ECONOMIC PROBLEMS OF THE 1920s

1. Overproduction.

Industry produced more than people bought.

ECONOMIC PROBLEMS OF THE 1920s

2. Declining demand for products.

People who had lost jobs could not afford products.

ECONOMIC PROBLEMS OF THE 1920s

3. "Junk Stocks." There was no accountability to

stockholders.-Some stocks were for

businesses that produced no goods, but were

set up just to sell stock certificates.

ECONOMIC PROBLEMS OF THE 1920s

4. Speculative Investing. People invested in companies with

the idea of selling the stock when its

value went up instead of holding it to

earn dividends.

ECONOMIC PROBLEMS OF THE 1920s

5. Poor Banking Practices. The government did not adequately

regulate the banks' use of depositors' savings accounts to speculate in the stock market.

Savings accounts were not insured. If the bank failed, the depositors

lost their savings.

ECONOMIC PROBLEMS OF THE 1920s

6. Declining prices and demand for crops.

Farmers had increased production during World War I.

The demand for crops was less after the war, but production was still up.

As crop prices fell, the farmers lost purchasing power.

ECONOMIC PROBLEMS OF THE 1920s

7. Unemployment due to technology.

Fewer Americans produced more goods. Workers were laid off.

ECONOMIC PROBLEMS OF THE 1920s

8. Installment buying. People went into debt. When they could not pay debts, the businesses lost money.