The Great Depression

The Great Depression

1929
• America was at the height of prosperity.
• Higher wages, more free time, & new inventions led to consumer society.


All that changed in 1929.
The Great Depression not only affected the US, but Europe as well.

Causes
1. Stock Market Crash of 1929- October
2. Bank failures
3. People stopped buying things
4. Smoot-Hawley Tariff & the American Economic Policy
5. Drought (not a cause but a major event during the Depression era)

The Stock Market
Background
• With more money to spend people invested on the stock market.
• President Hoover’s aim: “a chicken in every pot and two cars in every garage”.
BUT
• 50% of American families earned less than $2000 a year
• American Industry was producing too many goods

Businesses & Stocks
• Companies borrow money to pay for equipment or staff
• To make more money, they can sell stocks, or shares in their company
• Investors get a share of the profit the company makes
• ‘Shareholders’ can sell their shares on the stock market.
• Prices can change every day according to how well the company is doing.
• Prices can also change no matter how the company is doing
• this is called Speculation
• American industry booms, price of stocks go up
• People see the stock market as a way to make easy money
• Banks use your money to buy shares in companies
• Investors sell their shares at higher prices and make huge profits
• More people invest, pushing prices higher
• People buy “on the margin” – you borrow $$ from a broker to buy stocks. When they pay off, both of you get $$

Timeline of the Crash
• Sat 19th Oct - 3.5 million shares sold. Prices fall
• Sun 20th Oct - “Stocks driven down as wave of selling engulfs market”
• Mon. 21st Oct - Over 6 million shares change hands. Prices fall then rise in the afternoon. There are still buyers on the market
• Tue 22nd Oct - Prices begin to rise
• Wed 23rd Oct
• 3 million shares sold in the last hour of trading
Black Thursday
• OCTOBER 24
• Morning: Stock prices begin to fall, & people get desperate – try to sell their stocks
• Brokers start to panic – refuse to buy on margin
• Almost 13 million stocks sold
• Noon: 2 exchanges had shut down, 11 had committed suicide
• A meeting of bankers was held @ J.P. Morgan
• Richard Whitney, v.p. of the Stock Exchange, went onto the floor & started buying high.
• Others followed suit, & the market recovered

….for now

Oct 25-28 – the market begins to recover
Trading remains pretty heavy, prices stay steady
Many investors were still nervous

Black Monday
• The market opens with a flood of selling
• There wasn’t the support of bankers like there had been on the 24th
• Over 9 million shares sold
• New York Stock Exchange value dropped 10 million in 1 day

Black Tuesday
• Market opens @ 10am & everyone begins selling their stocks
• Stock prices at an all-time low
• Bankers were no longer trying to help the market – they were selling stocks too
• By the end of the day, the volume of shares was very high
• 14 billion dollars lost
• The market continued to drop – in June 1930, until July 1932, when it bottom
Black Tuesday is the beginning of the Great Depression

Effect of the Stock Market Crash on the Country
• Thousands of small businesses go bust.
• Banks closed.
• People bought less
• Suicides
• Unemployment

Banking System Collapses
• Banks invested heavily in the market
• Collapse of market led to bank failures
• Many depositors panicked, leading to even more bank failures

Mass Unemployment
• After the crash, over 1 million people lost their jobs
• Loss of income = people think there’s a crisis
• They stop their consumption of goods & services
– This leads to business making less money, so they go out of business
– If they wanted to stay in business, they had to cut wages & lay-off employees
Statistics
• 1929 (pre-crash) 1.5 million unemployed
• 1930 – 4.25 million unemployed
• 1931 – 8 million unemployed
• 1932 – 12 million unemployed

• Unemployment leads to homelessness & makes the economy go down even more

Effects on Farming & Agriculture
• Problems for Farmers:
– They hadn’t made money in the 1920s
– The price of crops stayed low
– No money leads to: debt, hunger, & bankruptcy
• Factories:
– Used machinery, so needed fewer workers
– More cost effective
The Bonus Army
• Patman Bill was to move up bonus payments from 1945 to 1933
• 1932 – thousands of veterans march to Washington DC
• They want their bonus
– They were unemployed & desperate
• They became known as the “Bonus Army”
• Their numbers grew to 25,000 within 2 months
• Veterans camped near the Capitol to support the bill
• Bill failed in Congress
• Hoover’s removal of vets made Hoover appear heartless

HoovervillesBU
• Settlements of shacks inhabited by transients and unemployed
• Derisively named after President Hoover
• Many cities and towns had at least one
• One of the biggest was in Central Park, NY
• People set up shacks made of wooden crates, tar paper, & other scraps they could find
• Most were on the outskirts of cities

Nearly anything that was a sign of the Depression or its hardships was linked to the beleaguered Hoover. A “Hoover blanket” was an old newspaper that might be used to cover someone. A “Hoover flag” was a person’s turned-out empty pocket. A piece of cardboard used to cover the hole in a worn-out shoe sole was called “Hoover leather.” An automobile powered by horses because the owner couldn’t afford gasoline might be called a “Hoover wagon.”

Most notable, however, were “Hoovervilles.” Many cities and towns had at least one Hooverville, a settlement of shacks in which many transient and unemployed people lived. “Hoovervillas” might be made out of any sort of material: cardboard, wood scraps, piano boxes, or even stones.

Hoover’s Response
• President Hoover overwhelmed
• Believed that private charity was best suited to solve problems
• Most efforts failed
• Reconstruction Finance Corporation achieved some success
• People blamed President Hoover for his lack of action
• His policy of “non-intervention” wasn’t working

The Dust Bowl
Remember…
• During WWI, farmers were told to increase production
• Overproduction of crops =drop in prices
• Farmers borrowed money to buy supplies & machinery
• People lost their farms; the land was unplanted but plowed

In the Early 1930’s,
• Drought hit the southwestern United States
• Hardest hit: Oklahoma & parts of Kansas & Texas
• No rain=dry soil…it blew away with the wind
• This led to…
The Dust Bowl
• Towns & farms were covered with layetrs of dust
• Dust storms lasted for days

• April 14, 1935 – Black Sunday
– One of the worst dust storms…a black Blizzard

Looking for Jobs
• People who had lost their farms/jobs heard about new opportunities in California
• They traveled there on Highway 66, through Oklahoma, Texas, New Mexico, &Arizona on its way to California
Okies
• The nickname for people that headed to California from Oklahoma
• Hoped to get jobs as migrant workers in the fruit & vegetable fields
• People in California thought the addition of more people would make life harder for them.
• They saw Okies as being lazy, poor, & dirty
• However, they were willing to take low paying jobs
• They lived in Okievilles on the outskirts of towns
• Large number of people moving to California - fewer jobs available
• One job available for every 50 men

End of the Dust Bowl
• 1937 – end of the drought provides new life to farms
• The conditions lasted for 4 years, but it would take years for the land & people to recover.

GREAT DEPRESSION Activity

ASSIGNMENT:
Make a poster that shows the experience of a person from one of the following categories during the Great Depression
1. Poor Child
2. Adult who invested all his money in the stock market
3. Midwestern farmer
4. Oakie
5. Rich person
6. regular American
7. Wild card – you choose


Find at least 3-4 pictures that represent the conditions of the economy and the people during the Great Depression.
Include captions & facts that support your vision of your person.
You can give them a name if you want
Due Wednesday
Extra Credit: Watch the Grapes of Wrath & write an essay on the depiction of the Okies within the movie.