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Causes of the Stock Market Crash
Stock prices were over valued, over production of goods- they ended up laying people off because they weren't making any money.
Overspeculation during the 1920's-peoople who play the stock market and buy and sell, it drove the price for that stock, lead to huge demand of stocks, it didn't reflect on the companies value.
Uneven distubution of wealth
Too much borrowing from banks.
Stock prices were grossly inflated- didn't have real value.
Federal Reserve increased intrest rates- to try to stop people from buying things and borrowing money, when they did this, they crashed the whole economy because people got scared and sold their stock.
Lack of government regualtion. people started selling stock becuase they were nervous, buying on credit, buying on margin- buying stock on credit.
Stock market was based on borrowed money.
Effects
Investors and businiesses lose millions of dollars.
Thousands of banks failed.
Businesses cut production- laid off workers.
Unemployment rises- people quit spending money, Great Depression sets in.
Depression spreads to Europe and other parts of the world.
Causes of the Great Depression
Overproduction of goods- companies were making too many products, they weren't selling any because people were in debt, so the companies laid people off.
Underconsumption of goods by consumers
Agricultural slump due to to overproduction- planted too many crops, that was their solutionto make more money, prices dropped and they didn't make any money.
High protective tariff policies of hte 1920's- High tariffs to try to keep out foreign goods and to buy American goods. Other countries put high tariffs on the U.S.
Taxes bennefiting the rich- the rich got richer, poor got poorer.
Stock market crash- banks and businesses closed, unemplyment rose.
Effects
New Deal programs start- made the U.S. government larger, created jobs, regulated stock market.
Deficit spending starts- help the economy by putting money in it, give money to businesses.
The New Deal creates many organizatinos that are still around today- social security
Facist, military and communist dictators come to power throughout the world- people turned to more radical forms of government.
Companies loose money so they lay people off, unemployment rises, people don't have money so they don't buy anything, companies loose more money so they lay off more people or close and ect.
1. 1928 Election(466)
Republican- Herbert Hoover- better on the radio, Hoover won, liked prohibition
Democrat- Al Smith- better speaker, against prohibition, catholic- people were afraid that he would make the country turn catholic.
2. Stock Market in the 1920's(466-468)
A stock is a share of a company. The Dow Jones is an indicator of how the stock market is doing. It is made up of the 30 largest companies in the U.S. The stock market in the 20's was booming.
3. Story of the stock market crash-not the causes(467-469)
Thursday, Oct 24.- it crasher 11% right away, everyone went crazy. Richard Whitney bought U.S. steel stock to try to stop the crash. He bought it for more than it was worth. It worked tempararily for that day. Stock prices stoped for a while.
Over the weekend, the press made stories of how the stock market was going to crash. On Monday it crashed 13%. On Tuesday it crashed 12%. The executives would try to buy stock at a higher price, but people ignored it.
4. Banks and business' collapse(469)
Banks- stocks would go up and people would try to sell their stocks, the banks ran out of money to give people, 11,000 banks closed.
Businesses- people weren't spending money so the businesses had too many goods and they couldn't get rid of them, they would lay off people, 90,000 business closed.
5. Effect stock market crash had on other countries(469-471)
Other countries weren't doing as good as the U.S. was. Germany was worse than the U.S. in the Great Depression.
6. Depression in the cities(472-473)
Manufactures were hit hard. They laid off their workers, suicide went up, people who wanted money would turn to organized crime, city officials didn't want to do anything about it.
7. Depression in the rural areas(473)
lead to starvation, had too many products, dstroyed things to get prices down, lead to unfaithfulness in the government, helped build characters- they started to save and appreciate what they had.
8. Dust Bowl(474)
The dirty thirties- 1930-1936, caused by famers- they didn't rotate crops and there was a drought. Black Wizards- couldn't see in front of your face, houses were destroyed. Oakies- people who left Oklamhoma and the Great Plains and moved to California to work.
9. Men in the Streets(475)
They became migrant workers- they were hobos, and they traveled on trains to work in different towns. They developed differnt signs. Hoovervilles were made of cardboard houses and they were on the side of roads, blamed Hoover for the problems. 25% were homeless.
10. Women struggle to survive(475-476)
Women wre too embarrassed to go into a bread line, men were the ones who put food on the table. Started working outside of the home, but men didn't like it because they thought that they were taking their jobs. In many areas, people wouldn't hire women because they weren't in bread lines.
11. Children suffer hardships(476)
Children got rickets, they had poor diets, 2000 schools closed so they didn't get an education, teenagers left their families and became hobos.
12. Social and psychological effects(477)
Crime rate went up- people didn't have food so they stole it, teens felt bad so they tried to do it themselves, marriage rate went down and so did the divorce rate, education for college went down. Suicide rates went up 30%. People became thriftier and they appriciated their jobs. Neighbors came together.
13. Hoover's background
14. Hoover's philosophy/Cautious steps(479)
Rugged individualism- leave people alone and let them figure out their own problems, todl labor leaders not to fire people and not to cut wages- but people still went on strike. He wanted small goevrnment and wanted to leave people alone. Fiscally responsible- responsible for money
15. Boulder Dam(480)
The Hoover Dam, built in the CO river, between Nevada and Arizona, it gave thousands of men jobs, provides energy and drinkning water- Hoover wanted to build it because it would eventually pay for itself.
16. Democrats win 1930 Congressional elections(480)
Democrats won because people blamed Hoover for the problems, the house of rep. became full of democrats.
17. Hoover takes action(481)
He tried to help farmers- federal farm board would buy up the crops and store them, and then they would sell them. National Credit Corp.- large banks would loan money to smaller banks so they wouldn't close. Federal Home Loan Bank Act- helped lower morgage rates so people didn't loose their homes and farms. Reconstruction Finance Corp- trickle down theory, loan out money to businesses, banks, and local governments, Hoover wanted them to use that money to hire people and raise wages.
18. Bonus Army(482-483)
1932- veterans wanted to get paid so they went to Washington D.C. They got paid for being in WWI, Hoover wouldn't give it to them, veterans marched around D.C. to protest, Hoover gives them tents and water, the Patmen bill didn't pass, some people didn't leave so Hoover orded the military to get them away with tear gas.
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