New consumer goods  radios, dishwashers, etc. Rise of the automobile  new roads, gas stations, etc. People could buy on credit Buy now… pay later Business profits and wages soared Stock market boomed Many ‘regular people’ began to buy stocks The economic boom was reflected in social themes of the decade: flapper girls, speakeasies, the Harlem Renaissance, Charles Lindbergh, etc.

Fruits of the booming economy were not shared equally 71% of the population earned just above the poverty level in the 1920s Increasing personal debt due to “credit” In other words, we’ve already done all of the consuming for the next few years in this year Risky investment choices (speculating- playing the stock market) “ Hey… you can’t lose in this market. Get every cent you can, even if you have to borrow it, and throw it in the stock market!” Buying on Margin This is not investing. This is gambling. It can create what is known as a ‘bubble’ because the prices inflate, and if they go too far, they must…

Farms were overproducing (started in WWI to meet high demand) causing prices to drop and land to become exhausted of nutrients Dust Bowl 1/3 of Americans were farmers One million families lost their farms Okies

Investing in stocks became popular in the 1920s (stock = part ownership in a company) “Black Tuesday” – Stock Market Crash on October 29 th, 1929 (16.4 million shares were sold) An estimated $30 billion dollars were lost on the stock market by November.

Banks had money invested in the stock market, which they lost People who had taken loans from banks (much of this also invested in stock market) couldn’t pay it back Which means that if you went to a bank to get your money out, they might say they didn’t have it. This, in turn would cause a panic and a bank run. From 1929 to 1932 five thousand banks failed

A Vicious Cycle As people lost their jobs, they were unable to buy goods, so demand fell Companies couldn’t sell their goods, so they laid off more workers Thus, less demand, fewer workers, less demand…

25% of the population was unemployed by 1932 People standing in bread lines for food

Excerpt From A History Textbook (suffering during the Great Depression) “ Without jobs and without money, even necessities became luxuries. In the cities, some people quietly lined up at soup kitchens or in bread lines. Others ate only potatoes, crackers, or dandelions, or scratched through garbage cans for bits of food. As diets deteriorated, malnutrition became common, and the undernourished frequently fell victim to disease. Millions of Americans were hungry and ill; they were cold. Unable to afford fuel, they huddled in unheated tenements and shacks. Families doubled up in crowded apartments, and those unable to pay rent were evicted. The homeless created shantytowns, called “Hoovervilles”, where they lived in shacks made of everything from egg crates to discarded boards and bricks.” (Norton, A People & a Nation)

Republican President from 1928 – 1932 He opposed direct government intervention and direct relief Only private charities should help Hoovervilles: homeless shanty towns that were blamed on Hoover Passed highest tariffs in U.S. History (Hawley-Smoot Tariff) to try to protect American Business However, the tariff ended up also destroying international trade, spreading the G.D. and making it international

Finally, in 1932 (three years into the Great Depression) Hoover set up the Reconstruction Finance Corporation (RFC) – a program to give loans to businesses and help them survive through the depression This program would eventually do a lot to end the G.D., but too little, too late for Hoover He was defeated in 1932 election due to his failure to address the problems of the Great Depression. (continued)