America: Pathways to the Present Chapter 8 Crash and Depression (1928–1932)

America: Pathways to the Present Chapter 8: Crash and Depression (1928–1932) Section 1: The Stock Market Crash Section 2: Social Effects of the Depression Section 3: Surviving the Great Depression

QW #4 - Dad Loses His Job The Great Depression, which lasted from 1929 to 1939, devastated America. Up to 30% of working Americans lost their jobs; members of the middle-class became homeless; children went hungry. Imagine you are a child in a middle-class family. Many of your friends’ fathers have lost their jobs, and you have just found out that you father has lost his job. Write a brief journal entry describing your fears about the future.

The Stock Market Crash What events led to the stock market’s Great Crash in 1929? Why did the Great Crash produce a ripple effect throughout the nation’s economy? What were the main causes of the Great Depression?

Section 1 Vocab Dow Jones Industrial Average Black Tuesday Great Crash Business cycle Great Depression Herbert Hoover Speculation Hawley-Smoot Tariff

1987 Stock Market Crash

Herbert Hoover – Elected president 1928 Optimism and Hoover Herbert Hoover – Elected president 1928 The continuation of the Republican Government Accomplished reformer and politician

Problems with Agriculture Problems Plague the Farms Too many crops and not enough places to sell (surplus)

The Stock 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.

Effects of the Great Crash, 1929 Investors Businesses and Workers Investors lose millions. Businesses lose profits. Consumer spending drops. Workers are laid off. Businesses cut investment and production Some fail. Banks Businesses and workers cannot repay bank loans. Savings accounts are wiped out. Bank runs occur. Banks run out of money and fail. World Payments Overall U.S. production plummets. U.S. investors have little or no money to invest. U.S. investments in Germany decline. German war payments to Allies fall off. Europeans cannot afford American goods. Allies cannot pay debts to United States. Great Crash Investors Businesses and Workers Investors lose millions. Businesses lose profits. Consumer spending drops. Workers are laid off. Businesses cut investment and production Some fail. Banks Businesses and workers cannot repay bank loans. Savings accounts are wiped out. Bank runs occur. Banks run out of money and fail. World Payments Overall U.S. production plummets. U.S. investors have little or no money to invest. U.S. investments in Germany decline. German war payments to Allies fall off. Europeans cannot afford American goods. Allies cannot pay debts to United States. Great Crash Investors Businesses and Workers Investors lose millions. Businesses lose profits. Consumer spending drops. Workers are laid off. Businesses cut investment and production Some fail. Banks Businesses and workers cannot repay bank loans. Savings accounts are wiped out. Bank runs occur. Banks run out of money and fail. World Payments Overall U.S. production plummets. U.S. investors have little or no money to invest. U.S. investments in Germany decline. German war payments to Allies fall off. Europeans cannot afford American goods. Allies cannot pay debts to United States. Great Crash Investors Investors lose millions. Businesses lose profits. Great Crash Investors Businesses and Workers Investors lose millions. Businesses lose profits. Consumer spending drops. Workers are laid off. Businesses cut investment and production. Some fail. Banks Businesses and workers cannot repay bank loans. Savings accounts are wiped out. Bank runs occur. Banks run out of money and fail. World Payments Overall U.S. production plummets. U.S. investors have little or no money to invest. U.S. investments in Germany decline. German war payments to Allies fall off. Europeans cannot afford American goods. Allies cannot pay debts to United States.

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.

Underlying Causes of the Depression 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. 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.

Hawley-Smoot Tariff Tariffs Add to the Woes Raised prices on foreign imports to such a level they could not compete in the American market Europe will do the same to protect their markets Instead of helping to fix the Depression, the Tariff makes the problem worse

1929 Stock Market Crash

The Stock Market Crash—Assessment ________ 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 ________ 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

QW #5 - An Empty Riddle Part 1 The more you take away from me, the bigger I become. What am I?

QW #5 - Watching Guns part 2 You are sailing on a lake. Suddenly a mysterious stranger standing on the shore points a rifle at you and fires. Fortunately, the shot misses and the bullet enters the water right next to your boat. In what order do you experience the following? A. See the splash on the water B. See the flash of the rifle firing C. Hear the gunshot Light travels faster than sound; sound travels faster than bullets; so b, c, a

Social Effects of the Depression How did poverty spread during the Great Depression? What social problems were caused by poverty in the 1930s? How did some people struggle to survive hard times?

Section 2 Vocab Bread line Hooverville Tenant farmer Dust Bowl Okies repartition

Poverty Spreads People of all levels of society faced hardships during the Great Depression. Unemployed laborers, unable to pay their rent, became homeless. Unemployment rates: 1921 to 1929 3.7% on average By 1933 24.9% For those who kept their jobs their hours or wages were cut 10-30%. Graphs page 262-263

Hoovervilles Sometimes the homeless built shacks of tar paper or scrap material. These shanty town settlements came to be called Hoovervilles. Page 264-265

The Dust Bowl Farm families suffered from low crop prices. Tenant Farmers – some farmers who lost their land were able to stay on their land working for bigger land owners rather than themselves 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. Page 266

Dust Bowl Migration Okies – A dust bowl refugee. Some came from Oklahoma, but it became a generalized term 800,000 people migrated out of Missouri, Arkansas, Oklahoma and Texas Rural towns lost big populations, and big cities got bigger

Poverty Strains Society Some people starved and thousands went hungry. Children suffered long-term effects from poor diet and inadequate medical care. Impact on Health 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. Stresses on Families Competition for jobs produced a rise in hostilities against African Americans, Hispanics, and Asian Americans. Lynchings increased. Aid programs discriminated against African Americans. Discrimination Increases

Social Effects of the 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 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

Hoover’s Response What was Hoover’s response to the Great Depression? How did the Bonus Army end up ending Hoover’s re-election bid in 1932?

Section 3 Vocab Localism RFC Trickle-down economics Hoover Dam Bonus Army Douglas MacArthur

Herbert Hoover – 31st President, 1929-1933

Douglas MacArthur

John Steinbeck

Cautious Response to Depression Fails Hoover followed a ‘hands-off’ policy. Hoover used a policy called ‘volunteerism’ Keep employment, wages, and prices at current levels Called on government to reduce taxes, lower interest rates, and create public works programs. Hoover had faith in localism, the policy of handling problems at the local level Some Americans called on a rejection of capitalism and an acceptance of socialism

Hoover Adopts More Activist Policies Hoover urged Congress to create the Reconstruction Finance Corporation (RFC). Gave more than $1 billion of government loans to business and railroads. Trickle-down economics

Hoover and the Bonus Army The Bonus Army – page 275 Hoover ordered the Bonus Army out of Washington FDR was quoted as saying “this wins the election for me.”

The Grapes of Wrath – page 277

Hoover’s Response—Assessment What was Hoover’s response to the Great Depression? (A) Have Congress make laws to help the unemployed. (B) Use Volunteerism to help the problem. (C) Help create jobs to get people working again. (D) Order the Bonus Army out of Washington DC. What did Hoover finally have Congress create to help the Great Depression? (A) Build the Hoover Dam. (B) Have Congress give up on capitalism and embrace socialism. (C) Use localism to solve the problem. (D) The Reconstruction Finance Corporation.

Hoover’s Response—Assessment What was Hoover’s response to the Great Depression? (A) Have Congress make laws to help the unemployed. (B) Use Volunteerism to help the problem. (C) Help create jobs to get people working again. (D) Order the Bonus Army out of Washington DC. What did Hoover finally have Congress create to help the Great Depression? (A) Build the Hoover Dam. (B) Have Congress give up on capitalism and embrace socialism. (C) Use localism to solve the problem. (D) The Reconstruction Finance Corporation.