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									                   Chapter 15, Section 1: The Stock Market Crash

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. People rushed to get their money out of the stock market.
• On Black Tuesday, October 29, 1929, 16.4 million people sold their stocks at a
  tremendous loss.
• This collapse of the stock market is called the Great Crash. Overall losses totaled $30

Causes and Effects of the Great Crash
(See chart)
Overspeculation - Speculators bought stocks with borrowed money and then pledged
those stocks as collateral to buy more stocks. Collateral is an item of value that a
borrower agrees to forfeit to the lender if the borrower cannot repay the loan. The stock
market boom was based on borrowed money instead of real value.
Industry produced more goods than most consumers wanted or could afford.
Buying on margin – Paying only a fraction of the stock’s value and borrowing the rest
of the money at a high interest rate.
An Unstable Economy - The prosperous economy of the 1920s lacked a firm base. The
nation’s wealth was unevenly distributed. Those who had the most tended to save or
invest rather than buy goods.
•Thousands of banks closed their doors when they could not return their depositors’
money. In just a few years, 5,500 banks failed.
•Business could now not borrow money to use to produce more goods. Businesses lacked
any incentive to spend money producing goods because few people had money to buy
•As businesses cut back on production, they laid off workers and unemployment grew.
•Consumers spent less and less money. The overall output of goods in the economy
•By the 1930s, international banking, manufacturing and trade had made nations around
the world interdependent. When the world’s leading economy fell, the global economic
system began to crumble or contract in much the same way the U.S. economy had.

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.
• When the Depression began, Hoover was President and in 1932 FDR was elected.
               Chapter 15, Section 2: Social Effects of the Depression

Poverty Spreads
•People of all levels of society faced hardships during the Great Depression.
•Unemployed laborers, unable to pay their rent, became homeless. In NYC in 1931, there
were about 15,000 homeless people.
•Sometimes the homeless built shacks of tar paper or scrap material. These shanty town
settlements came to be called Hoovervilles. Lived in orange crates, piano boxes, rusted-
out car bodies, etc. Many blamed the President for not resolving the crisis.
•As a result of a severe drought and farming practices that removed protective prairie
grasses, dust storms destroyed the central and southern Great Plains region between 1931
and 1940. 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. Many migrated to California
•Rain finally came and WWII drove farm prices up.
•Could the Dust Bowl happen again? Yes, there are dust bowl conditions in Lamar,
Colorado and in China.

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. Many were homeless. Men felt like failures because they couldn’t
provide for their families. Working women were accused of taking jobs away from men.
Discrimination increases - Competition for jobs produced a rise in hostilities against
African Americans, Hispanics, and Asian Americans. Thousands of Asians and
Hispanics were deported. Lynchings increased. Aid programs discriminated against
African Americans.
                Chapter 15, Section 3: Surviving the Great Depression

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, the farm was sold at an auction and neighbors would
agree to keep the bids low. Neighbors would bid pennies on land and machines, which
they would then return to the original owners. These sales became known as penny
•Some Americans called for radical political and economic change. They believed that a
fairer distribution of wealth would help to end the hard times. Communist Party
membership increased.
•Jokes and humor helped many people to fight everyday despair. ―Hoover blankets‖ = old
newspapers, ―Hoover flags‖ = pockets inside out.

Signs of Change
Prohibition is Repealed - In February 1933, Congress passed the 21st Amendment,
which repealed the 18th Amendment prohibiting the sale of alcohol. End of gangsters
who profited from bootlegging.
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. $1 to go to the top – for ordinary citizens.
The End of An Era - Many things that symbolized the 1920s faded away.
        -Organized crime gangster Al Capone was sent to prison – tax evasion.
        -Calvin Coolidge died.
        -Babe Ruth retired.
                     Chapter 15, Section 4: The Election of 1932

Hoover’s Limited Strategy
•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. He thought state and local
governments should handle relief.
•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 in
Washington D.C. They wanted early payment of a pension bonus that had been promised.
They stayed for several weeks, sleeping in tents and cardboard boxes. Force was used
against the Bonus Army and veterans faced their own government’s tanks, guns, and tear
gas. Many were injured (50) and one veteran was killed.

A “New Deal” for America
•FDR promised a New Deal for the American people – Governor of New York at the
•He was ready to experiment with government roles in an effort to end the Depression.
•He got polio when he was 39 years old.

The Election of 1932
Herbert Hoover
•Believed that federal government should not try to fix people’s problems.
•He argued for voluntary aid to help the poor and argued against giving the national
government more power.
•Many saw him as too passive.
Franklin Roosevelt
•Believed that government had a responsibility to help people in need.
•Supported broadening the role of government.
•Favored increased government spending and government projects to end the Depression.
•Roosevelt won 57 percent of the popular vote and almost 89 percent of the electoral vote.
*Fascinating Facts p. 175-181
*Political Cartoon #47

            Chapter 15, Section 1: The Stock Market Crash
Take the perspective of a bank customer who wants to withdraw savings and is told by
the teller that there is no money. What might be the cause of such a situation?
What are some of your impressions of the Great Depression?

   I.          The Market Crashes
            a. Dow Jones Industrial Average
            b. Black Tuesday
            c. Great Crash

   II.         Causes and Effects of the Great Crash (Section Reading Support
               Transparency System 22.1)

   III.        The Great Depression
            a. 1929 – 1941 (WWII)
            b. Hoover (1928 – 1932) to FDR

Color Transparencies F7

         Chapter 15, Section 2: Social Effects of the Depression
   I.          Poverty Spreads
            a. Hoovervilles

Picture of Hooverville

            b. Dust Bowl – central and southern Great Plains region
                  i. Causes (see graphic organizer)

Color Transparencies A35
Dust storm photo analysis and readings
Visual Learning, p. 61 – Hard Times for Farmers

   II.         Poverty Strains Society
            a. Impact on Health
            b. Stresses on Families
            c. Discrimination Increases

        Chapter 15, Section 3: Surviving the Great Depression
The Great Depression brought out courage, kindness, charity, and humor in many
Americans. How do crises bring out these characteristics?
   I.      Americans Pull Together
           a. Penny Auctions
           b. Jokes and Humor

Some favorite pastimes of the Great Depression were going to the movies and playing
board games like Monopoly. How do such diversions help people cope with their

   II.     Signs of Change
           a. Prohibition is Repealed
                   i. 21st Amendment repealed 18th Amendment
           b. Empire State Building

(Picture of Empire State Building)

           c. The End of an Era
                  i. Al Capone
                 ii. Babe Ruth

             Chapter 15, Section 4: The Election of 1932
   I.         Hoover’s Limited Strategy

(Color Transparencies B12 – Blame it on Hoover)

           a. Reconstruction Finance Corporation (RFC)
           b. Bonus Army

(Photo Analysis of Bonus Army Marchers)
Visual Learning, p. 72 – Veterans March on Washington

   II.        A ―New Deal‖ for America
           a. FDR, Governor of New York

What did Roosevelt mean when he offered Americans a ―new deal‖? Why did the 1932
election signal a shift in the relationship between the people and the government?

   III.       The Election of 1932
           a. Herbert Hoover (Republican)
           b. Franklin D. Roosevelt (Democrat)

(See graphic organizer)
Section Reading Support Transparency System 22.4

Learning with Documents, p. 87 – FDR, First Inaugural Address

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