America: The Story of Us: Bust Video Guide
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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. • • • • • • • • •
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.