1. The Great Depression

2. How much to blame is Hoover?
“Hoover failed as president not because he sat idly by and waited for market forces to right the economy, as many believed - mistakenly, at the time - but because he aggressively pursued policies that ran in a direction counter to what the nation and its economy needed.” - Steven Felzenberg

3. Hoover’s Policies
Hoover falsely believes that high wages were the cause rather than the result of American prosperity. - Presses Corporate execs not to cut employees and wages. (Associationalism)
Tied to “Real Bills” financial policy of loaning. short term bank loans to be repaid by production of goods and services hence no expansion of money supply - Under this theory central banks restrict credit during downturns and expand during boom times.
After all his public works programs create a large deficit he pushes through the largest tax increase in U.S. History!! - Keynes would not approve.

4. Hoover’s Stubborness
Famous economists like Yale’s Irving Fisher are begging Hoover to reinflate and expand the money supply and make the Fed be the lender of last resort but to no avail.
1,028 economists sign an open letter in the New York Times warning Hoover not to sign the Hawley-Smoot Tariff. Hoover signs the bill anyhow

5. Attempts to Help Farmers
Agricultural Marketing Act created bureaucracy to help farmers with prices
Required voluntary cooperation to reduce crops, give gvt no power to limit production
Farm Board has budget of $500 million to loan to cooperatives, buy up surplus goods but lacks money to deal with the crisis
Hawley-Smoot Tariff increases rates on 75 farm products from 26% to 50%
Also raises rates on 925 manufactured goods

6. Hawley - Smoot Tariff (1930)
This was done in part to help farmers by increasing the tariff on agricultural imports.
The farmers overproduction was due in large part to Hoover’s policies during WWI.
The results of the tariff bear out economists’ warnings.
U.S. imports decline from $7.034 billion in 1929 to $2.402 billion by 1933
U.S. exports fell from $5.886 billion in 1929 to $2.044 MILLION in 1932!!

7. Hoover’s Efforts: Too little, too late
Home Loan Bank provides money to banks, insurance companies to give out low-interest mortgages
Glass-Steagall Banking Act allows paper currency to support the Federal Reserve System
Allows major banks to pay gold to European creditors
Reconstruction Finance Corporation created to provide federal loans to banks, railroads, other businesses
Of $300 million for local relief, only gives out $30 million
Only uses 20% of $1.5 billion for public works
Helps large corporations avoid collapse, gives no direct aid to small businesses

8. The Bonus Army June 1932, 20,000 WWI veterans camp out in DC
Want early payment of pension bonuses
When Congress rejects the Bonus Bill, 2,000 veterans refuse to leave
Late July, Hoover orders the Army to remove the remaining veterans
Troops drive veterans out with tanks, tear gas
Three killed, including a baby

11. Hoover’s Place in History?
Hoover will do a first round of public works programs that will be modeled by FDR. It won’t make a change but it was a model.
Hoover would discretely funnel money to state and local governments but did not want people to know it was coming from government so they would not feel dependent on the federal government and stifle individual initiative.
Hoover’s RFC is the new entity that will make the government the lender of last resort but most of its policies don’t kick in until FDR’s term begins.
Hoover secretly took food and blankets to the Bonus Army protestors the night before MacArthur took harsh actions.

12. What is a Stock Market?
System that allows the trading of company stocks, other securities, and derivatives
Participants range from individuals to large hedge fund traders, who can be based anywhere
Stock orders usually end up with a professional at a stock exchange, who executes the order
Some exchanges are physical locations where transactions are carried out on a trading floor

13. New York Stock Exchange
Largest stock exchange by dollar value
Holds $14.2 trillion in market value of 2,317 companies
Began in 1792, when the 24 stock brokers outside of 68 Wall Street created a stock brokerage house
NASDAQ (National Association of Securities Dealers Automated Quotations), has a value of $4.45 trillion market value listed with 2,872 companies (began 1971)
Tokyo Exchange has $3.8 trillion, founded 1878
London Stock Exchange has 3.2 trillion, founded 1801
Euronext Exchange has $2.93 trillion, founded 2000
Bombay Stock Exchange became biggest stock exchange with a company listing of 5,034 in August 2007
Value of shares is $1.63 trillion

14. Dow Jones Industrial Average
Began in 1896 by Wall Street Journal editor and Dow Jones and Company co-founder Charles Dow
The value of the Dow is not the actual average of the prices of its component stocks, but the sum of the component prices divided by a divisor, which changes whenever one of the component stocks has a stock split or stock dividend, so as to generate a consistent value for the index
Today, it consists of the 30 largest and most widely held public companies in the United States
The "industrial" portion of the name is historical—most of the 30 companies have little to do with industry
Only GE remains of the original 12 companies

15. Original Stocks in the DJIA
• American Cotton Oil Company, ancestor of Best Foods
American Sugar Company
American Tobacco Company, broken by anti-trust action
Chicago Gas Company, now part of Integrys Energy
Distilling and Cattle Feeding Company
Laclede Gas Light Company
National Lead Company
North American Company, an Edison electric company
TN Coal, Iron & Railroad, bought by US Steel in 1907
US Leather Company, dissolved 1952
US Rubber Company, now part of BF Goodrich

16. Companies on the DJIA Today
3M, Alcoa, American Express, AT&T, Bank of America, Boeing, Caterpillar, Chevron, Cisco, Coca Cola
DuPont, Exxon Mobil, General Electric, Hewlett-Packard, Home Depot, Intel, IBM, Johnson & Johnson, JP Morgan and Chase, Kraft Foods, McDonalds, Merck, Microsoft, Pfizer, Procter and Gamble, Travelers, United Technologies, Verizon, Wal-Mart, Walt Disney
On June 8, 2009, GM and Citigroup were replaced by Travelers Companies and Cisco Systems.
On September 22, 2008, Kraft Foods replaced AIG in the index

17. Growth of the Dow Jones
Index began at 40.94, computed as direct average
Closed at on July 30, 1914 for four months
When it reopened, it grew up to 381 by Oct. 1929
Nov. 14, closed above 1,000 for first time
1980s and 90s saw a rapid increase in the average
Oct. 19, largest one-day percentage drop since 1914, when the average fell 22.61%
Oct. 21, Largest one-day gain since the 1930s, 10.15%, bringing the Dow above 2,000

18. Growth and Decline Nov. 1995 - Closed above 5,000 for the first time
March Closed above the 10,000 mark
Sept. 17, 2001, third largest point drop ever, drops 684 points, 7.1%
By the end of that week, DJIA fell 1, points
July 19, Closes above the 14,000 level
Sept. 15, with collapse of Lehman Brothers, Dow drops 500 points in one day
March low of 6,547, lowest since April 1997

19. Dow Jones from

20. Dow Jones Growth from

21. Dow Jones from

22. Start of the Stock Market Crash
Sept 3, DJIA peaks at 381, value increases five-fold in five years
From March 1928-Sept. 1929, average price of stocks increased 40%, stocks on Dow double in value
Trading goes from 2-3 million shares a day to 5-10 million shares a day
Market fell after Sept. 3, losing 17% of its value by early October
Prices recovered more than half of the losses over next week, turn down immediately afterwards
Oct stock prices fall rapidly
Oct brief recovery made, then steep decline

23. The Crash Continues
“Black Thursday” - Thursday Oct DJIA lost 20% of its value
Oct JP Morgan attempts to save the market
With bankers' money, Morgan placed a bid to purchase a large block of shares in U.S. Steel at well above the current market price
Placed similar bids on other industrial stocks, and succeeded in halting the slide that day
A record number of 12.9 million shares traded
Monday Oct Dow closes down 13.5%

24. Immediate Impact of the Crash
10/29 - Members of Rockefeller family and other financial giants bought large quantities of stocks to demonstrate confidence in the market
DJIA lost another 12% that day, 16 million shares are traded
Ticker did not stop running until 7:45 that evening
By the market’s close on 10/29, Dow had lost 39.6% since its market value since Sept. 3
October losses are over $16 billion

25. The Continuing Fall of the Dow Jones
Bottom seen on Nov. 13, with a close of 198.6
Dow reaches a secondary peak of 294 in April 1930
Market took a steady slide in April 1931
Ended July 8, 1932 when Dow closed at 41.22, down 89% decline from the peak in Sept. 1929
As late as April 1942, stock prices at 75% below the1929 peak and would not be at that level until November 1954—a quarter of a century later

28. The yearly chart shows the eventual market low in 1932.

29. Overall Causes of the Depression
Economy too tied to construction and automobiles
Construction spending goes from $11 billion in 1926 to $9 billion in 1929
Auto sales decrease by 1/3 in 1919
Purchasing power not equally divided
Half of American families at or below poverty line
Income of wealthiest 1% increases by 63% from
Income of 93% of Americans increases by 4% from
Factories and farmers produce more goods than needed
Credit and banking structures flawed
No regulation over interest rates, lending policies, banks invest recklessly in stock market

30. International Causes of the Depression
European demand for US goods declines
Many nations begin to default on WWI loans
US banks begin lending money to European nations to help them re-pay loans
Only leads to more debt
Increase in US tariffs leads European nations to increase their own tariff walls

31. Progress of the Depression
Stock market crash triggers economic decline
9,000 banks close/bankrupted in
Depositors lose at least $2.5 billion
Money supply declines by 1/3 from
Federal Reserve responds by raising interest rates in 1931
GNP falls from $104 billion in 1929 to $76 billion in 1932
Business investment falls from $16 billion in 1929 to 1/3 of a billion in 1933
Wholesale price index falls 32% by 1933
Farm income falls from $12 billion to $5 billion

32. Unemployment during the Depression
1929, 1.5 million Americans unemployed
million unemployed
Cities particularly hit - Cleveland has 50%, Toledo, 80%
Farm income decreases 60% from
1/3 of farmers lose land
Unemployment for black males higher than national average

33. Impact for African Americans
By 1932, half of all blacks in South unemployed
Unemployment in NYC up to 50% for black men
Supreme Court overturns conviction of Scottsboro boys
NAACP supports formation of the Congress of Industrial Organizations
Over 500,000 blacks join labor movement

34. Hispanics and Women
Hispanic population increases dramatically in 20th century, due to no immigration restrictions, WWI
Over 500,000 return to Mexico during 1930s
Excluded from most relief programs, have few educational or social facilities
Strong belief that no woman whose husband was employed should accept a job
From , illegal for more than one family member to have a federal civil service job
22 states consider prohibiting women from working in paid jobs
By end of Depression, 25% more women working than at start of Depression, mostly in non-professional jobs
24% of white women, 38% of black women

35. Social Issues in the Great Depression
Divorce rate declines due to cost of divorces
Marriage and birth rates both decline
Some view Depression as the fault of individuals
Others see the Depression as a societal issue, not the fault of individuals, want a collective response
Farm Security Administration documents plight of rural Americans
Many writers focus on exposing social injustice
Agee describes lives of Southern families
Steinbeck’s The Grapes of Wrath, Cannery Row
Other cultural products provide light entertainment
Movies are mostly lavish musicals, comedies

36. 1932 Presidential Election