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5.
The Gap Between the Rich and the Poor.
Easy Credit Led to Larger Amounts of
Personal Debt.
Unregulated Stock Speculation!
Industrial Overproduction of Durable
Goods.
Farmers Suffered First!
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By 1929, many Americans
were invested in the Stock
Market
The Stock Market had
become the most visible
symbol of a prosperous
American economy
The Dow Jones Industrial
Average was the barometer
of the Stock Market’s worth
The Dow is a measure
based on the price of 30
large firms
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Through most of the
1920s, stock prices
rose steadily
The Dow reached a
high in 1929 of 381
points (300 points
higher than 1924)
By 1929, 4 million
Americans owned
stocks
New York Stock Exchange
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1928 – Dow Jones Industrial
Average – the avg. price of stock
for major industries hit 191.
Mar. 4, 1929 – Dow hit 313
Points!
Sept. 3, 1929 – All time high of
381 Points!
It fell gradually until Oct. 23,
1929 when it fell 21 Points in one
hour.
Black Thursday, Oct. 24, 1929
orders to sell by worried
investors caused it to plummet!
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To stop panic, a group
of bankers pooled $ to
start buying again, but
be Monday, Oct. 28th
they were falling again.
Black Tuesday – a
record 16.4 Million
shares sold (compared
to 6 Million on a
average day)!
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By November 13, the
Dow had fallen to 198.7
(381 on Sept. 3rd).
GE had been $400/
share; now $283.
$30 Billion evaporated!
At first only the 4
million Americans who
owned stock were
affected; soon millions
more!
By mid-November, investors had
lost about $30 billion
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In September the Stock Market
had some unusual up & down
movements
On October 24, the market took
a plunge . . .the worst was yet
to come
On October 29, now known as
Black Tuesday, the bottom fell
out
16.4 million shares were sold
that day – prices plummeted
People who had bought on
margin (credit) were stuck with
huge debts
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Alabama family, 1938 Photo by Walter Evans
The Stock Market crash
signaled the beginning of
the Great Depression
The Great Depression is
generally defined as the
period from 1929 – 1940
in which the economy
plummeted and
unemployment
skyrocketed
The crash alone did not
cause the Great
Depression, but it
hastened its arrival
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Factories shut down leaving
millions jobless! Ford left
75,000 out of work by Aug.
1931!
1932 –1 out of 4 Americans
were unemployed!
Farm prices continued to fall.
Wheat from $1.04 in 1929 to
$0.38 in 1932; Cotton $0.17/ lb.
To $0.065/ lb.
Business failures large and
small put others out of work
and slashed many incomes and
hours of those able to keep
their jobs.
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After the crash, many
Americans panicked and
withdrew their money
from banks
Banks had invested in
the Stock Market and
lost money
In 1929- 600 banks fail
By 1933 – 11,000 of the
25,000 banks nationwide
had collapsed
Bank run 1929, Los Angeles
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Bank failures went
from rural to urban.
9 Million savings
accounts vanished
and runs on banks
added to the problem!
1931 – 1500 banks ran
out of money!
Federal Reserve –
tightened the money
supply – big mistake!
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International banking,
manufacturing, & trade
had made the world
interdependent by 1930.
France and Britain could
not pay U.S. because
Germany could no
longer borrow from U.S.
banks to pay reparations!
Republican Tariff Policy
(Hawley-Smoot Tariff –
1930) restricted
international trade.
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Between 1928-1932, the
U.S. Gross National
Product (GNP) – the total
output of a nation’s
goods & services – fell
nearly 50% from $104
billion to $59 billion
90,000 businesses went
bankrupt
Unemployment leaped
from 3% in 1929 to 25% in
1933
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The U.S. was not the only
country gripped by the
Great Depression
Much of Europe suffered
throughout the 1920s
In 1930, Congress passed
the toughest tariff in U.S.
history called the
Hawley- Smoot Tariff
It was meant to protect
U.S. industry yet had the
opposite effect
Other countries enacted
their own tariffs and soon
world trade fell 40%
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October 29, 1929 is known as “__________.”
T or F: Most businesses were hurt by the Great
Crash.
T or F: Banks prospered after the crash because
they were the only ones that had money.
This European nation suffered most during the
Depression?
A. Great Britain B. France C. Germany