The Stock Market Crash The Stock Market Crash Section 1 – 732-736

The Stock Market CrashThe Stock Market Crash• Many people were investing in the stock market by

borrowing money from Stock Brokers = The people and businesses that have a license to buy and sell stock on the NYSE.– Buying on Margin = Borrowing money from a

broker to buy stock.– The brokers didn’t have enough money to lend, so

they were borrowing money from banks.• This process of borrowing and investing with

the hope of making a profit is called Speculation.

The Stock Market CrashThe Stock Market Crash• In September, 1929, the stock market reached

its highest point and then began to fall.– Millions of investors panicked and began to

sell their stock.• As more people sold, others saw the value

of their stock go down and they sold as well.–This process was repeated millions of

times.• On October 29th, 1929 the stock market

collapsed.– This day is known as Black Tuesday.

The Stock Market CrashThe Stock Market Crash• Because millions of investors had been buying on

margin, they were forced to pay brokers with their savings, or by selling their valuables.– Many of these investors had overextended

themselves and went completely broke.– This was the start of the Great Depression.

The Economy CollapsesThe Economy Collapses• The crash hurt banks in two ways:– Banks and small investors suffered great

financial losses from their diminished stock values.

– Many investors could not repay the bank loans they had taken and banks began to close.• When the news of bank closings spread,

millions of people panicked and rushed to withdraw their money before the banks failed.

The Economy CollapsesThe Economy Collapses• Because so many people withdrew their money,

many banks literally “ran out of money” and closed their doors.– As banks closed, businesses no longer had

cash available to operate, and they began to shut down as well.• When production slowed down, millions of

people lost their jobs.

The Depression Hits HomeThe Depression Hits Home• The Great Depression hit Americans very hard as

unemployment skyrocketed.– People struggled to feed and house

themselves.• Soup kitchens, bread lines, and shelters

spread across the country, but there were not enough of them to keep up with the rising demand of struggling Americans.

The Depression Hits HomeThe Depression Hits Home• The federal government was not prepared for the

“tidal wave” of support that it was expected to give and tensions started to rise.– People felt that the government should have

been doing more to help.• In some cases the government could not

meet its financial obligations.

The Depression Hits HomeThe Depression Hits Home• One group that expected the government to meet

its financial obligations was the WWI veterans.– These veterans were due payments on their

“war bonuses.”– Veterans from all over the country travelled to

Washington DC to demand the payments they were due.

The Depression Hits HomeThe Depression Hits Home• The veterans felt that the government was not taking

their demands seriously, and soon violence broke out.– The local police force could not handle the mob, so

President Hoover ordered federal troops to restore order.• The troops eventually had to use bayonets and

tear gas to disperse the mob.– Many troops were embarrassed and ashamed

that they had to follow orders that would hurt war veterans and fellow Americans.

The Election of 1932 The Election of 1932 Section 2 – 737-743

• In 1932, New York Governor, Franklin D. Roosevelt (FDR) won a landslide victory over Herbert Hoover.– Americans felt that the government was

responsible for the depression.• Since President Hoover was the leader of

the government, he was the natural “scapegoat” and basically had no chance of winning the ‘32 election.

The Election of 1932The Election of 1932

• During the presidential campaign, FDR started to assemble a group of experts (the Brain Trust) that could advise him on programs that would help the country.– During his campaign speeches, he would tell the

American people about these programs that his Brain Trust had developed and that he was proposing. • By doing this he showed the American people,

that they and the country were his top priority, and they in turn voted for him.

• These programs, are known as the New Deal.

The Election of 1932The Election of 1932• At FDR’s inauguration, he spoke about the New

Deal, encouraged Americans to be as patient as they could and said these famous words:– “The only thing we have to fear is fear itself.”

New Deal ProgramsNew Deal Programs• The first goal of the New Deal was to restore the

nation’s confidence in America’s banks.– Banks were inspected and “healthy” ones were

allowed to reopen.• The government started the Federal Deposit

Insurance Corporation (FDIC) which insured deposits up to $5,000.

– FDR started his first of many fireside chats in which he spoke to the nation via radio.• He encouraged the people to deposit what

money they had in the reopened banks.–By the end of March, 1933, people had

deposited nearly $1 billion in banks.

New Deal ProgramsNew Deal Programs

FDR during a fireside chatFDIC logo

Today, bank deposits are insured up to $100,000.

New Deal ProgramsNew Deal Programs• Once the banks were working again, the next

step was to get the unemployed back to work.– The president set up the Civil Works

Administration (CWA) = this started the building of airports, roads, sewers, and other public works projects.

New Deal ProgramsNew Deal Programs• In addition to the CWA, the government also

created the Civilian Conservation Corps (CCC).– The CCC hired men between the ages of 18-25

from families that were receiving financial relief from the government.

– These men lived in US Army camps while they fought fires, planted trees, and improved national parks.

New Deal ProgramsNew Deal Programs• Many historians now believe that FDR and his advisors

had another and just as important reason for creating the CCC.– They probably saw from the rise of Fascism and

Adolf Hitler and the Third Reich that another war in Europe was inevitable.• By creating the CCC, they were training young

men to be physically and mentally tough as well as disciplined.– These are all great qualities for a fighting force

to have.

New Deal ProgramsNew Deal Programs• The Tennessee Valley Authority (TVA) was

formed to help one of the poorest and underdeveloped parts of the country.– The TVA built dams along the Tennessee River

to create hydroelectric power and control flooding. • Thousands of people living in that area

received electricity for the first time.

New Deal CriticsNew Deal Critics• Soon after these groups began to work, some people

began to speak out against the New Deal because:– They felt it expanded the size and power of the

government too much.– They thought that the expense of these projects

would bankrupt the country.– Still other groups felt that the New Deal did not go

far enough towards helping the country.

New Deal CriticsNew Deal Critics

A symbol of the New DealA critic’s view of what that symbol could

become.

The Second New DealThe Second New Deal

• In 1934, the midterm election results showed that the people felt that the Democrats were doing a good job.– Many Democratic Representatives and

Senators were voted into office therefore strengthening their “majority party” position in Congress.

– President Roosevelt proposed even more programs.• These programs became the start of the

Second New Deal.

The Second New DealThe Second New Deal• In 1935, the Roosevelt Administration created

the Works Progress Administration (WPA). – Millions of WPA workers created:• hospitals, sewers, schools, parks, and roads.• They also did child care and land surveying.

The Second New DealThe Second New DealWPA poster promoting the

construction of a sanitary privy.WPA construction of a major

sewer line.

The Second New DealThe Second New Deal• Also in 1935, Congress passed the Social Security

Act.– This programs three main parts are:

• A pension system for retired workers age 65 and older.

• To give the unemployed a small amount of cash while they look for work.

• To give payments to women with children and people with disabilities.

New Deal Labor ProgramsNew Deal Labor Programs• In 1935, Congress passed the National Labor

Relations Act (NLRA). The purpose of this act was to protect unions.– A union is a group of people who work

together in the same type of job. • They all work under the same contract.• The purpose of a union is to protect workers

so that they earn a reasonable wage and other benefits.–NJ teachers are part of a union.

New Deal Labor ProgramsNew Deal Labor Programs• Union efforts to improve working conditions led to

strikes. – A strike is when employees collectively decide to

not work as a way to protest working conditions, salaries, benefits etc.• A sit-down strike is when employees stay at

their place of work 24/7 and refuse to work.– This prevents the employer from replacing

them with new workers.

Family Life Family Life Section 3 – 744-748

• The Great Depression was very hard on American families.– Parents had to send their children to live with

distant relatives.– Millions of families became homeless.– Men left their families in search of work.– Children had to drop out of school so they could

work to help support their family.

Farmers in the DepressionFarmers in the Depression• As the prices for crops dropped, many farmers could not

keep up with their land and home payments (mortgages).– Banks would then foreclose (take ownership) of the

farmers’ homes and land.• The banks would then sell the land, home,

equipment, animals etc. at auction.– People resented the banks’ foreclosures and

would go to the auctions and not bid on items until they were selling for pennies.» Then they would buy the items and give

them back to the owners.

Farmers in the DepressionFarmers in the Depression• During the mid 1930s, a drought struck the Midwest

and the farmers’ overworked fields began to erode.– The Dust Bowl was an area from North Texas to

North Dakota in which wind blew away fertile topsoil.

– Massive dust storm would create a blizzard of soil in the air.• Homes, cars, farm equipment would be covered in

dust.• People and animals suffered respiratory ailments

from breathing the dust.

Farmers in the DepressionFarmers in the Depression

Working Hard to SurviveWorking Hard to Survive• African Americans and Mexican-born workers

faced discrimination and segregation.– They were in competition for jobs that white

Americans also wanted.– Many times they were the last to be hired and

the first to be fired.

Arts and LiteratureArts and Literature• Despite the depression, some people wrote

novels that are still enjoyed today.– John Steinbeck = The Grapes of Wrath• A novel about the depression

– Margaret Mitchell = Gone with the Wind• A novel about a woman’s desire to rebuild

her family’s fortune and plantation after the Civil War and Reconstruction.

Arts and LiteratureArts and Literature• Photography became a powerful medium for

showing life during the depression.– Dorothea Lang became famous for her photos

of this period.

Popular EntertainmentPopular Entertainment• During the 1930s, radio was an inexpensive form of

entertainment.– People and families could sit around a radio and

listen to weekly programs much the way we watch weekly TV programs.• These radio shows were brought to life in studios

where several people would create stories of adventure and triumph over tragedy.

• There would be background music and sound effects.

• Often the story would carry through from one week to the next.

Empires in Europe and Asia Empires in Europe and Asia Section 4 – 750-755

• European countries and their economies were still trying to recover from WWI when the depression came.– The depression affected their economies as

well.• In response to this “global depression”

countries such as Germany and Italy created totalitarian systems of government.– Totalitarianism = A political system in which the

government controls every aspect of citizens’ lives.

Empires in Europe and AsiaEmpires in Europe and Asia• Italy was suffering economic difficulties after

WWI.– Italian citizens wanted a strong leader to help

pull their country out of the depression.• Benito Mussolini (former journalist and

soldier) and his Blackshirts, marched on Rome where the king granted Mussolini “temporary” powers as a dictator.

Empires in Europe and AsiaEmpires in Europe and Asia• Mussolini established a government based on fascism = A

single person leads the government which is seen as more important than individuals.

• In Germany, the economic situation was even worse.– The Treaty of Versailles, signed after WWI, left

Germany with virtually no way to support itself.– WWI veteran and politician Adolf Hitler began to gain a

following based on his book: Mein Kampf (My Struggle).• In Mein Kampf, Hitler blames Communists,

intellectuals, and Jews for Germany’s defeat in WWI and its problems afterward.– In Mein Kampf, Hitler described his plans for

Germany’s rise to global power.

Empires in Europe and AsiaEmpires in Europe and Asia• In 1933 Hitler and the National Socialist Party

(Nazis) took dictatorial power of Germany and formed the Third Reich, a hostile new German Empire.– Hitler ignored the Treaty of Versailles and

began to rebuild the German military.– In 1936, Germany and Italy entered into a

military alliance called the Axis Powers.

Empires in Europe and AsiaEmpires in Europe and Asia• The Nazis banned Jews and non-Nazis from all

government positions.• Jews were deprived of their citizenship and their

property was destroyed or seized.• In September 1935, Jews were assigned a lower class of

citizenship.• This Nazi propaganda poster shows a hand pointing at a

Jewish person. The translation is: “He is guilty for the war.”

Empires in Europe and AsiaEmpires in Europe and Asia• In November, 1938 the Nazis went on a one-

night rampage called Kristallnacht = “Night of the broken glass.”– On that night throughout Germany and

Austria, 91 Jews were killed and hundreds were wounded.

– 7,500 Jewish businesses were destroyed, and 200 synagogues were damaged.

Empires in Europe and AsiaEmpires in Europe and Asia• Japan also used force to solve its economic

problems.– The Japanese wanted to be less reliant on

foreign imports so they:• Invaded Manchuria in Northern China in

1931 so that they could tap into that region’s natural resources.

Roosevelt’s ResponseRoosevelt’s Response• The Roosevelt Administration did not agree with

the aggressive acts of Italy, Germany, and Japan– However the majority of U.S. citizens were

still opposed to using any type of force to stop the hostile acts. They were fearful of a repeat of WWI.• During the 1930s, the U.S. Congress took a

stance of isolationism = To stay out of all other countries business, especially war.• In 1937, FDR said: “The epidemic of world

lawlessness is spreading.”