CHAPTER 26 AND AMERICA: THE
STORY OF US: BUST
VIDEO GUIDE
THE GREAT
DEPRESSION
BEGINS
Photos by photographer Dorothea Lange
SECTION 1
Hoover
and
the
Crash
HOOVER WINS
1928 ELECTION
● Republican Herbert Hoover ran
against Democrat Alfred E. Smith
in the 1928 election
● “We shall soon . . . be in sight of
the day when poverty will be
banished from this nation.”
● Hoover won an overwhelming
victory
Young Hoover supporter in 1928
THE NATION’S SICK ECONOMY
As Herbert Hoover took over the office of President
in 1929, many of the excesses of ’20’s masked
problems in the American economy. Agriculture, the
railroad industry, textile mills, and mining were all in
trouble.
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Agriculture
Railroads
Textiles
Steel
Mining
Lumber
Automobiles
Housing
Consumer goods
SOCIETY DURING THE 1920S
1. By 1929 more money was spent on
advertisement than education.
THE 1920S: BUY, BUY, BUY!
2. The boom is built on credit.
SEEDS OF TROUBLE
• By the late 1920s, problems with
the economy emerged
• Consumerism
• Speculation: Too many
Americans were engaged in
speculation – buying stocks &
bonds hoping for a quick profit
• Margin: Americans were buying
“on margin” – paying a small
percentage of a stock’s price as
a down payment and borrowing
the rest
The Stock Market’s bubble was
about to break
CONSUMERISM
• Consumers bought goods on credit
• When their debts grew higher than what they could pay, they
stopped buying new products
BUYING ON CREDIT
3. In 1929, 6 billion dollars of goods are
bought on credit. Eighty (80) % of Americans
have no savings at all! Some stocks are valued
at 50 times what they are worth.
SPECULATION
• Investors bought on speculation
hoping to make quick money
• From 1925-1929 it was a craze to
speculate in the stock market
• The little guy could speculate with the
guy in the pit
BUYING ON MARGIN
• Put a down a small payment on a
stock
• Borrow the rest
• Sell stock and repay loan
• Works if prices keep going up
GAP BETWEEN RICH &
POOR
• The gap between rich and
poor widened
• The wealthiest 1% saw their
income rise 75%
• The rest of the population
saw an increase of only 9%
• More than 70% of American
families earned less than
$2500 per year
Photo by Dorothea Lange
THE MARKET CRASHES!
4. By October 1929, the inevitable happens.
The stock markets loses 12x times more
money in 3 weeks than the U.S. government
uses in 1 year.
5. Only 2 % of the U.S. population owns stock.
What caused the Stock Market to crash?
THE 1929 CRASH
• September 3, 1929, New York
Stock Exchange reached a high
point
• October 23, Prices drop sharply
• People began dumping stock
• Price of stocks plummeted
• October 24, 12.9 million shares
traded. The market took a
plunge . . .the worst was yet to
come
THE 1929 CRASH
• On October 29, now
known as “Black
Tuesday”, the
bottom fell out
• 16.4 million stocks
were exchanged
that day at low
prices– prices
plummeted
• People who had
bought on margin
(credit) were stuck
with huge debts
MARKET PANIC
6. When banks refused to give the merchant
his stocks, by mid afternoon 20,000 – 25,000
people showed up outside the banks
7. In the last 60 days of 1930, 600 banks shut
down.
BUSINESS
• Warehouses are full of goods people can’t
buy
• Businesses were unable to sell goods and
had to fire workers
• People lost their homes and millions went
hungry
• Lasted from 1929 to WWII (1942)
• Called “Great Depression”
CONSUMER SPENDING
DOWN
• By the late 1920s, American
consumers were buying less
• Rising prices, stagnant wages
and overbuying on credit were
to blame
• Most people did not have the
money to buy the flood of
goods factories produced
By mid-November, investors
had lost about $30 billion
BANKS
• After the crash, many Americans
panicked and withdrew their
money from banks
• Banks began to demand people
pay back loans used to buy
stocks
• Banks had invested in the Stock
Market, and ran short of cash as
people couldn’t repay their loans
• People swarmed banks to take
out savings but the banks didn’t
have cash to cover depositors
• By 1933 – 11,000 of the 25,000
banks nationwide had collapsed
Bank run 1929, Los Angeles
BANK CLOSINGS AND THE PEOPLE
8. By 1933, there are 28 states without a single
bank opened.
9. Unemployment goes from 4 million in 1930
to 12 million in 1932.
10. 34 million Americans have no source of
income.
FARMERS STRUGGLE
• No industry suffered as much
as agriculture
• During World War I European
demand for American crops
soared
• After the war demand
plummeted
• Farmers increased production
sending prices further
downward
Photo by Dorothea Lange
HOOVER’S RESPONSE
• Balance Federal Budget
• Cut Government spending and Raise
Taxes
• Result: it pulled money out of the
economy and made the slump worse
• Did not want to interfere with the economy
• Believed aid to the poor would make them
too dependent on government
HOOVER’S RESPONSE
• Believed in “Rugged Individualism”
• “We cannot legislate ourselves out of world
economic depression. We can and will work
ourselves out.”
• Stressed the value of volunteer effort
• Encouraged churches, the Red Cross, Salvation
Army, and other charitable organizations to help
the poor
• In 1932 private giving was at an all time high but
it wasn’t enough
HOOVER’S RESPONSE
• Softened stance against government relief by
1932
• Created Public Works Projects
• Built dams, roads, bridges, etc.
• Created jobs
• Too little; Too late
PUBLIC WORKS PROJECTS
11. The Colorado River is one of the most
powerful rivers in the world.
12. March 4, 1931, the government gives the go
ahead to build the Hoover Dam.
13. The dam cost nearly $1 billion dollars in
today’s money.
BUILDING THE DAM
14. Of the 42,000 men who came across the
country to find jobs, Frank Crowe takes 5,000
of those men to build the dam.
15. There arte 2 stages to building the dam:
1. Divert the river around the work zone
2. Build the colossal wall
COMPLETION OF THE DAM
16. There is a $3,000 fine for every day the
project falls behind schedule.
17. Carbon Monoxide poisoning claims
hundreds of men’s lives.
18. The Hoover Dam, is completed on
September 30, 1935, 2 years ahead of
schedule.
HOOVER DAM TODAY
19. The dam creates Lake Mead, the biggest
reservoir in America.
20. After 70 years, the dam still supplies power
to Nevada, Arizona, and California.
PICTURES OF THE HOOVER DAM
THE DUST BOWL
In 1934, the worst environmental disaster in
American history hits New York, Chicago and
Boston.
21. The dust storms were born out of 100 million
acres of dead zone 2,000 miles away. The states
included: Oklahoma, Texas, Kansas, and Colorado.
22. The dust storms were created by extended
drought, high winds and loss of top soil.
PICTURES OF THE DUST BOWL
BUILDING MOUNT RUSHMORE
23. Mount Rushmore is located in South
Dakota. The faces on Mount Rushmore are :
George Washington, Thomas Jefferson, Teddy
Roosevelt, and Abraham Lincoln. It was
designed by Gutzon Borglum.
PICTURES OF MOUNT RUSHMORE
BONUS ARMY
• Spring 1932 World War I vets
arrived in Washington to support a
proposed bill
• Congress promised WWI vets a
bonus which were not due to be
paid until the 1940’s
• Vets marched on Washington,
D.C., asking for bonuses in
summer of 1932
• 12,000-15,000 Bonus Army vets
camped from May-June
• Hoover sent a force of 1,000
soldiers under the command of
General Douglas MacArthur and
his aide Dwight Eisenhower
AMERICANS SHOCKED AT
TREATMENT OF WWI VETS
• MacArthur’s 12th infantry gassed more than 1,000
marchers, including an 11-month old baby, who died
• Two vets were shot and scores injured
• Americans were outraged and once again, Hoover’s
image suffered
FRANKLIN D. ROOSEVELT
• After “Bonus Army”
debacle, the American
public was dismayed with
Hoover
• Elected Franklin Delano
Roosevelt as President in
1932
A SOLUTION ON THE HORIZON?
24. World War II pulled America out of its economic
slump.
THE FIGHT TO END ALL FIGHTS
25. On June 22, 1938, boxer Joe Louis and Max
Schmeling and a re-match.
WHO WINS?
Joe Louis