Presentation on theme: "The Aftermath of Black Tuesday How the Depression affected the lives of Americans."— Presentation transcript:
The Aftermath of Black Tuesday How the Depression affected the lives of Americans
In the U.S., the 1920s was a decade of prosperity. Bold cultural ideas New inventions available to broad audiences CONFIDENCE in the U.S. economy
How did the U.S. Economy grow so much in the 1920s? Lots of new inventions –Automobiles –Radios –Telephones –Telegraphs Lots of supply, not enough demand Solution? Supply Demand
Financing! 60% of Americans financed automobiles in the 1920s 80% of Americans financed radios in the 1920s Created an artificial demand (people were imagining they had money that they didn’t)
The Stock Market in the 1920s A stock is a percentage – a piece - of a company. The value of stock is based on confidence in the total market for stocks, not the actual profits of that one company. The overall value of stock increased 120% from 1925-1929.
The Upward Spiral (or so it seemed…) Americans borrowed money not just to buy goods, but also to buy stocks. Increased Spending Economic Confidence Desire to invest in stocks
Economic Danger Signs of the 1920s Over-speculation on stocks with borrowed money Large gaps between the rich and poor Post-WWI international economic slump
What happened to consumers? Consumers were afraid of economic failure, so they stopped spending money. Businesses lost the profit they relied on. Businesses closed.
What happened to workers? As businesses lost money, salaries were lowered and many workers were laid off or fired. Many businesses couldn’t hire the unemployed because they didn’t have the funds to pay salaries.
Unemployment 24% - 50% of Americans were unemployed at the peak of the Great Depression.
The Downward Spiral Less money to spend Businesses lose profit Businesses can’t afford to pay workers Businesses lay off workers
What happened to homeowners? As homeowners lost their jobs, they couldn’t afford to pay their mortgages. Banks foreclosed on loans. Homeowners became homeless.
On an international scale… During WWI and after the war, billions of dollars were loaned to European Allies Allies struggled after WWI and couldn’t repay the money The U.S. increased tariffs to gain some of the money back in trade $ (Hawley-Smoot Tariff) – BAD IDEA! European countries retaliated with tariffs as well.
Bank Closings With so many mortgage foreclosures, banks could not return depositors’ money Banks closed. Depositors lost everything.