Investors Businesses and Workers
Investors lose millions. Businesses lose profits. Consumer spending
drops. Workers are laid off. Businesses cut investment and
production Some fail. Banks Businesses and workers cannot repay
bank loans. Savings accounts are wiped out. Bank runs occur. Banks
run out of money and fail. World Payments Overall U.S. production
plummets. U.S. investors have little or no money to invest. U.S.
investments in Germany decline. German war payments to Allies fall
off. Europeans cannot afford American goods. Allies cannot pay
debts to United States. Effects of the Great Crash, 1929 Great
Crash Investors Businesses and Workers Investors lose millions.
Businesses lose profits. Consumer spending drops. Workers are laid
off. Businesses cut investment and production Some fail. Banks
Businesses and workers cannot repay bank loans. Savings accounts
are wiped out. Bank runs occur. Banks run out of money and fail.
World Payments Overall U.S. production plummets. U.S. investors
have little or no money to invest. U.S. investments in Germany
decline. German war payments to Allies fall off. Europeans cannot
afford American goods. Allies cannot pay debts to United
States.
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World Wide Because the international economy was dependent on
the United States for loans, Investments and a market place the
ripple effect of the Great Crash led to a worldwide economic
depression.
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Causes of Great Depression 1.Unstable economy where nearly all
the wealth was held in a few families and not spread among farmers
and workers. 2.Over speculation in the stock market and investors
borrowing heavily to cover their purchases. 3.Government regulation
cut interest rates to encourage speculation and then limited the
supply of money to discourage lending. 1.Once the problems with the
market were obvious, there was too little money in the economy to
recover from the crash.
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Social Effects of the Depression People at all levels of
society found themselves in trouble during the depression as they
lost their savings in bank failures, their jobs in company
closures, and their homes because they could no longer pay rent or
mortgages. Many of the homeless built shantytowns out of tar paper
shacks or other scrap material. They called these makeshift towns
Hoovervilles after President Hoover, who was blamed for not
alleviating the crisis.
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Farmers Had not seen prosperity during the 1920s and were
already losing their farms, was made even worse by an environmental
crisis. Years of drought and the disappearance of natural prairie
grasses led to dust storms that blew away good topsoil. A large
area of the Great Plains became known as the Dust Bowl. 60% of
farming families left their land and hundreds of thousands to leave
the area and migrate either to California or northern cities.
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Dust Storm
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Black Blizzard
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Physical and Psychological Toll Many people suffered from an
inadequate diet and lack of shelter. Some died because they could
not afford food and medical treatment. Men suffered because they
could not support their families. Many were ashamed for being out
of work, and some even abandoned their families. The hard times
increased discrimination against African Americans and other
minorities.
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Surviving the Great Depression Americans survived the Great
Depression by sticking together. This can be seen very clearly in
the penny auctions of the farmers. When a farmer was to lose his
land to the bank for failure to pay his mortgage, other farmers
would conspire to give the land back to its owner. They would bid
mere pennies on the land and the machines auctioned by the bank and
then give the land and machines back to the owner. The success of
these auctions led some states to pass laws to give farmers more
time to pay off debts.
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Other Americans survived the depression by leaving home and
riding the rails stealing rides on trains and wandering the country
looking for work and a place to start over. This solution was
particularly favored by adolescents. By the mid-1930s, over 250,000
teenagers were living on the road.
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Signs of Change Prohibition was repealed as a failed
experiment. Jacob Raskob began the building of the Empire State
Building, giving people in New York an opportunity to work. The
nations distressed condition was symbolized by the tragic
kidnapping and murder of the infant son of Charles and Ann Morrow
Lindbergh.
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As the memory of the 1920s faded away, the nations distressed
condition was symbolized by the tragic kidnapping and murder of the
infant son of Charles and Ann Morrow Lindbergh.
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The Election of 1932 After the stock market crash, President
Hoover insisted that the economy would recover if everyone had
enough confidence. It didnt. Hoover also refused to provide relief
for the millions of unemployed and homeless, insisting that this
was the job of private charities, not the government. He eventually
did take measures to help suffering Americans, but they were too
little.
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Hoovers Attempt To Help 1.To protect domestic industries, he
supported the Hawley-Smoot Tariff. 2.In 1932, he set up the
Reconstruction Finance Cooperation, which gave government credit to
large industries, railroads, insurance companies, and banks.
3.Congress passed the Home Loan Bank Act to help owners save their
homes. 4.The government also began to create jobs by building the
Hoover Dam.
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Despite these measures, Hoovers unpopularity continued to grow.
People saw him as cold and uncaring. In 1932, World War I veterans
called the Bonus Army marched on Washington to get early payment of
a pension bonus that had been promised them. Hoover refused and
told them to leave. When they did not leave, he asked General
Douglas MacArthur to make them leave. MacArthur decided to use
force and drove the marchers, former members of the American armed
forces, out of Washington with guns. The country was horrified, as
was Hoover himself, and Hoovers popularity plummeted even
more.
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The Democratic candidate for president in 1932 was Franklin
Delano Roosevelt (FDR), a distant relative of Theodore Roosevelt.
Like his relative, FDR had served as the assistant secretary of the
Navy and as governor of New York. While running for president, FDR
promised a New Deal for all Americans. Roosevelt was ready to
experiment with government roles to provide relief.
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FDRs wife, Eleanor, was an experienced social reformer. She
worked for public housing legislation, state government reform,
birth control, and better conditions for working women. When the
Roosevelts campaigned for the presidency, they brought their ideas
for political action with them.
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As governor of New York, he had worked boldly for relief,
making New York the first state to provide monetary assistance for
unemployment and to aid the poor during the Great Depression.
Roosevelt won in a landslide victory, and as he stepped into
office, he would bring sweeping change to the role of the federal
government in peoples lives and to the presidency itself.
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The Election of 1932 Franklin Roosevelt Herbert Hoover Believed
that government had a responsibility to help people in need. Called
for a reappraisal of values and more controls on big business.
Helped many Americans reassess the importance of making it on their
own without any help. Much of his support came from urban workers,
coal miners, and immigrants in need of federal relief. Roosevelt
won 57 percent of the popular vote and almost 89 percent of the
electoral vote. Believed that federal government should not try to
fix peoples problems. Argued that federal aid and government
policies to help the poor would alter the foundation of our
national life. He argued for voluntary aid to help the poor and
argued against giving the national government more power. Hoover
gave very few campaign speeches and was jeered by crowds.