# Chapter Twenty-Six — The Great Crash, and What Came of It

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## Black Tuesday and a New Deal

In the United States, after World War I, life just seemed to get better and better. The doughboys had come home victorious, the stores were full of food, and everyone seemed to have plenty of money. Architects were designing triumphant new buildings called skyscrapers that rose up high above the roofs of America’s cities. Schools were packed with students. For the first time in American history, almost everyone could read, and authors like William Faulkner (*The Sound and the Fury*) and Hendrik Willem van Loon (*The Story of Mankind*) were publishing books that made them famous. Almost three hundred plays were performed in New York City alone. Musicians sang silly, light-hearted songs like “Yes, We Have No Bananas” and “I Wish That I Could Shimmy Like My Sister Kate.” Dance marathons—all-night contests, where the contestants had to keep moving without once stopping or falling asleep—were held all over the country.

Everywhere, new things were happening. The first Miss America pageant was held. (A sixteen-year-old girl from Washington DC, Margaret Gorman, won!) The first Oscar awards for the movies were handed out. In his little plane *The Spirit of St*. *Louis*, Charles Lindbergh became the first person to fly alone, without stopping, across the Atlantic Ocean. Nothing seemed impossible. Life in America seemed like a beautiful dream.

In 1929, the dream ended.

During the 1920s, hundreds of thousands of people were spending money on something called the “stock market.” A market is a place where people go to buy and sell. Many cities have a “farmer’s market,” where people with gardens come with their extra vegetables and sell them to others who don’t have gardens. The “stock market” is a place where people buy “stock,” and stock is a small portion of a company.

We read about stocks in Chapter Sixteen. When the chocolate factory owner took money from his friends to improve his factory, and promised them that in return they would get some of the profits at the end of the year, he was selling them “stock.” Each friend now “owned” part of the company, and would get part of the money that the company made. They had become “stockholders.”

If the chocolate factory did well, each stockholder would make money at the end of the year. But if the chocolate factory didn’t make any profit, the money that each stockholder gave to the factory owner would be gone. As a matter of fact, if the factory was *really* doing poorly, the stockholders might even have to chip in some more money to help pay salaries and keep the factory open.

In the United States, people who wanted to sell parts of their companies, and people who wanted to buy those “stocks” because they hoped to share in the year-end profits, all met together in an area of New York City called Wall Street. (The name comes from a real wall that was built along the street in the seventeenth century, to protect the original Dutch settlers of the city from the attacks of Native Americans and hostile Englishmen.) In the early 1800s, a group of businessmen decided to open a “stock exchange” on Wall Street. There, company owners and company buyers could come to buy and sell stocks. This place of business was called the New York Stock Exchange.

In the 1920s, after the end of World War I, factories and companies were making wagonloads of money. People who bought stock in those companies were making lots of money too, sharing in the company profits. If they spent \$100, they got \$1,000 back; if they spent \$25,000, they might get a hundred thousand dollars in profit. Buying stock seemed like the easiest way in the world to earn money. People were so excited about this easy money that they spent hundreds of thousands of dollars on stocks. Sometimes, they even borrowed money to buy stocks. After all, they were sure they would make enough profit to pay back the loan.

But when factories and companies are raking in money, more factories get built and more companies get started. More sellers compete for the same buyers. The buying starts to slow down. Money gets a little tighter, and a little scarcer.

In 1929, the stock market didn’t just slow down. It came to a crashing halt, all within a week.

On October 24, 1929, people began to sell off their stock. As they sold their stock, others began to think that it might be a good idea to sell as well. With so many people selling, and not too many people wanting to buy, the prices of the stocks had to go down, and down, and down. (Think of it this way: if twenty people want a candy bar, and one person has five candy bars to sell, the person with the candy bars can probably charge \$2 per candy bar, and at least five of the twenty people will be willing to pay it. But if twenty people have candy bars that they really want to sell, and only one person wants to buy a candy bar, all twenty people will charge as little as possible for their candy bars, hoping that the hungry person will pick *their* five-cent candy bar instead of another seller’s fifteen-cent bar.)

The prices of stocks kept going down, and down, and down. More people sold their stock, hoping to get some money back for it before the prices dropped even more. The value of the stocks went down even more. A man who owned \$50,000 worth of stock on the morning of October 24 found, at the end of the day, that his stock was worth less than a hundred dollars.

This selling went on for a week. It was known as the Wall Street Crash. The worst day of the whole Crash was Tuesday, October 29, 1929. On that day, which became known as Black Tuesday, fourteen billion dollars worth of stock lost so much of its value that it was worth almost nothing.

Stockholders who had put most of their money into buying stocks now had no money at all. Many owed loans to banks that they couldn’t possibly pay. The banks couldn’t get their money back—so the banks themselves had to close. Some businessmen were plunged so deeply into great debt that they killed themselves. Buyers and sellers lost so much money that for the next ten years, most Americans had very little to spend. They didn’t buy new clothes, they didn’t buy new cars, they didn’t buy a lot of food, and they certainly didn’t buy Christmas presents. If you got an orange for Christmas, you were a very lucky child.

This time, the 1930s, was called the “Great Depression.” To make matters worse, the weather turned bad. Tremendous droughts killed off hundreds of thousands of acres of crops. The Great Plains of the United States had so little rain that winds picked up the dust and blew it back and forth in huge dust storms. During a dust storm, people locked themselves in their houses, put towels under the doors and around the windows—and still found an inch of dirt all over their floors, beds, and furniture at the end of the storm. The middle of America became known as the Dust Bowl. Unable to make a living on their dry farms, thousands of Americans left the Dust Bowl states and headed to California. These emigrants were called “Okies,” because although many hailed from Arkansas, Missouri, and Texas, one out of every five came from Oklahoma.

When the Great Depression began, a man named Herbert Hoover was president. Hoover knew that he would have to do something to help the thousands of poor, hungry, and homeless Americans. In 1932, President Hoover and the United States Congress set up something called the “Reconstruction Finance Corporation.” The RFC was like a bank that would lend money to banks, businesses, and farms, so that they could keep going until times got a little better.

The RFC was a good start, but it wasn’t enough. Another American leader, a New Yorker named Franklin Delano Roosevelt, promised Americans that if he were elected president instead of Herbert Hoover, he would give America a “New Deal” that would reverse the Great Depression.

Roosevelt, nicknamed FDR, had suffered from a disease called polio as a child. He was in a wheelchair, because he couldn’t walk. But even from his wheelchair, he seemed more energetic and more full of ideas than Herbert Hoover. And Americans were desperate for an answer to their poverty. On Election Day, FDR beat Hoover by millions and millions of votes.

Now that he was president, FDR wanted to get immediate help to people who were homeless and hungry. He wanted to provide jobs for people who were out of work. And he wanted to change the stock market and the banks so that a Great Crash could never happen again.

Along with Congress, FDR created new “companies” that would give Americans jobs and salaries. The Civilian Conservation Corps, nicknamed the CCC, hired men to plant forests, fight fires, and control floods. The Works Progress Administration, or WPA, hired even more men to build roads and bridges. The Agricultural Adjustment Administration, or AAA, helped farmers rebuild their herds and get their fields back. FDR created so many programs with abbreviations like CCC, WPA, and AAA, that Americans said, “FDR is making alphabet soup for the USA!”

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FDR’s alphabet soup put real soup into the bellies of millions of hungry Americans. And his “New Deal” would slowly bring the United States out of the Great Depression.

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## Hitler’s Rise to Power

The Great Depression of the United States didn’t just affect America. It affected the whole world. All during the 1920s, Americans bought expensive things, from cars to coffeemakers, from European businesses. Americans travelled to Europe and spent millions of dollars on hotels and food. American money poured into Europe.

When Americans began to lose their money, they stopped buying fancy European goods. They quit travelling to Europe. European factories and businesses suddenly had much less money. Hotels and restaurants started to fire waiters, bellboys, and maids. Like America, Europe became poorer. The Great Depression spread across the countries of Europe.

One of the countries hardest hit by the Depression was Germany.

Germany was poor and unhappy even before Black Tuesday, the day the stock market crashed in New York. When Germany was forced to sign the Peace of Versailles, after World War I, the German government had to agree to pay France and England *reparations*—huge sums of money to make up for all the money France and England had spent beating Germany in World War I.

Germany, which had already lost almost two million young men to war and had spent enormous amounts of money fighting, began to try to pay the reparations. But the government simply didn’t have the money to pay. So Germany borrowed the money for reparations from American and British banks—and then paid it back to the French and British governments.

When the stock market crashed, the American banks that had lent money to Germany demanded that Germany repay the loans. Germany didn’t have the money—not unless it could borrow from yet another country. But all the countries of Europe became poorer during the Depression. No one had money to lend. Now, Germany couldn’t afford to pay off its loans *or* the reparations.

People began to lose their jobs in Germany. Every week, more German businesses folded and disappeared. Prices began to rise higher and higher. Soon, a German housewife needed an entire wheelbarrowful of cash to buy a loaf of bread.

A young Austrian named Adolf Hitler thought that he had the answer to Germany’s problems.

Although Adolf Hitler was born in Austria, he considered himself German. Many Austrians did think of themselves as German—which is one reason why Germany and Austria fought together in World War I. Hitler studied German art and listened to German music, especially to the operas of composer Richard Wagner.

When World War I began, Hitler joined the German army. He believed that Germany was the strongest, worthiest country in the world, and that German culture was the most beautiful. If Germany conquered Europe, German ways would spread across the land—and that could only be good. If Germany wanted to add other countries to the German Empire by force, those countries were *lucky* to become German.

Hitler was surprised to find out that many Germans didn’t support the war. After a few years of fighting, thousands of German citizens just wanted life to go back to normal. They wanted the war to end, even if Germany had to give up some of its land and its power.

Hitler was appalled. How could his fellow Germans be so unpatriotic? Some evil force must be spreading discontent throughout Germany, keeping Germans from recognizing the importance of German victory.

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Hitler decided that the evil people who were spreading this discontent must be the Jews.

Since the Middle Ages, Europeans had been suspicious of Jews. Christians who knew almost nothing about Jewish culture and the Jewish religion thought that the Jews had strange, illegal rituals. They accused Jews of being proud and boastful, and caring about nothing but money. None of these things were true, but hatred of Jews, called *anti-Semitism*, was so widespread that, in many European countries, Jews couldn’t even own land until the 1700s.

In the twentieth century, thousands of people still hated and feared the Jewish people. When Hitler began to make speeches about how the Jews were responsible for Germany’s troubles, he found many Germans who were willing to listen.

After World War I, Hitler became part of a political group that became known as the National Socialist German Workers’ Party. Like the communists, the National Socialists believed that the poor and working people of Germany should have more of a say in how the country was run. Like the Fascists, the National Socialists believed that they needed a strong leader who could make Germany a great and wealthy nation again. And like many Europeans, the National Socialists were anti-Semitic.

Hitler made speeches at the National Socialist meetings. He turned out to be a mesmerizing public speaker. When he talked about the greatness of the German people, his listeners were almost hypnotized. After he spoke, the audience would stand up, cheering for Hitler’s ideas. Before long, Hitler had become the leader, or *führer*, of the National Socialists.

When the Great Depression hit America and Europe, Hitler’s audiences grew even larger. The German people had already been poor and discouraged. Now they were poorer, and hungrier, and more desperate. They were willing to listen to anyone who could promise them a better future.

Hitler travelled through Germany, promising that if Germans would vote the National Socialists (nicknamed the “Nazis” for short) into office, Germany would change. He would bring order, wealth, and greatness to Germany. He would cancel the terms of the Peace of Versailles, so that Germany would be free of its crushing war debt. And he promised that the Nazi party would get rid of all of the menacing Jews who were helping to cause Germany’s difficulties.

By 1932, over a third of the German voters supported the Nazis. The Nazis had become the most popular political party in Germany. When elections were held, the führer of the Nazi party, Adolf Hitler, won the job of German chancellor.

He was now the most powerful man in Germany.

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