1928 President Hoover said that the nation was: “nearer to the final triumph over poverty than ever before in the history of any land.” What evidence about the 1920s economy can you give to support Hoover’s thinking at this time? How Long Will the Good Times Last?

Tuesday, October 29, 1929 – Stock prices plunged and lost their value because people decided to sell when no one was buying – This stock market crash is called Black Tuesday

The Great Depression The stock market crash was a major factor in the beginning of the longest economic slump in American history, called the Great Depression.

The Stock Market Bull market—a long period of rising stock prices – People kept buying and buying and it seemed there was no limit to how high stocks would go Buying on margin-buying stock with borrowed money (credit) – As the market rose, you would pay back the loan—works great with a bull market! – Increased the number of people and amount of stock purchased

The Stock Market September 1929 prices started dropping in small amounts, prompting people to sell quickly so they would not lose money. – When enough people did this, there were not enough buyers and a bear market was created. Bear market—stock prices decrease steadily

The Ripple Effect When the stock market crashed…. – Banks lost money they had in the stock market – People couldn’t pay the banks back the money they borrowed to purchase stock – Banks were losing money and didn’t seem safe – People tried to take their money out of the banks, causing bank runs – Once the bank was out of cash, they closed and no one else could get their money.

The Ripple Effect By 1933, 1/5 U.S. banks had closed Millions of people had lost their savings