Transcript Great Depression

Warm Up:
Describe the events of “Black
Thursday” and “Black Tuesday.”
Warm up:
Define or describe the
Reconstruction Finance Corporation,
and the National Credit Corporation
Warm up:
What happened at the Bonus March?
Troubled Economy, Stock Market
Crash, and 1932 Election
AP Chapter 25 (805-814)
The student will understand the
events involved the crash of the stock
market, causes of the Great
Depression, response by Hoover, and
the 1932 election.
A. Warning signs of economic decline
1.Increased productivity without
increased wages
2. Overproduction and full warehouses
3. Declining farm prices throughout
the 1920s
4. Attention to the new consumer
economy weakened traditional
sector (RR, steel, textile, and
mining)
ECONOMIC DANGER SIGNS:
indications that the economy wasn’t as
strong as thought. HOWEVER THEY
WERE IGNORED BY MOST PEOPLE.
•Huge corporations controlled most of
the economy (top 200 businesses
controlled 49% of American industry)
•Disparity of income:
Wealth concentrated in the hands of a
few families (0.1% of the population
controlled a 1/3 of the wealth)
•Personal debt greatly increased because
of installment plans
installment plan: paying for goods over
many months.
•Too many goods, too little demand
(technology)
•Stock market speculation had many
people taking risks
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speculation: making high-risk
investments in hopes of getting a high
gain.
•Buying on margin left stock owners
without the ability to pay back loans once
the stock market falls.
buying on margin: allows investors to
purchase stock for only a fraction of its
price (10 to 50%) and borrow the rest
•collapse of farm economy
•Falling farm prices made farmers
unable to repay their debts for land and
machinery.
•Real wages (actual purchasing power)
declining
Dow Jones Industrial Average: an
average of stock prices of major
industries
1.Crash
A. Stock market dominated by over
speculation and skyrocketing stock
values; 9 million Americans
speculated in the market, often
with borrowed money (Buying
on margin)
1. Black Thursday: Oct. 24, 1929
stock prices fell but were
temporarily maintained by
investment bankers purchasing
stock (JP Morgan)
2. Black Tuesday: Oct. 29,1929
market crashes again with no rescue
Black Tuesday began
when stockholders
panicked because of a
sudden drop in stock
prices. The Dow Jones
started at 299 thatday and
fell to 230 by end of day;
25%.
Stock Market Crash: affected millions
of America, even those who did not
own stock.
Stock Prices on Sep. 3, 1929/Nov. 13, 1929/1932 Low
American Telephone 304
197 1/4
70 1/4
General Electric
396 1/4 168 ½
34
General Motors
72 3/4
36
7 5/8
New York Central
256 3/8 160
8 3/4
U.S. Steel
261
150
21 1/4
Great Depression: a severe economic
decline that lasted from ‘29 until WWII.
C. Reasons for a decline turning into a
Depression
1. Structural weakness of the
economy (see above)
2. Monetarist theory of Milton
Friedman blaming the Fed Reserve
for not increasing the money
supply (repeat Fed Reserve
regulatory role)
3.Serious dislocation in international
trade due to poor European
economy, tariffs, war loans
D. Results
1. GNP drops in half
2. Banking system near collapse
3. Unemployment increases (25%
by 1933) and cuts in hours and
wages (show overheads of
prices and wages; see graphs
page 811)
4. American people give the
Democrats control of the Congress
in 1930 and the Presidency in ‘32
Causes and effects of the Great Depression
1. Govt. failure to regulate stock market
speculation which allowed stock prices to
skyrocket.
2. Decrease in consumer spending which led
to underconsumption of goods and services.
3. Uneven distribution of wealth which
limited the income of most families and
worsened underconsumption.
Causes and effects of the Great Depression
4. Overproduction of goods which led to
falling prices and hardships for
manufacturers
5. Huge farm surpluses which led to drops
in farm prices and a general slump in
agriculture
6. High tariffs and insistence on collecting
war debts which interfered with world trade
and destroyed foreign markets for American
products.
Gross National Product: total value of
goods and services a country produces
annually.
GNP in 1929 dollars
1920-- 60
1925--80
1929--100
1930—90
1933-- 70
1937--100
1938-- 95
1939--100
By 1932 the nation’s manufacturing output
stood at 47 percent of its 1929 level.
Impact on the world: collapse of the
American economy led to a worldwide
depression.
Bank closing:occurred in large numbers
because banks could not return their
depositors’ money.
Bank Failures
1929 659 1930 1,352
1931 1,456 1932 2,294
1933 5,190
Section 14
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Tariffs: increased tariffs by the U.S. led
to the collapse of world trade and further
worldwide depression. Congress kept
import taxes high to protect industries.
Farm prices: because of the crash,
prices dropped even more
than they had in the 20s.
1929 1932 1933
Corn $/bu.
.77 .25 .26
Wheat $/bu.
1.10 .40 .43
Soybeans $/b 1.69 .37 .50
Hogs $/cwt.
10.00 3.70 3.90
Cattle $/cwt. 10.10 4.85 4.30
Milk $/cwt.
2.50 1.40 1.30
Chickens ¢/lb.
.24 .12 .09
Eggs ¢/doz.
.29 .13 .12
1937 1940 1942
1.00 .63 .91
1.02 .74 1.21
1.26 .95 1.61
10.0 5.60 13.55
7.90 8.10 11.12
2.05 1.85 2.60
.16 .13 .19
.20 .16 .29
“Ralston Purina sales plummet from a 1930 high
of $60 million to $19 million in 1932. In 1931
Ralston registers its first net loss — half a million
dollars. According to Fortune magazine, ‘When
200-pound hogs brought only $12 ... farmers
could not afford to buy commercial feed at any
price.’”—Ralston Purina company
Notice cotton prices?
farms: when farmers could not pay
their mortgages, many lost their farms
through bank
auctions. Dust bowl video
Soil blown by "dust bowl“
winds piled up in large drifts
near Liberal, Kansas.
Drought refugees camping by the
Roadside Blythe, CA 1936 by
"Destitute peapickers in California;
Dorothea Lange
a 32 year old mother of seven children.
February 1936.“ by Dorothea Lange
video
Dust storm by Robert Riggs
Dust Bowl video
sharecropper and wife. Mississippi. They have no tools, stock,
equipment, or garden. 1937
The Depression in the South
For most cotton farmers the Depression goes
back to 1920 when the boll weevil and falling
cotton prices ruined many farmers and sent the
rate of tenancy soaring after several years of
decline.
•By 1930 Alabama contained 207,000 cotton
farms, 70 percent of them worked by white and
black tenant farmers.
•Non-farm employment declined by 15 percent
between 1930 and 1940, the highest rate for any
Southern state.
•The Birmingham industrial district was
hard hit, with employment declining in the city
of Birmingham itself from 100,000 to only
15,000 full time employees. Some national
observers contended that Birmingham was the
major American city most affected by the
Great Depression.
•During early stages of the national Depression
(1929-1933), both private charity and state
relief were overwhelmed by the magnitude of
suffering in Alabama. Families were disrupted.
•During a four-month period in 1933, detectives
working for the L&N Railroad expelled more
than 27,200 transients illegally riding freight
trains within the state's borders. Many
transients (between 40 and 45 percent) were
teenagers.
Unemployment as % of the Labor Force
1900 5 percent
1910 5.9 percent
1920 4 percent
1925 4.0 percent
1929 3.2 percent
1930 8.7 percent
1932 23.6 percent
1933 24.9 percent
1934 21.7 percent
1935 20.1 percent
1936 16.9 percent
1937 14.3 percent
1938 19 percent
1939 17.2 percent
1940 14.6 percent
1950 5 percent
M/C 1-2a
health: the Depression with its resulting
poor diet and anxiety took a serious toll
on the people including depression,
anxiety, and suicide. The young
increasingly suffered from malnutrition
(18% malnourished in 1928 in NYC;
60% malnourished in 1931 in NYC).
women: were less likely to get jobs
because of the accusation that they were
taking jobs away from men.
E. Hoover's response--caught between
the belief that Depressions were
"natural"/Republican belief in noninterference and experience in WWI
1. Voluntary corporate promise to
maintain wages and employment
2. Urged municipal and state govt.
to create jobs with public-works
3. Urged private charities to care for
the unemployed coordination with
the Emergency Committee for
Employment
4. Set up the National Credit
Corporation so that larger banks
could loan to smaller banksbanks to
make business loans. THESE
failed so he tried, reluctantly, actual
fed. govt intervention:
5. Reconstruction Finance Corporation,
Glass-Steagall Act, and National
Credit Corporation to aid banks or
businesses, but he feared "socialism“
6. Tax increased to avoid unbalanced
budget
Hawley-Smoot tariff: created the
highest import tax in history to protect
domestic industries from foreign goods
and competition. The end result was a
slowdown of international trade.
II. 1932 election
A. Hoover blamed more and
becomes more withdrawn with
impersonal press released
1. Hoover blankets, Hoover flags
Hoovervilles—shantytowns of
unemployed and homeless
people
2. Bonus Expeditionary March—
purpose was to obtain paymen
of money to veterans of WWI
(see 812)
Hoovervilles or Homelessness:
unemployed laborers
created houses out of cardboard and tar
paper; named after the president whom
the people blamed.
Okies: Groups of farmers escaping the
Dust Bowls, especially from Oklahoma
Hooverville in Central Park
Family living in tent in Georgia, 1940
Handpainted sign on Bonus Army truck states:
"We Done a Good Job in France, Now You Do a Good Job
in America"
`
Once I built a tower up to the sun
Brick and rivet and lime.
Once I built a tower, Now it's done.
Brother, can you spare a dime?
Once in khaki suits Gee we looked swell
Full of that yankee doodle dee dum.
Half a million boots went sloggin' through hell
And I was the kid with the drum!
Say don't you remember?They called me Al.
It was Al all the time.
Why don't you remember? I'm your pal.
Say buddy, can you spare a dime?
Once in khaki suits,Ah, gee we looked swell
Full of that yankee doodle dee dum!
Half a million boots went sloggin' through hell
And I was the kid with the drum!
Oh, say don't you remember?
They called me Al.
It was Al all the time.
Say, don't you remember?
I'm your pal.Buddy, can you spare a dime? ht
http://bss.sfsu.edu/tygiel/Hist427/427sound/Crash
Bonus Army: (1932) wanted immediate
payment of pension bonuses instead of
waiting until 1945.
See notes
Farmers’ Holiday Association:
Farmers try to force prices up by
withholding grain and
livestock…dairy farmers dumped
milk. Farmers who didn’t faced
reprisals.
B. FDR wins with energy and a
promise of a New Deal; he also
attacked Hoover for reckless
spending and said govt. should only
get involved as last resort;
pragmatist
C. Disagreement between two most
strong over federal relief
to individuals
1932 election: historic battle between
those who believed that the federal
government could not and shouldn’t try
to fix people’s problems, and those
who believed that the Great Depression
demanded a more responsible
govt. with major federal intervention.
Ultimately many Americans for the first
time turned to the federal government as
their only hope.