Objective Questions • What were the causes of the stock market crash of 1929? • How did the Great Depression affect American workers? • Why was the Great Depression less severe in Texas than in other parts of the country?
The Great Depression in Texas The Depression was not as severe in Texas as in other parts of the country. • Few Texans owned stock. Few lost their savings in the crash. • Texas had little industry. Few Texans lost their jobs when factories closed. • Much of Texas had been rural and poor before the crash. Many people felt little change in their lives after the crash. • An oil boom in East Texas in 1930 and 1931 helped that part of the state. About 400,000 Texans were out of work by 1932. Women, African Americans, and Hispanic Americans had the highest unemployment rates.
The Great Depression in Texas Some people turned to crime to solve their problems. • Bonnie and Clyde, two of America’s most famous criminals, came from Texas. Government leaders in Texas took steps to provide relief during the Depression. • They created state jobs. • They passed a law in 1935 to provide pensions for the elderly. A pension is a grant of money paid to someone who has retired. Throughout the 1930s, Texas governors tried a variety of programs designed to boost the economy. None had the power to pull Texas out of the Depression.
The Great Depression Causes of the Great Depression • Wealth in the United States was spread out unevenly. A small group of rich people held most of the nation’s wealth. • Most people did not have enough money to buy goods to keep businesses going. • Farmers faced hard times during the 1920s. • Foreign trade slowed in the late 1920s. Impact of the Great Depression • One out of four workers was unemployed by 1932. • President Hoover offered government loans to help business and agriculture. The loans were not enough to help the economy recover, however. • Depression - a period of low economic activity and high unemployment.
World Wide Depression • Throughout the 1920s, while the American economy was booming, European countries had been suffering economic hard times. They were still trying to recover from the impact of WWI. • Also, the U.S. passed high tariffs on imported goods to give an advantage to American industries, which restricted international trade. • When the depression hit the U.S., our trading partners around the world could not help us.
Stock Market Booms • Stock prices rose steadily during the 1920’s. • Dow reached as high as 381 points. • People were eager to take advantage of the “bull market”. • Bull market was a period of rising stock prices. • American rushed to buy more stocks and bonds.
Price Speculation • People began buying on speculation, meaning buying on a chance of a quick profit while ignoring the risks. • They also began buying on margin, paying a small percentage of a stock price as a down payment and then borrowing the rest. • This created unrestrained buying and selling and the market skyrocketed. • Practice of buying on Margin led to major bank failures
Causes of the Great Depression • Tariffs and War Debt policies cut down the market for goods to be sold in foreign markets. • The Crisis in the Farm sectors • The Availability of easy credit. • Unequal Distribution of Income.
Economic Troubles Background: • Many people became wealthy while others couldn’t earn a decent living. • Farmers and Consumers were steady going into debt.
Industry Trouble • Key Industries such as the railroads, textiles and steel had barely made a profit. • Railroads had lost money due to new forms of transportation such as buses, cars, and trucks) • Mining and Lumber were no longer needed.
3. Coal Mining was going out of style because of new forms such as hydroelectric power. • 4. New Houses being built started to slow down and people stopped buying houses.
Uneven Distribution • The rich got richer, the poor got poorer. • More than 70% of the nations families earned less than $2500 per year. • People bought a new outfit only 1x per year.
Unequal Distribution of Income • Economic fact- poor people don’t hoard their money- they spend it on necessities • rich people can only spend so much money on luxuries - then they invest their money • Not enough people had money to spend on luxuries and necessities to keep the consumer industry going
Consumers • They had less money to spend. • Higher Prices created less spending. • People were living beyond their means. • Credit became really big during this time: people had trouble paying off debts
Overproduction of Consumer Goods • Market for consumer goods saturated- by 1929
Hoover Becomes President • Election of Herbert Hoover v. Alfred E. Smith. • Election of 1928- Hoover won because he had a major advantage: he could point to years to Republican prosperity. • Overwhelming Hoover victory.
Hoover • After the crash, Hoover tried to reassure Americans that the nations economy was sound. • He believed the Americans should remain optimistic and go about their daily lives.
Hoover • Hoover felt that the government should pay a limited role in helping to solve problems. • He believed in Rugged Individualism, the idea that people should succeed through their own efforts.
Hoover • Hoover opposed any form of federal welfare or direct relief of the needy. • Said it would weaken people’s self esteem and moral fiber. • Hoovers responses to the Great Depression shocked and frustrated suffering Americans.
Hoover • Called together key leaders in business, banking and labor to try and find a solution to the economy. • Asked employers not to cut wages or lay off workers or go on strike.
Hoover • He created a special organization to help private charities to generate contributions for the poor (NO ONE HAD MONEY!) • None of the things he did made a difference.
Stock Market • Oct 24, 1929, the stock market plunged. • People began to dump stock very quickly. • This is known as Black Thursday. • Oct. 29, 1929, known as Black Tuesday, the day that the bottom fell out. • Everyone was selling everything at this point • 16.4 Million shares of stock were dumped that day.
Stock Market Crash • Many people began to invest in the Stock Market despite the bad economy. • It became the most visible symbol of a prosperous American economy.
The trading floor of the New York Stock Exchange just after the crash of 1929. On Black Tuesday, October twenty-ninth, the market collapsed. In a single day, sixteen million shares were traded--a record--and thirty billion dollars vanished into thin air. Westinghouse lost two thirds of its September value. DuPont dropped seventy points. The "Era of Get Rich Quick" was over. Jack Dempsey, America's first millionaire athlete, lost $3 million. Cynical New York hotel clerks asked incoming guests, "You want a room for sleeping or jumping?"
Stock Market Crash • Practice of buying on Margin led to major bank failures • Black Thursday- October 24,1929 • Black Tuesday - October 29,1929
The Stock Market Crash • It is often assumed that the Great Depression was caused by the “Great Crash” in the fall of 1929, but this is an oversimplification. • The stock market crash was just one of the causes. • There were other serious weaknesses in the U.S. economy.
The Crash • Sept. 1929, stock market peaked and fell. • Confidence wavered • People began to pull money out.
People who bought on credit were stuck with huge debts. • Most people lost their savings. • Investors lost about $30 billion.. The same amount spent on WW1.
Financial Collapse • Stock Market signaled the beginning of the Great Depression. (1929-1940) • Economy plummeted and unemployment skyrocketed. • However, the crash did not alone cause the Great Depression.
Banks and Business Failure • People panicked and withdrew money from banks. • Banks had invested lots of money so people couldn’t get their money • 1929-600 banks closed. • Government did not protect or insure bank accounts, millions lost all their money.
Bank Failures • Thousands of bank failures contributed to the Great Depression. • Rumors often led bank customers to panic and withdraw all their funds. This is called a “run on the bank.” • When the bank ran out of funds, the other depositors lost all their money and the bank went bankrupt.
Bank Failure cont • Unemployment leaped from 3% to 25%. • 1 out of every 4 workers. • 1930- Congress passed the Hawley Smoot Tariff Act was established the highest protective tariff in US History. • Tariff made unemployment worse in industries.
Police stand guard outside the entrance to New York's closed World Exchange Bank, March 20, 1931. Not only did bank failures wipe out people's savings, they also undermined the ideology of thrift.
Unemployed men vying for jobs at the American Legion Employment Bureau in Los Angeles during the Great Depression.
Hardships and Suffering • People lost their jobs and were evicted from their homes. Most ended up on the streets. • Shantytowns began to rise. They were towns consisting of shacks. • Food and Bread lines (soup kitchens) became a common sight.
Income and Spending Consider this . . . In this manner, the U.S. economy became steadily worse between 1929 and 1933.
Not enough people had money to spend on luxuries and necessities to keep the consumer industry going
Business Failures • 90,000 businesses went bankrupt between 1929 and 1933. • One reason for this was that many industries had failed to adjust their high production rates to the declining demand in the late 1920s. • This was especially true with what are called “durable goods,” things that last a long time, like refrigerators, washing machines, and automobiles. • These surplus goods were already being stockpiled in company warehouses before the depression hit. Without buyers, companies could not afford to make more of these items. Factories had to close down.
Unemployment • The closing of factories led to millions of lay-offs. This sharp increase in the unemployment rate was the most obvious symptom of the Great Depression. • Many industries that were able to stay open were forced to decrease their overall production. They often had to turn full-time employees into part-time employees or lay off a portion of their workforce. • The resulting unemployment or under-employment had a profound impact on the American economy.
John L. Lewis • Formed the Congress of Industrial Organizations (CIO) because of the AFL’s exclusion of unskilled factory workers
The photograph that has become known as "Migrant Mother" is one of a series of photographs that Dorothea Lange made in February or March of 1936 in Nipomo, California. Lange was concluding a month's trip photographing migratory farm labor around the state for what was then the Resettlement Administration.
Kids and the Depression • Poor diets and lack of money for healthcare, led to serious health problems. • No milk led to malnutrition and diet related diseases. • Schools began to shorten their school year and some school closed because no one could pay their school taxed. Kids went to work instead.
Farmer and sons, dust storm, Cimarron County, Oklahoma, 1936. Photographer: Arthur Rothstein.The drought that helped cripple agriculture in the Great Depression was the worst in the climatologically history of the country. By 1934 it had desiccated the Great Plains, from North Dakota to Texas, from the Mississippi River Valley to the Rockies. Vast dust storms swept the region.
Porch of a sharecropper's cabin, Hale County, Alabama, Summer 1936. Photographer: Walker Evans. The marginal and oppressive economy of sharecropping largely collapsed during the great Depression.