THE PARTY’S OVER
Goal #45
Economic
problems pile
up and the
U.S. sinks
into the
worst
depression in
its history
I. HERBERT HOOVER WON THE PRESIDENCY
IN 1928
A. “Hands off” policy He was 1. against any
government
interference in
business
 2. Promoted idea that
everyone could be rich

II. PROBLEMS IN U.S. ECONOMY EMERGE
A. FARMERS
Grow more
crops
Farmers invest
in new
machinery to
meet demand;
Expenses rose
1.
Overproduc
tion
Famers forced to
sell farms to pay
off debts
Low
Prices
B. PROBLEMS IN BUSINESS
Demand for
goods declined
1. American
workers wages
did not keep up
with the price of
goods
4. Factories close
4 million men
discharged from the
army – influx of
workers; 1. Industry
needed time to convert
to peacetime
production
Workers no longer
have money to
buy goods
2.
Production
slowed
3. Factories cut
back on
expenses by
laying off
workers
C. STOCK MARKET
Many people wanted
to make quick
fortunes
 1. Stock Market was
soaring

Stock prices rose 400%
in past 5 years
 2. Many people
investing ;1920s fad –
get into the market
 Some people 3. “buy
on margin” (a. pay
only part of stock price
in cash and borrow
rest from stockbroker)

b. Value of stocks based on
borrowed $ instead of
real value
Increase in personal debt
III. STOCK MARKET CRASH
A. Black Thursday
Oct. 24th, 1929
 Some thought stocks
could not go much
higher & stopped
buying
 1. Stock prices start to
fall. a. People who had
borrowed $ to buy
stocks panic and flood
the market with orders
to sell
 b.Brokers make margin
calls
 80% of population had
no savings
B. BLACK TUESDAY

1. October 29th, 1929

a.Stocks plunge again


By the end of Oct. –
over $30 billion lost
b.Many people lose
everything
IV. THINGS GET WORSE
Banks call in loans made to Brokers & Investors
 No rules about how much $ banks could lend
 A. Banks had no $ on reserve
 1. When people went to withdraw $ from savings
accounts – there was none
 9 million savings accounts vanish
 As word spread, thousands of people tried to get their
$ out – B. “Run” on the bank
 1. Hundreds of banks close

V. THE GREAT
DEPRESSION BEGINS