1. 1920) World economy = a delicately balanced house of cards. Key card that held up the rest was American economic prosperity. HoJun

2. »Despite prosperity, 3 weaknesses in U.S economy caused problems »uneven distribution of wealth »overproduction by business and agriculture »lessening demand for consumer goods »By 1929) American factories were turning out 1/2 of the world’s industrial goods. »This rising productivity led to enormous profits; however, this wealth was not well distributed. For example, richest 5 % received 33 % of income yet 60% American families earned less than $ 2000 a year. A Flawed U.S. Economy

3. »Most families were too poor to buy these products »Factories reduced production and laid off workers »A downward economic spiral began »As more workers lost their jobs, families bought even fewer goods »1920) over production affected American farmers »New farming methods increased, thus more food produced »However the farmers faced competition with farmers in Australia, Latin America, and Europe »As a result = world wide surplus of agricultural products drove prices and profits down. A Flawed U.S. Economy

4. »1929) NYC was the financial capital of the world » NY Stock Exchange showed booming U.S economy in soaring prices for stocks. »To get into the boom, many middle income people bought stocks. »Meant they paid small percentage of a stock’s price as a down payment and borrowed the rest from stocker. »System worked well because of the stock prices were rising. »If they fell, investors had no money to pay off the loan. »1929) people thought the stock prices were unnaturally high. The Stock Market Crashes

5. »They started to sell stocks, believing that the rates will go down soon. »They were right. »People wanted to sell the stocks, but no one bought. »Prices sank fast. »Prices plunges to a new low on Tuesday, April 17, 2007 a record of 12 million were sold then the market collapsed. »In the stock market crash, billions of dollar were vanished »Bought things that weren’t worthy at high prices. Within the months of crashes, unemployment rates increased as industrial production, prices, and wages declined. »Great depression touches every corner of American economy. »1932) Factory production 1/2. 1000s of businesses failed. 1933) 1/4 of all American workers had no job The Stock Market Crashes

6. »They started to sell stocks, believing that the rates will go down soon. »They were right. »People wanted to sell the stocks, but no one bought. »Prices sank fast. »Prices plunges to a new low on Tuesday, April 17, 2007 a record of 12 million were sold then the market collapsed. »In the stock market crash, billions of dollar were vanished »Bought things that weren’t worthy at high prices. Within the months of crashes, unemployment rates increased as industrial production, prices, and wages declined. »Great depression touches every corner of American economy. »1932) Factory production 1/2. 1000s of businesses failed. 1933) 1/4 of all American workers had no job The Global Depression

7. »World was shocked of the fall of American economy. »Worried Americans asked banks for repayment of their over loans and American investors withdrew their money from Europe. »The American market for European goods dropped. »Gov forced American people to buy their goods. Conditions worsened. »When U.S raised Tariffs, other nations imposed their own higher tariffs. »Whole trade dropped by 65%. » Unemployment rate soared. B/c of war debts + Ameri. Loans + investment, Germany and Austria got hit. »1931) Austria’s largest bank failed. Led to financial panic in central European countries. The Global Depression