The Great Depression

Leading up to the Great Depression Election of 1928 Herbert Hoover Herbert Hoover Republican Republican Successful engineer Successful engineer Head of Food Administration during World War I Head of Food Administration during World War I Secretary of Commerce in two presidential administrations Secretary of Commerce in two presidential administrations Favored ban on liquor sales Favored ban on liquor sales Quaker Quaker Alfred E. Smith Alfred E. Smith Democrat Governor of New York Irish American 1 st Catholic nominated to run for president Did not favor ban on liquor sales Brennan is a beast. 6 th period son.

The Long Bull Market The prosperity of the 1920’s brought about an increase in stock prices, this is called a bull market The prosperity of the 1920’s brought about an increase in stock prices, this is called a bull market Due to the prosperity, Americans were investing more in stocks, 10 % of households owned stocks Due to the prosperity, Americans were investing more in stocks, 10 % of households owned stocks Investors bought stock on margin which meant they only had to pay a small cash down payment Investors bought stock on margin which meant they only had to pay a small cash down payment Buyers started taking risks to make money overnight by engaging in speculation Buyers started taking risks to make money overnight by engaging in speculation Downfall of buying on margin… Bad when stock prices start to fall Bad when stock prices start to fall Brokers may make margin calls which require investors to repay the loan at once Brokers may make margin calls which require investors to repay the loan at once

The Stock Market Crash of 1929 Prices started slipping in September Prices started slipping in September Black Tuesday: October 29 th, stock market prices took a steep dive Black Tuesday: October 29 th, stock market prices took a steep dive Was not the major cause of the Great Depression Was not the major cause of the Great Depression Crash weakened banks in the United States Crash weakened banks in the United States

Weakened Banks Banks lent too much money to stock speculators making risky investments Banks lent too much money to stock speculators making risky investments Banks invested depositors’ money in the stock market Banks invested depositors’ money in the stock market After the crash, banks lost money they invested and speculators could not pay back their loans After the crash, banks lost money they invested and speculators could not pay back their loans Banks stopped giving out large amounts of loans which made less credit available Banks stopped giving out large amounts of loans which made less credit available This made it borrowing money difficult for consumers and businesses This made it borrowing money difficult for consumers and businesses Some banks were forced to close because their losses were too great Some banks were forced to close because their losses were too great Americans started making runs on the banks which forced them to crumble Americans started making runs on the banks which forced them to crumble Banks had no guarantee of protecting the people’s money Banks had no guarantee of protecting the people’s money During the Great Depression 3,000 banks had to close During the Great Depression 3,000 banks had to close