Warm Up: Describe the events of “Black Thursday” and “Black Tuesday.”

1. Warm Up: Describe the events of “Black Thursday” and “Black Tuesday.”

2. Warm up: Define or describe the Reconstruction Finance Corporation, and the National Credit Corporation

3. Warm up: What happened at the Bonus March?

4. 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.

5. A. Warning signs of economic decline • 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)

6. 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)

7. 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)

9. ` • Stock market speculation had many • people taking risks • 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

13. collapse of farm economy • Falling farm prices made farmers • unable to repay their debts for land and • machinery. • Real wages (actual purchasing power) • declining

14. Dow Jones Industrial Average: an average of stock prices of major indus- tries

15. 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)

16. 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%.

18. 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.

19. 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

20. 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

21. Causes and effects of the Great Depression • 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.

22. 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.

23. Gross National Product: total value of goods and services a country produces annually. • GNP in 1929 dollars • 1920-- 60 1925--80 • --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.

24. 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

25. Section 1-4 Click the Speaker button to listen to the audio again.

26. 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.

27. 1929 1932 1933 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 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

28. “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

29. Notice cotton prices?

30. 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.

31. Drought refugees camping by the Roadside Blythe, CA 1936 by Dorothea Lange "Destitute peapickers in California; a 32 year old mother of seven children. February 1936.“ by Dorothea Lange video

32. Dust storm by Robert Riggs Dust Bowl video

33. sharecropper and wife. Mississippi. They have no tools, stock, equipment, or garden. 1937

34. 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.

35. 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.

36. 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.

38. 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

40. M/C 1-2a

41. 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.

42. E. Hoover's response--caught between the belief that Depressions were "natural"/Republican belief in non- interference 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

43. 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

44. 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.

45. 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 payment of money to veterans of WWI (see 812)

46. 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

47. Family living in tent in Georgia, 1940

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

50. `