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Crash and Depression

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					Crash and
the Great
Depression
 Chapter 14
  1929-1941
Economics of the 20’s
Chapter 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
    slow
     Uneven   distribution of
      wealth
     Bull market = up 300
     4mill.Am. Owned stocks
     Buying on credit
       Fueled by Ads
       Installment plans
   Over production
     Automobile sales slumped after 1925
     Housing construction fell before 1929

 Over speculation in the market – buying
  on margin
 Growing
  unemployment
   Farmers in trouble
     Borrowed  to increase production during
      WWI- low prices after war= Foreclosures
     Coolidge 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
      dumped
     Millions of shares had
      no buyers
   By November 13 DOW
    down to 198.7
     $30billion 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 jail
     Bonnie 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 inspire
Chapter 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
  spending
     John   Maynard Keynes (economist)
 Pulling together
 Turning to communism – 100,000
  moving to Russia
 Depression Humor
     Hoover blankets
     Hoover flags
   Bonus Army – 20,000 jobless WWI Vets
     Pension   bonus payments promised for
     1945
Hoover Sends
in the military
A   “New Deal” for America
         Delano Roosevelt
 Franklin
 Wins Democratic nomination
      Harvard  – NY Senator
       and past Governor
      Wealthy family

      Polio victim in 1920

      Nephew of Teddy

				
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posted:11/11/2011
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