The Great Depression Chapter 9
ELECTION OF 1928 • DEM. CHOSE ALFRED SMITH • - CATHOLIC RELIGION • REP. HERBERT HOOVER (SECRETARY OF COMMER) UNDER HARDING (WON)
Sec.1 The Causes of the Great Depression • Collapse began in 1929 • Stock market has a period of rising stocks or bull market • This convicted many investors to buy stocks. • By 1929, about 10% of Americans had stocks. • Buyers engaged in speculations (betting that the market will continue to climb) • Many investors bought stocks on a margin (buying stocks for less than then price) • With about $1,000 investor could buy $10,000 worth of stock
Great Crash • On Monday, Oct 24, 1929, “Black Thursday” the market fell. • On October 29, Black Tuesday prices fell even more. • 16 million shares of stocks were sold…. About $30 billion was lost.
Banks close • Banks closed for two days • Effects: • (1) Banks lent billions of dollars to speculators • (2) many banks had invested people’s money in the stock market…hoping for high returns. • By 1932, 1 in 4 of banks in the U.S. went out of business.
Causes of the G.D. • Low interest rates (companies borrowed money and expanded more than necessary) • Overproduction (more products than demand) • Uneven distribution of wealth (anyone could afford a consumer good) • High tariff (high tariff restricted foreign demand for American goods) • Falling demand (too many goods produce…. No demand) • Stock market Speculation (low interest rate encouraged investors to buy stocks)
Sec. 2 Life During the Great Depression • the G.D. worse during President Hoover • 1,352 banks suspended operations • In 1932, 30,000 companies went out of business • By 1933, ¼ of workers unemployed. • People had no job, therefore, could not afford a house, food… • People who could not afford to pay their house were evicted (expelled from the house) by court officers called bailiffs. • Dust Bowl- a terrible drought struck the Great Plains, the soil dried to dust…. No crops or livestock (cows, beef….)
Arts and entertainment • Movies & radio programs increased popularity • During 1930, more than 60 million Americans went to the movies each week…….to relief from daily worries. • Walt Disney produced Snow White (1937) • MGM The Wizard of Oz (1939) • Gone with the Wind (a civil war epic) • Soap operas- extremely popular (why the name? the sponsors were makers of laundry soaps!!
Section 3 Hoover's response to the g.d • On Friday, Oct 25, 1929 the day after Black Thursday President Hoover addressed the nation • He hoped to downplay the public’s fear and to avoid more bank runs • He urged consumers and business to make rational decisions but the economy continued to decline. • Hoover increased funds for public work and asked the Federal Reserve to put more money in circulation but the Board refused. • He tried to use the National Credit Corporation NCC to give banks more money to lend to people in their communities but the program failed.
He opposed the federal government to participate in relief –money given directly to families….this became known as Emergency Relief and Construction Act • Marchers and protest by farmers increased throughout the US. • Creditors foreclosure more than one millions farms