1920’s1920’s“Crash and Depression”“Crash and Depression”

1929-1933“The Great Depression Begins”

How could the economy appear SO GOOD in the 1920’s and then suddenly TURN SO BAD in 1929?

• 1- Explain why the economy appeared to be so “healthy” in the 1920’s

• Wages UP - Stock Values UP - Unemployment Down - People had Confidence -

• 2-Explain why, in reality, the economy was headed into danger.

• Credit – Stock Speculation - Farmers in Trouble -Too Many Goods, too little demand

Ch. 22 The Great Depression BeginsCh. 22 The Great Depression BeginsAs the prosperity of the 1920’s ended, severe

economic problems gripped the nation

The Great Depression will have lasting effects on how Americans view themselves and their

government

• Section 1: “The Nations Sick Economy”

1920’sEconomic Wheel

( + )Old industries• Railroads• Coal Mining• Textiles• Farming

( - )New Industries• Consumer

Goods• Credit • Stock Market

Problems Threaten Economy• Old Industries Face “New Competition”

– Railroads (Trucks , Buses, Automobiles)– Textiles : North > South (Foreign Competition)– Coal Mining (Oil, Natural Gas, Hydroelectric)

• Farmers Suffer From “Overproduction”– WWI: expanded , borrowed for new machinery– Congress > “Price Supports” - Coolidge Vetoes

• by 1929 “Rich > Richer, Poor > Poorer -Stock Market (Buying on Margin)

• FarmersFarmers (Overproduction = low prices) Debt buying “Farming Machines”

• Too many Goods, Too little DemandToo many Goods, Too little Demand **OVERCONSUMPTIONOVERCONSUMPTION* * -Production v. Consumption

• Unbalanced Foreign TradeUnbalanced Foreign Trade -High Tariffs / Not buying U.S. goods

• Buying on CreditBuying on Credit (Huge personal DEBT)

• Stock MarketStock Market Stock Speculation (Buying on Margin - Credit)– Inflates the value of the stock

DEPRESSION

Uneven Prosperity -Rich v. Poor

Buying on Credit -increase in Debt

Stock Market -Buying on Margin -Speculation

Too many Goods Too little Demand -Overproduction

Farmers - More Crops -Low Prices

Unbalanced Foreign Trade -HIGH Tariffs (NO export)

Mechanization -Machines = Less Jobs

“DEPRESSION”

• Uneven Income Distribution• Too much “Easy Credit”

• Stock Speculation (Over Valued)• Over Consumption (production-purchases)

• Unbalanced Foreign Trade (less jobs)– Mechanization (Machines = less jobs)

• EFFECTS• Millions lose their jobs• Gross National Product Falls dramatically• Many Banks fail (bankrupt)• rise in Poverty = Health & Social problems• Global Economy Suffers

• Stocks -investing in a company by buying shares in that company

• Value - based on strength / weakness of Co.

• people buying stocks can also INFLATE the value of a stock

• Dow Jones Industrial Average– S & P 500

• Buying on Margin

• Speculation

Slipping Economy Signals• Herbert Hoover wins 1928 Election

• Economic Wheel “Slows Down” 1926 - 1929 Construction slowing (others) -buying slows, productions slows, (spiral)

• Oct.29, 1929 “Stock Market Crashes” -BLACK TUESDAY (Panic continues 2 weeks) people lose CONFIDENCE

U.S. ECONOMY 1929-1933• Gross National Product • Unemployment

(1929 - 1932)• Gross National Product

• National Income dropped 1/2• 85,000 business closed

• 400,000 farms foreclosed

• 6,000 Banks Failed (1/4)• 12 Million Unemployed (1/4)• Hunger & Suffering

•NO Direct Relief