25.1 The Stock Market Crash of 1929

Timeline of Key Events

  • 1929

    • Hoover inaugurated as president.

    • Stock market crashes (Black Tuesday, Oct 29).

    • Great Depression begins.

  • 1930

    • Dust Bowl devastates Great Plains.

    • Early effects of unemployment and bank instability.

  • 1931

    • Scottsboro Boys trial begins in Alabama.

  • 1932

    • Hoover forms Reconstruction Finance Corporation.

    • Bonus Army riot in Washington.

    • Franklin D. Roosevelt elected president.

1. Hoover’s Early Presidency

  • Optimistic approach: continue 1920s prosperity.

  • Belief in individualism—limited government intervention.

  • Early reforms before crash:

    • Federal Farm Board → support for farmers.

    • Veterans Administration → expanded care for veterans.

    • Federal Bureau of Prisons → improved prison conditions.

    • Bureau of Indian Affairs → protect Native Americans.

    • Proposed old-age pensions (proto-Social Security).

  • Popular with the public; expected to succeed Coolidge.

2. Stock Market Speculation (1920s)

  • Wild speculation on stocks; risky investments common.

  • Ponzi schemes circulated wealth between investors.

  • Florida land boom → buying unseen land with borrowed money.

  • Buying on margin: small down payment, borrow the rest, hope to sell for profit.

  • Advertising hype fueled speculation: “Buy NOW! You’re guaranteed to make money!”

3. Black Tuesday – October 29, 1929

  • 16 million shares traded; $14 billion lost in a single day.

  • Brokers fainted, fistfights, papers flying; banks collapsed.

  • Americans lost life savings but still owed debts.

  • Panic spread nationwide → start of the Great Depression.

4. Causes of the Crash

  • Global debts: Europe owed massive sums to U.S. banks; defaults stressed the system.

  • Wealth inequality: 80% of Americans had almost no savings; top 1% held over 1/3 of wealth.

  • Panic psychology: selling triggered mass fear → self-reinforcing crash.

5. Daily Life During the Depression

  • Bank runs; cash hidden at home.

  • Industries collapse: automotive & construction hardest hit.

  • Wages drop, unemployment triples (1.5M → 4.5M).

  • Family life disrupted: lower marriage/birth rates, kids sent out to work/beg.

  • Urban vs rural:

    • Cities → breadlines, homeless shelters.

    • Rural → subsistence farming, burning crops for heat.

6. Who Survived & Who Suffered

  • Women: workforce participation rises (secretaries, maids, operators).

  • African Americans: unemployment double/triple Whites; many survive via subsistence farming.

  • Farmers: 750,000 family farms lost (1930–1935); crop prices plummet.

  • Relief efforts:

    • Hoover relied on private charities → insufficient for scale.

    • Teachers & police contributed personal funds to feed children.

  • Elderly: extremely vulnerable, depended on family or private aid.

Key Takeaways

  • Hoover’s optimism & early reforms couldn’t stop the Depression.

  • Stock market crash = trigger, not sole cause.

  • Underlying issues: wealth inequality, international debt, speculative culture, and panic psychology.

  • Daily life: widespread poverty, unemployment, family disruption, breadlines, and regional differences.

  • Relief was patchy → federal aid limited, private charities stepped in.