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The Stock Market Crash

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					Chapter 15, Section 1   The Stock Market Crash
      • How did speculation, buying on credit, the
        unstable economy, and government policies
        lead to the Great Depression?
Chapter 15, Section 1   The Market Crashes
      • The market crash in October of 1929 happened very quickly.
      • In September, the Dow Jones Industrial Average, an average of
        stock prices of major industries, had reached an all time high of
        381.
      • On October 23 and 24, the Dow Jones Average quickly plummeted,
        which caused a panic.
      • On Black Tuesday, October 29, 1929, most people sold their stocks
        at a tremendous loss.
      • This collapse of the stock market is called the Great Crash. Overall
        losses totaled $30 billion.
      • The Great Crash was part of the nation’s business cycle, a span in
        which the economy grows, and then contracts.
Black Tuesday
• Write 3 new things you learned about the
  Crash
Chapter 15, Section 1



           Effects of the Great Crash, 1929
          Great
          Great
          Crash
          Crash               Investors
                             Investors                                                                   World Payments
                                                                                                         World Payments
                                              Businesses
                                              Businesses
                         Investors lose
                        Investors lose                                                                        Overall U.S.
                                                                                                             Overall U.S.
                         millions.
                        millions.             and Workers
                                              and Workers                 Banks
                                                                          Banks                               production
                                                                                                             production
                                                                                                              plummets.
                                                                                                             plummets.
                                                                            Businesses
                                                                           Businesses
                                               Consumer
                                              Consumer                      and workers
                                                                           and workers         Allies cannot
                                                                                              Allies cannot                   U.S.
                                                                                                                             U.S. investors
                         Businesses
                        Businesses             spending drops.
                                              spending drops.               cannot repay
                                                                           cannot repay        pay debts to
                                                                                              pay debts to                   investors or
                                                                                                                              have little
                         lose profits.
                        lose profits.                                       bank loans.
                                                                           bank loans.         United States.
                                                                                              United States.                  no money to
                                                                                                                             have little or
                                                                                                                              invest.
                                                                                                                             no money to
                                                    Businesses cut
                                                   Businesses cut     Savings
                                                                     Savings           Banks run
                                                                                      Banks run                              invest.
                                         Workers investment and
                                          Workers  investment and     accounts
                                                                     accounts          out of
                                                                                      out of
                                                    production.
                                          are laid production
                                         are laid production          are wiped
                                                                     are wiped         money Europeans
                                                                                      money       Europeans
                                          off.      Some fail.
                                                   Some fail.         out.
                                                                     out.              and fail. cannot afford
                                                                                      and fail. cannot afford                U.S.
                                                                                                                            U.S.
                                         off.                                                                                investments
                                                                                                                            investments
                                                                               Bank               American
                                                                                                 American                    in Germany
                                                                                                                            in Germany
                                                                              Bank                goods.
                                                                                                 goods.
                                                                               runs
                                                                              runs                                           decline.
                                                                                                                            decline.
                                                                               occur.
                                                                              occur.                          German war
                                                                                                             German war
                                                                                                              payments to
                                                                                                             payments to
                                                                                                              Allies fall off.
                                                                                                             Allies fall off.
Chapter 15, Section 1   The Great Depression
          • The economic contraction that began with the
            Great Crash triggered the most severe economic
            downturn in the nation’s history—the Great
            Depression.
          • The Great Depression lasted from 1929 until the
            United States entered World War II in 1941.
          • The stock market crash of 1929 did not cause the
            Great Depression. Rather, both the Great Crash and
            the Depression were the result of deep underlying
            problems with the country’s economy.
Business Cycle
• Locate where the Great Depression would be
  on the business cycle?
Chapter 15, Section 1



         Underlying Causes of the Depression
   An Unstable           The prosperous economy of the 1920s lacked a firm base.
   Economy               The nation’s wealth was unevenly distributed. Those who had the most
                         tended to save or invest rather than buy goods.
                         Industry produced more goods than most consumers wanted or could
                         afford.

   Overspeculation       Speculators bought stocks with borrowed money and then pledged those
                         stocks as collateral to buy more stocks.
                         The stock market boom was based on borrowed money.

   Government Policies   During the 1920s, the Federal Reserve System cut interest rates to assist
                         economic growth.
                         In 1929, it limited the money supply to discourage lending.
                         As a result, there was too little money in circulation to help the economy
                         after the Great Crash.
Great Depression Movie
        The Stock Market Crash—Assessment
Chapter 15, Section 1
         ________ was part of the nation’s business cycle.
              (A) The Great Crash
              (B) Overspeculation
              (C) Black Tuesday
              (D) An uneven distribution of wealth

         How did the Federal Reserve try to assist economic growth?
             (A) Raising interest rates
             (B) Limiting the money supply
             (C) Lowering interest rates
             (D) Helping investors accumulate more collateral
        The Stock Market Crash—Assessment
Chapter 15, Section 1


          ________ was part of the nation’s business cycle.
               (A) The Great Crash
               (B) Overspeculation
               (C) Black Tuesday
               (D) An uneven distribution of wealth

          How did the Federal Reserve try to assist economic growth?
              (A) Raising interest rates
              (B) Limiting the money supply
              (C) Lowering interest rates
              (D) Helping investors accumulate more collateral
Chapter 15, Section 2



             Social Effects of the Depression
      • What were the affects of the problems caused
        by the Great Depression?
African Americans
Chapter 15, Section 2         Poverty Spreads
      •    People of all levels of society faced hardships during the Great Depression.
      •    Unemployed laborers, unable to pay their rent, became homeless.
      •    Sometimes the homeless built shacks of tar paper or scrap material. These shanty
           town settlements came to be called Hoovervilles.
      •    Farm families suffered from low crop prices.
      •    As a result of a severe drought and farming practices that removed protective
           prairie grasses, dust storms ravaged the central and southern Great Plains region.
           This area, stripped of its natural soil, was reduced to dust and became known as
           the Dust Bowl.
      •    The combination of the terrible weather and low prices caused about 60 percent
           of Dust Bowl families to lose their farms.
             Dust Bowl Link
• Go to the following link and brows the
  pictures and skim the information about the
  Dust Bowl

• http://www.english.illinois.edu/maps/depress
  ion/dustbowl.htm
Chapter 15, Section 2   Poverty Strains Society
       Impact on Health       Some people starved and thousands went hungry.
                              Children suffered long-term effects from poor diet and inadequate
                              medical care.

       Stresses on Families   Living conditions declined as families crowded into small houses or
                              apartments.
                              Men felt like failures because they couldn’t provide for their families.
                              Working women were accused of taking jobs away from men.


       Discrimination         Competition for jobs produced a rise in hostilities against African
       Increases              Americans, Hispanics, and Asian Americans.
                              Lynchings increased.
                              Aid programs discriminated against African Americans.
                African Americans
Meanwhile, as people fled the economic devastation of the
South, jobs rapidly disappeared in the northern and
Midwestern cities. African American families were hit the
hardest. While white unemployment had hit an extraordinarily
high rate of 31.7 percent in 1931, it was well over 50 percent
for Black Americans. As the economy spiraled downward, the
jobs that black Americans had come North to obtain were
given to white workers or eliminated entirely. Furthermore,
discrimination in wages meant that black workers suffered
significantly in their attempts to provide for their families. Even
when families were able to hold onto employment, the low
level of income meant poverty for many.
                          Social Effects of the
Chapter 15, Section 2

                        Depression—Assessment
        What factors contributed to disaster for farming families living in the Dust Bowl?
            (A) Drought
            (B) Farmers plowing under prairie grasses
            (C) Decreased prices for agricultural goods
            (D) All of the above

        The shanty towns made up of temporary shacks were called:
             (A) Roosevilles
             (B) Hoovervilles
             (C) Greenspans
             (D) Simpson towns
                          Social Effects of the
Chapter 15, Section 2

                        Depression—Assessment
          What factors contributed to disaster for farming families living in the Dust Bowl?
              (A) Drought
              (B) Farmers plowing under prairie grasses
              (C) Decreased prices for agricultural goods
              (D) All of the above

          The shanty towns made up of temporary shacks were called:
               (A) Roosevilles
               (B) Hoovervilles
               (C) Greenspans
               (D) Simpson towns
              Surviving the Great Depression
Chapter 15, Section 3



          • In what ways did Americans pull together
            to survive the Great Depression?
          • What signs of change did Americans begin
            to notice in the early 1930s?
Chapter 15, Section 3   Americans Pull Together
      • Throughout the country, people pulled together to help one another.
      • Neighbors in difficult circumstances helped those they saw as worse off
        than themselves.
      • When banks foreclosed on a farm, neighboring farmers would bid pennies
        on land and machines, which they would then return to the original
        owners. These sales became known as penny auctions.
      • Some Americans called for radical political and economic change. They
        believed that a fairer distribution of wealth would help to end the hard
        times.
      • Jokes and humor helped many people to fight everyday despair.
Chapter 15, Section 3          Signs of Change
   Prohibition Is Repealed     In February 1933, Congress passed the Twenty-first Amendment,
                               which repealed the eighteenth amendment prohibiting the sale of
                               alcohol.

   The Empire State Building   2,500 to 4,000 people worked on the construction.
                               The cost of construction was about $41 million.
                               At that time, it was the world’s tallest building and had 102 stories and
                               67 elevators.
   The End of an Era           Many things that symbolized the 1920s faded away.

                                    - Organized crime gangster Al Capone was sent to prison.
                                    - Calvin Coolidge died.
                                    - Babe Ruth retired.
The building's opening coincided with the Great
Depression in the United States, and as a result
much of its office space went without being
rented. The building's vacancy was exacerbated by
its poor location on 34th Street, which placed it
relatively far from public transportation, as Grand
Central Terminal, the Port Authority Bus Terminal,
and Penn Station are all several blocks away.
Other more successful skyscrapers, such as the
Chrysler Building, do not have this problem. In its
first year of operation, the observation deck took
in approximately 2 million dollars, as much money
as its owners made in rent that year. The lack of
renters led New Yorkers to deride the building as
the "Empty State Building". The building would
not become profitable until 1950. The famous
1951 sale of The Empire State Building to Roger L.
Stevens and his business partners was brokered
by the prominent upper Manhattan real-estate
firm Charles F. Noyes & Company for a record $51
million. At the time, that was the highest price
ever paid for a single structure in real-estate
history.
               Surviving the Great Depression—
Chapter 15, Section 3

                          Assessment
          What was a penny auction?
              (A) An event at which stocks once highly valued were auctioned off for a penny.
              (B) An event at which laborers eager for work auctioned off their labor for pennies.
              (C) An event at which neighbors, in an effort to help each other, auctioned their spare
                    rooms for a penny.
              (D) An event at which neighboring farmers bid pennies on land and machines, which the
                    buyers then returned to the original owners.

          Which of the following did not symbolize an end to the prosperity of the 1920s?
              (A) Al Capone went to jail.
              (B) Babe Ruth retired.
              (C) Riots and political upheaval erupted in the nation’s cities.
              (D) Calvin Coolidge died.
               Surviving the Great Depression—
Chapter 15, Section 3

                          Assessment
          What was a penny auction?
              (A) An event at which stocks once highly valued were auctioned off for a penny.
              (B) An event at which laborers eager for work auctioned off their labor for pennies.
              (C) An event at which neighbors, in an effort to help each other, auctioned their spare
                    rooms for a penny.
              (D) An event at which neighboring farmers bid pennies on land and machines, which the
                    buyers then returned to the original owners.

          Which of the following did not symbolize an end to the prosperity of the 1920s?
              (A) Al Capone went to jail.
              (B) Babe Ruth retired.
              (C) Riots and political upheaval erupted in the nation’s cities.
              (D) Calvin Coolidge died.
Chapter 15, Section 4   The Election of 1932
      • How did President Hoover respond to the
        Great Depression?
      • What did Roosevelt mean when he offered
        Americans a “New Deal”?
      • Why was the election of 1932 a significant
        turning point for American politics?
Chapter 15, Section 4   Hoover’s Limited Strategy
      •    Hoover convinced business leaders to help maintain public confidence in the economy.
      •    To protect domestic industries, Congress passed the Hawley-Smoot tariff, the highest import
           tax in history. European countries also raised their tariffs, and international trade suffered a
           slowdown.
      •    Hoover set up the Reconstruction Finance Corporation (RFC), which gave government credit
           to banks, industries, railroads, and insurance companies. The theory was that prosperity at
           the top would help the economy as a whole. Many Americans saw it as helping bankers and
           big businessmen, while ordinary people went hungry.
      •    Hoover did not support federal public assistance because he believed it would destroy
           people’s self-respect and create a large bureaucracy.
      •    Finally, public opinion soured for Hoover when he called the United States Army to disband a
           protest of 20,000 unemployed World War I veterans called the Bonus Army.
Welcome To Hooverville
Chapter 15, Section 4   A “New Deal” for America
      • FDR promised a New Deal for the American people.
      • He was ready to experiment with government roles in
        an effort to end the Depression.
      • As governor of New York, Roosevelt had set up an
        unemployment commission and a relief agency.
      • FDR’s 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.
New Deal
The Second New Deal
Chapter 15, Section 4     The Election of 1932
         Franklin Roosevelt                            Herbert Hoover
         • Believed that government had a              • Believed that federal government
             responsibility to help people in need.       should not try to fix people’s problems.
         • Called for a reappraisal of values and      • Argued that federal aid and
             more controls on big business.               government policies to help the poor
         • Helped many Americans reassess the             would alter the foundation of our
             importance of “making it on their own”       national life.
             without any help.                         • He argued for voluntary aid to help the
         • Much of his support came from urban            poor and argued against giving the
             workers, coal miners, and immigrants in      national government more power.
             need of federal relief.                   • Hoover gave very few campaign
         • Roosevelt won 57 percent of the                speeches and was jeered by crowds.
             popular vote and almost 89 percent of
             the electoral vote.
        The Election of 1932—Assessment
Chapter 15, Section 4


          What was one way President Hoover wanted to battle the Depression?
              (A) Federal relief programs
              (B) U.S. expansion into foreign markets
              (C) Stock market investment
              (D) Voluntary aid

          Roosevelt won public support from which groups?
               (A) Urban workers and coal miners
               (B) Big business executives
               (C) Supporters of international trade
               (D) Journalists and newspaper publishers
        The Election of 1932—Assessment
Chapter 15, Section 4


          What was one way President Hoover wanted to battle the Depression?
              (A) Federal relief programs
              (B) U.S. expansion into foreign markets
              (C) Stock market investment
              (D) Voluntary aid

          Roosevelt won public support from which groups?
               (A) Urban workers and coal miners
               (B) Big business executives
               (C) Supporters of international trade
               (D) Journalists and newspaper publishers
                    QUIZ
• As early as 1926, economic trouble started
  surfacing in businesses and farms?
• The collapse of the Stock Market was the only
  cause of the Great Depression.
• By 1933, half of America’s banks had failed
  and one quarter of Americans were jobless.
• Communities of cardboard shacks were called
  “Hoovervilles” after president Herbert Hoover.
                    QUIZ
• President Hoover’s advisors believed the
  economy would recover on it’s own.
• President Roosevelt’s first 100 days in office
  were spent making proposals to provide relief,
  recovery, and reform to Americans.
• President Roosevelt's “fireside chats” helped
  to build courage during the great Depression.
QUIZ

				
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