Hoover and the Stock Market Crash

1. Hoover and the Stock Market Crash

2. Objectives Learn about America’s economic problems during the late 1920s. Understand how the Great Depression started. Find out how the Depression affected Americans. Explore President Hoover’s response to the Depression.

3. Terms and People overproduction – situation in which the supply of manufactured goods exceeds the demand bankruptcy – financial failure caused by a company’s inability to pay its debts default – failure to repay a loan bonus – extra payment

4. Why did the economy collapse after the stock market crash? The prosperity many Americans enjoyed came to a sudden halt in 1929. During the Great Depression, poverty and desperation became a way of life.

5. Despite President Hoover’s optimistic outlook, the economy had weakened during the 1920s. Older industries such as mining, railroads, and clothing manufacturing had declined. So too, had agriculture. Yet stock prices continued to skyrocket.

6. Many Americans had bought stocks on margin, gambling that prices would continue to soar. They lost their gamble in October 1929, when stock prices began a rapid slide. Brokers who had lent people money to buy stocks on margin called in the loans. Many were likely to default, so they sold their stocks. Stock prices dropped even more.

7. On Black Tuesday, October 29, 1929, the stock market collapsed as prices hit rock bottom. Valuable stock certificates were now worthless pieces of paper. Many Americans lost everything.

8. The stock market crash alone, however, was not the only symptom of the Depression. Stock market crash Great Depression Overproduction Business failures Banking crisis Unemployment

9. Two key industries—housing and automobiles—were hit especially hard. Many people, however, had cut back on spending. Overproductionresulted in a huge supply of goods. Most people who could afford cars or houses had already bought them, so prices fell quickly.

10. A banking crisis also contributed to the Depression. • Many people were unable to repay their loans. • Banks also lost money on the stock market. When they ran out of money, the banks went out of business.

11. Terrified depositors ran to their banks, demanding their money. Many found that their money was gone.

12. Business failures added to the deepening crisis. With little money, consumers stopped spending. Business profits plunged. Many companies closed, forced intobankruptcy.

13. With factories and businesses closing, more workers lost their jobs. By 1933, some 13 million people were unemployed. Some resorted to selling apples and pencils on the street. Even those with jobs suffered frompay cuts.

14. The Great Depression soon spread worldwide.

15. As the Depression worsened, poverty swept across the country. In earlier times, people could rely on their own farms to get by. Now, urban Americans struggled to feed their families. People lined up for food at soup kitchens run by churches and other charities.

16. The Depression was especially hard on families. Couples Fathers Children Many had to leave home in search of work. Children often went hungry. They put off marriage. When they did marry, couples had fewer children. Ashamed, some deserted their families. Many could not attend school.

17. The homeless built makeshift shelters on the outskirts of the cities. They called the shantytowns Hoovervilles.

18. Hoover asked businesses and state and local governments to create work for the jobless. He also established the Reconstruction Finance Corporation. Funded critical businesses like banks, insurance companies, and railroads Gave money to local governments for public-works projects

19. But it wasn’t enough. Support for Hoover diminished further in June 1932. Struggling army veterans began to demand immediate payment of their bonuses. Hoover refused. Veterans marched to Washington. Congress refused their plea. Government forces fired on the “Bonus Army.” The little support Hoover had left vanished.