 The new concept of
“credit”
 People were buying:
 Automobiles
 Appliances
 Clothes
 Fun times reigned
 Dancing
 Flappers
 Drinking
 Credit system
 People didn’t really have the
money they were spending
 Interest rates on loans were low
= people borrowed more
money
 Excessive real estate
construction = oversupply
 WWI
 The U.S. was a major credit
loaner to other nations in need
 Many of these nations could
not pay us back
 People bought stocks
on margins
 If a stock is $100 you
can pay $10 now and
the rest later when
the stock rose
 Stocks fall
 Now the person has
less than $100 and
no money to pay
back
 With people panicking
about their money
investors tried to sell their
stocks
 This leads to a huge
decline in stocks
 Stocks were worthless
now
 People who bought on
“margins” now could not
pay
 Investors were average
people who were now
broke
The New York Stock Exchange
Black Thursday, October 24, 1929
 Black Thursday October
24th, 1929 – lost 11 % at the
start of the day but
recovered
 Black Monday October
29th, 1920 – lost 13 % over 16
million shares were traded
that day.
 Black Tuesday October 30th
– lost 12 % Lost 14 Billion
dollars in one day. 33
Billion over the two days!
 Black Monday October 19,
1987 – dropped 22.6 %

http://www.huffingtonpost.com/2011/08
/05/dow-jones-biggest-dropsfalls_n_919216.html#s323006&title=10_A
ugust_4th
• Increased technology
• Good growing conditions
• Supply greater
than demand
• Overproduction
from World War I
• Wages not keeping up with inflation
• Supply greater than demand
• European Depression
Many Poor and
Very Few Rich!
Workers earned
so little they
couldn’t buy the
products they
produced!
Wages were as
little as 20 – 25
cents per hour!
Even the best employer Ford Motor Company paid only $5.00/Day
($0.48 / hr.) for a 6AM-6PM shift!
Impact on the American People
 Farmers were already feeling the effects
 Prices of crops went down
 Many farms foreclosed
 People could not afford luxuries
 Factories shut down
 85,000 businesses failed
 Banks could not pay out money
 25% of banks closed
 Literally closed their doors to people
 People could not pay their taxes
 Schools shut down due to lack of funds
Tramps,
hobos,
riders of
freight
trains
Farmers and sharecroppers headed west; called migrants or “Okies”
25% of the workforce unemployed
by 1932
An additional 15% of the workforce
was “underemployed”
21% of the workers who kept
their jobs saw hours cut
20% of workers who kept their
jobs took pay cuts
Some worked only for food or a
place to sleep – No pay jobs