2. Beginning of the Crash
Remember that in 1928, Americans had
chosen Herbert Hoover to be the 31st
president of the United States
American economy was still in pretty good
shape when he gets elected
– But older industries, such as
agriculture/farming, started to fail as other
countries can’t buy our products
– The Stock market kept rising, but there wasn’t
anything behind the shares to back the prices.
3. Causes of the Great
Depression
Unequal distribution of wealth:
•The rich got richer & the poor got poorer
This means a Lack of purchasing power for the poor
•Company profits rose in 1920s but wages were NOT increased as much
•Taxes had also been drastically reduced for the top earners!
4. Causes of the Great
Depression
Buying on Margin
– A person borrows money to buy a stock
– A stock broker takes a
portion of the loan as
collateral
– You have to pay back
the stock broker when
you’re ready to sell.
– Stockbroker got the
share of stock if the
investor could not repay
the loan
5. Causes of the Great
Depression
Overspeculation:
You buy stocks you
THINK will rise in price
•Based on borrowed $$
$ & optimism…NOT the
real value of the stock!
6. Causes of the Great
Let me remind you Depression It is just as important
that business keep out
that credit is the
lifeblood of
of government as that
government keep out of
business, the
– Manyprices in the economic sectors of business stated
business.
lifeblood of people
and jobs. stocks were overpriced and the crash brought them
that the
It’s good for some banks and
back to normal levels
people to fail! This is all a part
of economic competition!
Stocks were overpriced
Federal Reserve Policy
– Raised the rates on stock brokers who tried to take loans
fromGive more cash to losses.
banks to cover
banks throughout
the 1920’s! Then
we will reduce the
amount of cash
Hoover, Andrew Mellon, and others were telling people
available to banks
that the stock pricesin
were wrong…people weren’t
1929!!!
Comments by Public Officials
–
listening…
7. The Crash Hits
On Wednesday October 23, 1929
– 6 Million shares are bought and sold by big
investors in the stock market.
On October
24, 1929 Black Thursday,
the day in which almost 2.5 million shares
are outright sold, and the market loses $4
Million
8. The Crash Hits
On Friday, many investors talk, and
decide the stock market will stabilize.
Monday again sees people skeptical, but
deciding to hold out.
On October 29, 1929 the stock market
officially crashes, known as Black
Tuesday. Most investors try to sell their
stocks back, but there is no one to buy
them, and values plummet drastically.
9. Was the Stock Market the only cause?
NO!!!! A number of events lead up to the
crash, not just the market.
Farmers run into some serious problems!
– Review the Graphic Organizer, Duh!!!
Big-time manufacturing businesses were
having similar problems to their farming
friends.
10. Human Causes of the Dust
Over-plowing, OverGrazing, and
Bowl
Drought!
Areas Hit By
The Dust Bowl
Problems
with
Overgrazing!
The Eventual Outcome…
12. As a Result…
Farmers and
their Families
Have to Leave
The Land, many
move West
Farms and
Homesteads are
Destroyed!!!
Little Kids are
WAAAAAYYYY
Bummed Out
13. More Causes of the
Great Depression
Overproduction
or a situation where
supply of manufactured goods is greater
than demand, also occurred.
The problem with this is, when there is too
many goods not being sold, and not
enough people to buy them, the goods
become worth less…the company’s worth
then goes down.
14. More Causes of the Great Depression
Overextension of credit:
Too much Installment
Buying, or buy now, pay
later…kind of like credit
cards!
15. More Causes of the Great
Depression
Remember Buying
on Margin ????
Well, banks used people’s money to play
stock market
The market did poorly
They lose innocent people’s money.
Banks then had to close…
– which meant even those people who hadn’t
played the market lost out.
16. The Role of Banks
As banks closed, they
often took
businesses’ money
with them.
Sales continued to fall
Companies couldn’t
pay their workers
They had to declare
Bankruptcy , a
condition in which a
company’s financial
failure does not allow
it to pay its debts.
17. The Role of Banks
It wasn’t just companies that were affected
by this.
Remember that countries purchase goods
from each other on loan for things like war
and other essential functions.
When the depression hit, they couldn’t pay
these loans back and were forced to
Default or failed to repay their loans.
18. The Effects of the Depression
In
1930, Unemployment rose from 3
to 25 percent , and people that were
working weren’t making any money.
People couldn’t afford their homes, so
they started setting up Hoovervilles,
small towns made up of make-shift
shanties.
The Depression also broke up families,
through fights, search for work, and
sometimes death.
22. Hoover’s Response
Hoover will rely on Voluntarism
or
asking big business and local
governments to begin supporting the
people of America at their own will.
Hoover realizes that this isn’t the only way
to recover, so he sets up the
Reconstruction Finance Corporation
gave money to banks and public-works
projects…the problem is, it’s not enough.
23. The Last Stab at Hoover
(View “March of the Bonus Army” - 16:00 – 21:40)
In 1932, the Bonus
Army marched on
Washington, these were a group of
soldiers from World War 1, who asked for
their service bonus pay during the
Depression to help their situations
Hoover refuses to pay, and actually sent
Major George Patton and General
MacArthur to get the soldiers out of
Washington, using military force.
34. The Last Stab at Hoover pt. 2
When this occurs, an already unhappy
electorate decides they can’t deal with
Hoover anymore, and in November 1932
decide to elect another man to be
president.
