1. Topic: The Stock Market Crash
AIM: Why did the Great Crash produce a ripple effect throughout the nation’s economy?

2. The Market Crashes
Before the panic in October, most people saw no reason to worry
Dow Jones Industrial Average  average of stock prices of major industries
Rising stock prices dominated the news
Prices for many stocks soared far above their real value in terms of company’s earnings and assets

3. Causes of the Great Depression
I. Stock Market Crash
On Tuesday, October 29, 1929, stock prices plummeted.
This became known as Black Tuesday.

4. Black Thursday After peak in September, stock prices slowly fell
Some brokers began calling in loans, but others continued to lend even more
Wednesday, October 23  Dow Jones average dropped 21 points in an hour
Thursday, October 24  worried investors began to sell and stock prices fell
Business and political leaders told people not to worry

5. Black Tuesday
Investors all over the country races to get their money out of the stock market
Black Tuesday  October 29, 1929, the day on which the Great Crash of the stock market began
Great Crash  the collapse of the American stock market in 1929
Overall losses totaled $30 billion

9. Crowd gathering on Wall Street after the 1929 crash

11. Economic Crisis
Great Depression the most severe economic downturn in the nation’s history, which lasted from 1929 to 1941

12. Farms and factories overproduced beyond the demand.
II. Overproduction / Reduction in Purchasing
Farms and factories overproduced beyond the demand.
Businesses cut
production
Demand for
goods fell.
Workers suffered
from wage cuts
and lay offs.
People had
little or no
money to spend.

13. III . Bank Failures
When the stock market crashed, people could not repay their loans to the bank.
Therefore, banks couldn’t give depositors their money and banks closed.
Many people lost their life savings.

14. Additional Causes Leading to the Crash
Uneven prosperity-Wealth was controlled by a small percentage of the population.
Personal debt- Installment Buying
Playing the stock market
Speculation
Buying on Margin
Poor conditions of farmers and workers

15. The Ripple Effect of the Stock Market
Initially the effects of the Crash were felt only by those who were heavily invested in the market
Within a short time, the effects of the Great Crash began to ripple through the nation’s economy

16. How the Effects of the Crash Spread to All Americans
Risky Loans Hurt Banks
Banks loaned huge sums of money to many high-risk businesses
Consumer Borrowing
When banks called in loans, customers did not have cash to pay them

17. Bank Runs
Fearful that banks would run out of money, people rushed to make withdrawals from their accounts
To pay back deposits, banks had to call in loans from borrowers
Many could not repay loans
Banks could usually not get money fast enough to pay all depositors money they demanded

18. Bank Run

19. Bank Failures Savings Wiped Out Cuts in Production
Combination of unpaid loans and bank runs meant that many banks failed
Savings Wiped Out
Bank failures wiped out what little savings people had
Cuts in Production
Businesses now could not borrow money to use to produce more goods
Few people had money to buy goods

20. Who felt the effects of the Great Crash?
Rise in Unemployment
As businesses cut back on production, laid off workers
Unemployment grew
Further Cuts in Production
As unemployment grew and income shrank, consumers spent less and less money
Who felt the effects of the Great Crash?

21. Line outside state employment office

22. Great Depression: man lying down on pier, NYC docks, 1935

23. Impact on Workers and Farmers
Factories throughout the country began to close
Workers lost jobs
Pay cuts
Restaurants and other small businesses closed because customers could no longer afford to go to them

24. Impact on the World
International banking, manufacturing, and trade had made the nations around the world become interdependent.
When world’s leading economy fell, the global economic system began to crumble

25. Great Depression Statistics
12 million people out of work
12,000 people being made unemployed every day
20,000 companies had gone bankrupt
1616 banks had gone bankrupt
1 farmer in 20 evicted
23,000 people committed suicide in one year - the highest

26. Hoover’s Initial Reaction
Capitalism is made up of a series of ups and downs.
“Prosperity is just around the corner”
People need to pull themselves out of this trouble. “Rugged Individualism”.
Government should play only a small role if any to help them. (Charities and Individuals volunteering help)

27. Hoover Takes Action
At first, President Hoover was against offering direct government relief.
Instead, he asked private charities, such as the YMCA, to help.

28. Poverty Spreads People lost savings due to bank closings
Lost jobs and cannot pay rents
Evicted from homes
New Yorkers queue up in a bread line near the intersection of Sixth Avenue and 42nd Street in New York City in 1932 during the depths of the Great Depression.

29. Dorothea Lange's Migrant Mother depicts destitute pea pickers in California, centering on Florence Owens Thompson, age 32, a mother of seven children, in Nipomo, California, March 1936

31. ‘Hoovervilles’
Hardest hit were those at the bottom of the economic ladder
Hoovervilles  term used to describe a makeshift homeless shelter during the early years of the Great Depression
Mocking the president, whom people blamed for not resolving the crisis

32. Hooverville

34. NYC, Central Park

35. Unemployed workers on Christmas Eve, NYC.

37. "Hoover wagons", cars pulled by horses, were used by farmers too impoverished to purchase gasoline

38. Farm Distress
Farm families suffered as low crop prices cut their income
Lost farms to banks when they could not repay debts

39. The Dust Bowl (1931 – 1939)
Dust Bowl  term used to describe the central and southern Great Plains in the 1930s when the region sustained a period of drought and dust storms
“Black Blizzards”
Drought and farming practices contributed to the dust bowl
Drought and winds persisted for more than seven years

40. Causes of the Dust Bowl
Overgrazing by cattle and plowing destroyed grasses.
Drought of the 1930s.
High winds

41. Black Blizzards

48. Results of the Dust Bowl
Migrant workers
People who moved from one region to another in search of work.
Packed belongings in cars and headed West.
Locals feared newcomers would take jobs.

50. Food Lines in NYC

51. Young boys waiting for soup at a mission

53. Hoover eventually set up public works programs, where the government hired people to construct schools, dams and highways. Ex.) Hoover Dam

54. The Hoover Dam

56. Des Moines Register, April 5, 1930
Hoover also approved the Reconstruction Finance Corporation (RFC), which loaned money to railroads, banks, and insurance companies.
Des Moines Register, April 5, 1930

57. The Bonus Army
World War I veterans were due to be paid a bonus in 1945.
In 1932, over 20,000 jobless veterans protested in Washington, D.C. demanding immediate payment.

60. Handpainted sign on Bonus Army truck states: "We Done a Good Job in France, Now You Do a Good Job in America"

61. The United States Army burned this and similar camps to the ground after routing the many thousands of protestors that were camped out in the national capital with tanks, tear gas, and troops of armed soldiers. (July 28, 1932)

62. In clashes with police, four veterans were killed.
Hoover ordered General Douglas MacArthur to clear out the veterans using cavalry, tanks, tear gas and machine guns.
* The brutal treatment of the Bonus Army lowered Hoover’s popularity even further. The nation was poised for a new leader to lead them out of the depression.