2. The Great Depression The Economy in the Late 1920’s

3. The Economy Appears Healthy  Wonderful Prosperity  The value of stock continued to rise from 1925 to 1929  Wages had risen 40% since 1914  Only 4% Unemployment (7.9% 01/13)  Employment Changes  Labor unions lost support during the 20’s due to higher wages and standard of living  Employers raised wages, gave paid vacations and provided health care

4. Economic Danger Signs 1.Uneven Prosperity  71% of people earned less than $2500 a year & had no savings  200 companies controlled 49% of American industry 2.Buying on Credit  Poor Americans accumulated personal debt 3.Playing the Stock Market  Widespread Speculation (high risk investments in hopes of financial gain)  Investors produced 10-15% of the stock price & borrowed the rest at very high interest rates (buying on margin)

5. 4. Too Many Goods, Too Little Demand  Overproduction! Assembly lines outpaced the public demand 5. Slump in Key Industries  Drop in demand caused layoffs (auto, steel, rubber, glass industries) 6. Trouble for Farmers  Value of agriculture goods dropped after WWI - farmers could not repay loans taken during WWI  6000 rural banks were forced to close