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

2. 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?

3. 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

4. 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.

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

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

7. 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.”

8. 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

9. 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.

10. Electoral Map- 1928 election
Hoover wins 1928 election easily.

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

12. 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

13. 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.

14. 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

15. 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.

16. 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.

18. The Stock Market Crashes

19. Stock Market Crash

20. 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

21. 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

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