chapter 15 and 16 mr. armstrong. chapter 15 the market crashes the ripple effect of the crash ...

Chapter 15 and 16 Mr. Armstrong

Chapter 15

The Market Crashes The Ripple Effect of the Crash Underlying Causes of the Depression

In early 1928, the Dow Jones Industrial Average, an average of stock prices of major industries, had climbed to 191. By March 1929, it had risen another 122 points, and by September 3 rd the Dow Jones average rose to to an all-time high of 381. The stock market became so popular that people kept track of the rise like they did Babe Ruths stats.

Black Thursday After their peak in September stock prices began to fall slowly. On Thursday October 24 th worried investors began selling off their stocks. $3 billion were lost in one single day, but business leaders, and President Hoover told the American people that the economy was sound.

Black Tuesday In an effort to stop the panic a group of bankers pooled money together to buy stock, and this worked for a few days. On Tuesday October 29 th, 1929 investors all over the country sold a record 16.4 million shares. Compare this to an average of 4 to 8 million per day earlier in the year. This collapse came to be known as the Great Crash. The Great crash resulted in the loss of $30 billion.

Business Cycle- a span in which the economy grows, the contracts. Look at the image of a business cycle on page 509. What part of the business cycle was the United States experiencing? Contraction/Trough

Initially the effects of the Crash were felt by those who were heavily invested in the stock market. Only about 4 million out of 120 millions Soon millions who had never owned a share of stock were affected.

Looking at page 510, list the ways in which these people were affected. Risky Loans hurt banks Consumer borrowing Bank runs Savings wiped out Cuts in production Rise in unemployment Further cuts in production

Risky loans- hurt banks because people couldnt pay them back. Consumer borrowing- When banks called in loans nobody could pay. Bank Runs- People made rushes to withdrawal from their accounts. Bank Failures- banks closed because many people couldnt pay their loans, and everybody came to get their money out of the bank. Savings Wiped Out- by 1933 9 million savings accounts vanished.

Cuts in production- couldnt borrow money necessary to produce more goods, and there was no one to sell to. Rise in Unemployment- as business cuts back on production, they laid off workers. Further cuts- as unemployment grew incomes decreased. Nobody to sell to means further production cuts.

Economic Contraction. The results of the Great Crash we just went through are symptoms of contraction. Contraction- an economic decline marked by falling output of goods and services. A long contraction is called a depression. The Great Crash triggered the Great Depression which lasted until 1941.

Impact on Workers and Farmers In August of 1931 Henry Ford shut down his Detroit factory which put 75,000 people out of work. As factory jobs dried up small businesses like restaurants started to close. Farm prices fell dramatically By 1932 12 million people were unemployed. 25%unemployment

Impact on the World When the worlds leading economy fell, the global economic system began to crumble and contract.

An Unstable Economy Wealth in the hands of a few who would rather save and invest, than buy goods. Uneven distribution of wealth made rapid recovery impossible. Overspeculation The stock market boom was based on borrowed money instead of real value. Government Policies The Federal Reserve cut interest rates to spur economic growth. In 1929 they limited the money supply because they were worried about overspeculation. Less money in circulation made it hard to recover.

Poverty Spreads Poverty Strains Society Stories of Survival

Hoovervilles In, 1931 census takers estimated there were 15,000 homeless people in NY city alone. Homeless people sometimes built shanty towns, with shacks of tar paper, cardboard, or scrap material. These towns came to be known as Hoovervilles mocking the President, whom people blamed for not resolving the crisis. Some families drifted across the country from town to town.

Farm Distress Farm families suffered from low crop prices and most lost their farms. Southern landowners expelled tenant farmers and sharecroppers. In protest against low prices farmers dumped thousands of gallons of milk, and destroyed crops. The Dust Bowl Severe drought and farming practices led to The Dust Bowl. By tilling up the protective prairie grasses in the Great Plains they became susceptible to harsh weather.

The Dust Bowl Terrible weather and falling prices led to 60% of Dust Bowl families losing their farms. Many families moved West to CA. Relief did not come until the 1940s when it started to rain again and WWII drove up crop prices.

Impact on Health Impoverished people who could not afford food or shelter got sick more easily. Children had it the worst. Stresses on Families Men Felt like they were like failures Embarrassed to seen at home during work hours. Women Had to figure out how to feed their children without husbands paycheck. Married women were fired if their husband had a job. Only work they could find were domestic work, typing, and nursing

Discrimination Increases African Americans, Hispanics, and in the West, Asian Americans all suffered as white laborers began to demand the low-paying jobs they had typically filled. Hispanics and Asian Americans not only lost their jobs, but were deported as well. Black unemployment rose to 56% Lynching increased. Scottsboro Boys 9 black youth accused of raping 2 white women and convicted without the benefit of lawyer.

Read the section titled Stories of Survival and answer the following question. What do you think was the hardest part of such an experience? What made it easier?

Americans Pull Together Signs of Change

Farmers Sticking Together Farmers would get together to bid mere pennies on land and equipment so that they could help out there fellow struggling farmer. These came to be known as penny auctions. The success of these penny auctions led many states to pass laws that suspended foreclosures on farms.

Young People Ride the Rails Many teenagers decided to hop on trains and ride the country either for adventure or to find jobs. These hobos witnessed the Depression around the country first hand. Seeking Political Solutions Unlike countries in Europe, the dreary conditions did not lead to riots and upheaval. Most trusted the democratic process. Communists and Socialist gained more votes.

Depression Humor Hoover Blankets Newspaper used as a blanket. Hoover Flags Empty pockets turned inside out. When Babe Ruth was criticized for asking for an $80,000 salary, which was higher than Hoovers, he responded by saying, I had a better year then he did.

Prohibition is Repealed In 1933, just 15 years after it passed, the 18 th Amendment was repealed by the 21 st Amendment. Control of alcohol was returned to the states. The Empire State Building At the time it was the tallest building in the world. 102-stories, and 1,250ft tall. It was finished in 1931.

The End of an Era Al Capone was put in jail in 1931. Coolidge died in January 1933. Babe Ruth retired in 1935. Charles Lindberghs infant son was kidnapped and murdered.

Hoovers Limited Strategy A New Deal for America The Election of 1932

Even when factories started to close the Hoover Administration insisted that conditions would soon improve. Voluntary Action Fails Hoover believed that voluntary controls by the business leaders of America could end the economic crisis. He held a conference of business leaders at the White House and got their promise to keep wages up. At first it they did, but it didnt last long.

The Government Acts Agricultural Marketing Act of 1929 Was meant to raise farm prices, instead it failed miserably and continued the downward spiral The Republicans lose the 1930 mid term elections and lose their majority in Congress. As things got worse Hoover decided to start spending money on roads, parks, and dams. The Boulder Dam (Hoover Dam). Hawley-Smoot tariff The highest import tariff in history.

Reconstruction Finance Corporation (RFC) Gave govt. credit to Large industries Railroads Insurance companies Banks To many it seemed like the govt. was helping the rich. Hoovers Unpopularity Grows Hoover insisted that state and local govt.s should handle relief. Too little too late John Maynard Keynes

Veterans March on Washington In the summer of 1932, 20,000 jobless WWI veterans and their families encamped inn Washington, DC. They called themselves the Bonus Army, and they wanted immediate payment of a pension bonus that had been promised for 1945. Most of the protestors were civil, but some prompted Hoover to call in the military. Gen. MacArthur used tanks, guns, and tear gas to make the crowd disperse.

I pledge myself to a new deal for America.- Franklin Delano Roosevelt. Democratic nominee in the 1932 election. He graduated from Harvard. He ran for VP but lost in 1920. Contracted polio in 1921, and could only walk with assistance for the rest of his life. Governor of New York from 1929-1932 He set up an unemployment commission and a relief administration in NY.

This campaign is more than a contest between two men It is a contest between two philosophies of government. Herbert Hoover, October 1932 Republicans- still believed in voluntary aid. Democrats- more government intervention. FDR won by 7 million popular votes. FDR 1933 Inaugural Address FDR 1933 Inaugural Address

1. The main purpose of the ______ system was to transport troops safely across the Atlantic Ocean (Ch12-3). 2. During the war, African American Soldiers served in _____ units and rarely saw combat (Ch12-3). 3. During WWI, the govt. managed the production of ____ materials (Ch12-4). 4. The _____ was the movement of African Americans to northern cities (Ch12-5). 5. Under the terms of the Versailles Treaty, ____ had to pay reparations to the Allies and accept full responsibility for the war (Ch 12-5).

Chapter 15

Restoring the Nations Hope The First Hundred Days Key Players in the New Deal The New Deal Falters A Second New Deal The 1936 Election

FDR was elected in November, but was not inaugurated until March of 1933. 20 th Amendment Moved the inauguration date up to January 20 th. Did not go into affect until the next election so in the mean time FDR prepared for the greatest change in govt. since its inception.

Second Bonus March The administration provided campsites for the marchers. Eleanor Roosevelt went to speak with them. The Fireside Chats Started the first Sunday after he took office. Bold, persistent experimentation Everybody knew he was going to do something, but they werent exactly sure what that was New Deal The relief, recovery, and reform programs of FDRs administration that were aimed at combating the Great Depression.

March through June of 1933 Stabilizing Financial Institutions On March 5 th, 1933 FDR ordered all banks to close for the next 4 days. He then pushed Congress to pass the Emergency Banking Act which authorized the govt. to inspect the financial health of all banks. Most banks were healthy and 2/3rds reopened by March 15 th. This became known as the Bank Holiday

Stabilizing Financial Institutions After the bank holiday more people put money in the bank than were taking it out which allowed the banks to make loans. In an effort to further increase confidence in the banks, Congress passed the Glass-Steagall Banking Act of 1933. It established the Federal Deposit Insurance Corporation (FDIC). The Federal Securities Act was passed to correct the problems that led to the stock market crash. Required companies to provide info on their finances if they offered stock for sale

Stabilizing Financial Institutions Securities and Exchange Commission (SEC) Set up to regulate the stock market. Congress also gave the Federal Reserve Board the power to regulate the purchasing of stock on margin. In July of 1933, FDR took decreased the value of U.S. Currency by taking it off the gold standard. Hoped it would raise farm prices, raise the price of other goods, and increase export trade.

Providing Relief and Creating Jobs Federal Emergency Relief Administration (FERA) Setup to help overburdened local relief agencies. FERA also put money into public works programs which are govt. funded projects to build public facilities. Civil Works Administration (CWA) Public works projects that put the unemployed to work building roads, parks, airports, and other facilities.

Read page 539 to the heading Key Players in the New Deal on page 540 and list the different agency names, their acronym, and what they are meant to do. Hint there are 8.

1. Civilian Conservation Corps (CCC) 2. National Industrial Recovery Act (NIRA) 3. National Recovery Administration (NRA) 4. Public Works Administration (PWA) 5. Home Owners Loan Corporation (HOLC) 6. Federal Housing Administration (FHA) 7. Agricultural Adjustment Administration (AAA) 8. Tennessee Valley Authority (TVA)

Brain trust an informal group of intellectuals who helped draft policies. Groundbreaking Appointments FDR appointed the first women to a cabinet post Secretary of Labor, Frances Perkins FDR also appointed many African Americans to policy making positions. Mary McCleod Bethune became the highest ranking of those when she was the Director of Negro Affairs of the National Youth Administration (NYA)

Eleanor Roosevelt Mrs. Roosevelt traveled a lot for her husband because his injury made it hard for him to travel. She sometimes made it tough on him.

The programs did not end the Depression and some saw the New Deal as giving the Federal Govt. to much power. Read the section titled The New Deal Falters on page 542 and list what the Supreme Court did to New Deal Programs.

1. Though relatively few in number, ______ represented womens desire to break with the past. (Ch13-1) 2. The new manners and morals of the 1920s were reflected in womens ______. ( Ch13-1) 3. Life changed for American women in the 1920s, in that many of them were _____ to political office. (Ch13-1) 4. The growth of radio and other mass media in the 1920s produced a national ________. (Ch13-2) 5. African Americans from the South brought a new musical form called _____ to northern cities. (Ch13- 2)

Despite some naysayers FDR still had most of the publics support. With the 2 nd New Deal FDR included more social welfare benefits, stricter controls over business, stronger support for unions, and higher taxes on the rich. Essentially FDR worked to do more for ordinary Americans.

New Expanded Agencies Works Progress Administration (WPA) Provided work for more than 8 million citizens Built or improved tens of thousands of playgrounds, schools, hospitals, and airfields, and it supported creative work of many artists and writers. Rural Electrification Rural Electrification Administration (REA) Provided loans to power companies and rural families to run power lines or wire their house or barn. Within 4 years about 25% of rural households had electricity. Demand for electric appliances grew aiding the manufacturing industries.

New Labor Legislation Wagner Act Legalized union practices such as collective bargaining, and closed shops, which are workplaces open only to union members. It outlawed spying on union activities and blacklisting, a practice in which employers agreed not to hire union leaders. It also set up the National Labor Relations Board (NLRB) to enforce its provisions. In 1937 the Supreme Court upheld the constitutionality of the Wagner Act in NLRB v. Jones and Laughlin. This case established the federal govt.s ability to regulate labor disputes linked to interstate commerce.

New Labor Legislation In 1938 the Fair Labors Standards Act banned child labor and established the minimum wage for all workers covered under the act.

FDR won the electoral vote 523-8. This landslide victory showed that the American people supported the New Deal, yet it still had critics.

The Limitations of the New Deal Political Critics Other Critics Modern Day Critics The Court-Packing Fiasco

Women Many aspects of New Deal legislation put women at a disadvantage. Womens wages were set lower, and men and boys were favored. African Americans African Americans were not offered professional level, or skilled jobs on public works projects. The federal govt. abandoned a law that would have made lynching a federal crime. African Americans did still vote for FDR, because he did seem genuinely concerned about the fate of African Americans.

New Deal Does Too Much Republicans believed the New Deal went too far. Rich people did not like FDR for passing higher taxes on individuals with incomes over $50,000. The Social Security Act aroused suspicion of the first step towards a militaristic, regimented society, and they felt it hurt the hardworking Americans. The American Liberty League was lead by Alfred E. Smith and argued that the New Deal smacked of Bolshevism.

New Deal Does Not Do Enough Progressives and Socialists attacked the New Deal saying it didnt do enough. Upton Sinclair argued that the govt. needed to do more to cure the permanent crisis. New Deal had only limited success in eliminating poverty, and as a result Progressivism was revived in Minnesota and Wisconsin. They called for a redistribution of income.

Some new deal critics were demagogues, leader who manipulate people with half- truths, deceptive promises, and scare tactics. Father Charles E. Coughlin At one point he advocated the nationalization, or govt. takeover and ownership, of banks then he changed his mind and defended the sanctity of private property including banks. National Union for Social Justice was formed in 1934 During their rise to power he showered praise on Hitler and Mussolini.

Huey Long He was from Louisiana and worked to help the underprivileged by improving education, medical care, and public services. At first he supported FDR, but he broke with him at the beginning of the New Deal. He advocated the redistribution of wealth. His popularity helped push FDR to pass steeper taxes on the wealthy in the 2 nd New Deal. Had Long not been shot by a political rivals son-in- law in 1935 he could have posed a problem in the 1936 election.

Some say that the New Deal hindered economic progress and threatened American enterprise. Some say that it created the federal bureaucracy that usurps state govt.s in making policy. Deficit spending- paying out more money from the annual federal budget than the govt. receives in revenue.

Nothing done by FDR aroused more suspicion than his attempt the pack the Supreme Court. Roosevelt asked Congress to add 6 additional Supreme Court Judges. He did this so he could appoint judges favorable to the New Deal.

The Recession of 1937 Unions Triumph The New Deals Effects on Culture Lasting New Deal Achievements

The New Deal was not a miracle cure, and in August of 1937 the nation entered a recession, which is a period of slow economic activity. FDR had cut back on spending because he was worried about the national debt. The national debt had risen from $21 billion in 1933 to $43 billion by 1940. National debt comes from having to borrow when the govt.s revenue, or income, doesnt match its expenditures.

By 1945 36% of the workforce was unionized. CIO Started as the Committee for Industrialization within the American Federation of Labor (AFL). The CIO was meant to be a recruiting arm of the AFL, but the AFL did not approve of its dealings. The CIO was expelled from the AFL and changed its name to the Congress of Industrial Organizations. John L. Lewis became its first president.

The CIO was a coalition, or alliance of groups with similar goals. Their main goal was to challenge the conditions of industry, and their main tool was the strike. The Era of Strikes Sit-down strike- is a strike in which laborers stop working, but refuse to leave the building while supporters picket outside the building. The first sit-down strike occurred at 3 rubber tire plants in Akron, Ohio.

Sit-down strikes were so successful that the Supreme Court ruled in 1939 that they were illegal because they were an obstacle to negotiation. Henry Ford resisted unionism, and some of his men beat UAW members trying to distribute leaflets.

Literature The Good Earth, Pearl S. Buck a saga of peasant struggle in China. Their Eyes Were Watching God, Zora Neale Hurston A novel about a strong willed African American woman and the Florida town she lived in. The Grapes of Wrath, John Steinbeck A powerful tale about the Dust Bowl Let Us Now Praise Famous Men, James Agee and Walker Evans non-fiction book about sharecropping in Alabama.

Radio and Movies Comedians like Jack Benny, George Burns, Gracie Allen. Soap Operas became popular. The Wizard of Oz was released in 1939 Walt Disney created Mickey Mouse and released Snow White and the Seven Dwarfs. The WPA and the Arts FDR felt that the arts were not luxuries that Americans should have to give up. WPA funded historians to go around and collect stories from over 2000 former slaves.

The New Deal did not end the nations suffering. Many New Deal bridges, dams, tunnels, public buildings, and hospitals exist to this day. The TVA, FDIC, and the SEC still exist today. Social Security Above all the New Deal gave people hope.

chapter 15 and 16 mr. armstrong. chapter 15 the market crashes the ripple effect of the crash ...

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