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?

______