The Great Depression
Period 7: 1890-1945
Do Now:
• What caused the “boom” of the 1920s to “bust” so dramatically in October 1929?
______
Underlying Causes:
• ______(______)
• Industries (coal, railroads, and textiles) saw steady declines in demand as well as agriculture
• 1926: construction ______$2 billion dollars
• By 1929, automobile industry experiences a 33% ______
• Why the decline in demand?
• ______
• In the 1920s, the rich grew richer. Middle, and lower-income America experienced a slight growth in wages
• Demand for products decreased à ______à demand decreased à ______
• Wealthy Americans invested their income in the stock market
• The majority of Americans didn’t have enough disposable income to continue purchasing radios, cars, etc.
• ______- catalogs showed people what they DIDN’T have à excessive use of credit
• Stock Market ______- ______
• ______- low prices since end of WWI
• Government policies- ______, Federal Reserve did not regulate the economy
• ______
The Stock Market Crash:
• Stock prices soared in 1928 à plunged in 1929
• October 24, 1929 – “______”
• 12.9 million shares of stock were traded that day for a loss of $4 billion
• Americans panicked
• To avoid further losses, J.P. Morgan & Co. puts up $20 million and begins to buy stocks to restore confidence
• October 29, 1929 - “______”
• After losing 13% of its value the previous day, 14 million shares traded for a loss of $14 billion
• Rockefellers purchased large amounts of stock, as J.P. Morgan & Co. did, but the stock market continued to lose money all through November
How does a bank work?:
Deposit / Borrow• People put their money into a bank
• The bank pays the depositor (customer) 2% interest on the money you put into the bank / • Banks loan the customer’s money to people purchasing homes, cars, and either expensive items
• The bank charges 6%-10% interest on consumer's loans (That’s how they are able to pay you interest on your account)
The Banking Crisis:
• Millions of American investors lost all their invested money overnight
• Many had purchased stocks on margin
• If everyone runs to the bank (“______”) to withdraw money, the bank will not have all that money on hand
• Why not?
• ______
• ______
• In 1929 659 banks folded
• In 1930 bank failures increased to 1,350
• In 1931 2,293 banks closed
• In 1932 an additional 1,453 banks shut down
Decline in Worldwide Trade:
• ______(1930)
• Raised tariffs on imported goods to record levels
• ______
• Exports decreased 61% from $5.4 billion to $2.1 billion
• Unemployment was at 7.8% in 1930 when the Smoot–Hawley tariff was passed, but it jumped to 16.3% in 1931, 24.9% in 1932, and ______% in 1933*
Hoover to the Rescue?:
• Pres. Herbert Hoover (1928-1932) à “______”
• “______” Theory- gave $ to businesses thinking it would eventually help the workers & consumers
• ______- unheated, shacks, built with cardboard, tin, & crates; those living in a Hooverville, used “Hoover blankets”, aka newspapers
• ______- a prolonged drought in the Midwest during the 20’s worsened farmers’ already desperate situation
• ______(1932)
• WWI veterans demanded early payment of their bonus à government wouldn’t pay à refused to leave their “camps” in D.C. à Hoover used army tanks & tear gas to disperse the veterans
Wrap Up:
• How did the Dust Bowl effect internal migration?
______
• Who will and how will the Great Depression be alleviated?
______