Chapter 21 Section 1 Mr. Riddlebarger The Great Depression Begins The Great Crash Chapter 21 Section 1 Mr. Riddlebarger The Great Depression Begins

Consider… Banks are closed forever… and families have no way to get money All working members of the family have lost their jobs… Bills are due… and the family has no way to pay bills. How and where are family members going to find new jobs? If they cannot pay rent, where are they going to live? If they lose their cars because they cannot afford the payment, how will they look for work?

An Appearance of Prosperity For most, the 1920’s was a time of prosperity Increased GNP (for farmers, incomes dropped) Corporate profits were high Unemployment was low; increase in spending of consumer products Economic optimism led to reckless economic activity

Stock Market Expansion Stock is ownership in a company. It is sold in shares. The Stock Market boomed in the 1920’s People began behaving as if market would never go down.

“It’s Fine As Long As You’re Going Up.”

Increase in Market Investment Many ordinary Americans began investing in the stock market Often, they borrowed money to do so. “Amateur Night”

Republican Presidencies Pro-business Presidents of the 1920’s were popular among voters Warren G. Harding Calvin Coolidge “The chief business of the American people is business.”

The Election of 1928 Herbert Hoover is Republican nominee Worked in cabinet & led US food production efforts during WWI Hoover seen as outstanding business-like administrator. Democrats nominate Al Smith

Irony Alert… “If some unprecedented calamity should come upon the nation… I would be sacrificed to the unreasoning disappointment of a people who expect too much.” - Herbert Hoover Before the 1928 election, when asked about the public’s positive perception of him.

Electoral Map- 1928 election Hoover wins 1928 election easily.

Economic Weaknesses While prosperity defined the 1920’s, a number of serious problems boiled just beneath the surface. Dow Jones

Wealth Distribution Despite wealth of 1920’s, few truly prospered Growing gap between rich and poor Wages didn’t increase much Many have high credit debt

Credit and Stock Market Buying on margin was a practice used to buy stock with credit. Buyer puts down payment then pays off when selling the stock. This risky practice increased during the 1920’s. Lower down payments required of buyers as stock market skyrockets.

The Federal Reserve Federal Reserve sets policies to regulate nation’s money supply in order to promote a healthy economy. Failed in efforts to limit buying on margin

Black Thursday On Thursday, October 24, 1929, many investors begin selling off stocks. This created a ripple effect and others follow. With few willing to buy, prices plunge.

Black Tuesday Following a short recovery, panic completely overcomes the market on Tuesday, October 29th. Investors dump over 16 million shares of stock. Stock Market drops in value during October 1929 by $16 billion.

The Stock Market Crashes

Stock Market Crash

Effects of the Crash Attempts to calm the public Business leaders and Pres. Hoover attempt to downplay the Crash Collapse ruins many Market investors. Many lose entire savings Many banks driven out of business by Market collapse Consumers cut back on spending; companies lay off workers

Overseas Effects Crisis has ripples throughout world US had many loans to foreign countries Foreign governments did not have money to repay loans. Lay-offs in foreign countries mean less buying of US goods Passage of high tariff in US also hurt buying of US goods

http://www. archelaus-cards http://www.archelaus-cards.com/blog/2009/04/11/the-great-depression-in-cartoons-part-12-opposing-the-new-deal/