The Roaring 20s Ends
The Great Depression Begins
Roaring 20’s
• The U.S. economy boomed!
• Business was good
• People spent tons of money
• People started buying stocks
• Many bought items on credit
What was the Great Depression?
• 1929-1941: A time of economic decline in
America. 25% unemployment.
• Many businesses closed
• Much Poverty
Cause #1
Industries In Trouble
• Many industries boosted production for
WWI took out loans to produce more.
• WWI ends, demand drops and companies
lose money
• Construction of new homes began to fall.
Coal Mine 1929
Coal Mine 1925
Cleveland Union Terminal 1928
Competition in Transportation
WWI Factory
Hydroelectric Dam 1929
Cause #2
Trouble on the Farm
• Huge demand from crops
during WWI
• Farmers take out
loans/plant more crops to
meet the demand.
• War ends demand drops,
farmers lose money
• Farmers try to make ends
meet by planting more
crops.
• Many farmers lost their
farms to the bank.
Farm 1923
Cause #3
Living On Credit
• 1920’s were a time of
consumption.
• Most people did not have
enough money to buy
new products.
• Many bought these new
items on credit.
• Americans in debt! They
start buying less!
• Companies lose money,
fire workers.
Cause #4
Uneven Distribution of Wealth
• Businesses made more money in the
1920’s, but did not pay their workers more.
• Rich got richer, but the poor stayed poor
• People bought less because their incomes
did not rise.
• Bulk of America poor! Who buys most
consumer goods?
• Chain reaction of business failure.
Decline In Trade
• 1920’s-European
demand for American
goods declines.
Cause # 5
International Debt Crisis
• Post war Europe owed American banks
money
• War torn Europe could not pay these
debts
• American banks gave new loans to
cover the old/ debt got much larger.
The Coming Collapse
•
•
•
•
•
•
•
Industrial Troubles +
Farm Troubles +
Credit pileup +
Uneven Wealth Distribution +
Decline in Trade+
International Debt Crisis =
Inevitable Economic Collapse!
Stock Market Crash
What is a Stock?
• A stock, also referred to as a share, is a share
of ownership in a company.
How Does The Stock Market
Work?
• The stock Market is a
place where stock
brokers buy and sell
stocks.
• The New York Stock
Exchange is the
largest market in the
United States.
New York Stock Exchange 1929
Stock Trader 1928
New York Stock Exchange 1955
1955
2006
The Stock Market 1929
• Stock prices rose steadily in the 1920’s.
• The stock market was seen as a way to get
rich quick.
• 1929 over 4 million Americans owned stock.
• The market was not as strong as it seemed!
• Speculation and buying on margin were to
issues that would bring the market to collapse.
Speculation
• Buying stocks on the chance that they
might make a quick large profit.
• Millions bought stocks in hope of a quick
profit; this made the prices rise, but only
on paper.
• The real worth of the company remained
the same.
Buying on Margin
• Paying a small percentage of a stocks
price and borrowing the rest from a
broker.
• Common in the late 1920’s.
• If stock price rose, the investor would sell
the stocks and use some of the profit to
pay off the loan.
• If prices went down the investor had no
money to pay back the loan.
Black Tuesday
• The stock prices peaked in September
1929 and started to decline.
• Some investors sold their stocks while
they were still worth something.
• This selling started a quick decline in the
market.
• October 29, Black Tuesday, investors sold
stocks in a panic.
Black Tuesday
• As the demand for stocks plunged so did
their price.
• 16 million shares of stock were sold on
Black Tuesday.
• Those who bought on margin were left in
huge debt.
• Millions lost their life savings.
• By November, 30 billion dollars was lost
on the market
Black Tuesday
The Banks Close
• When the stock market crashed people
panicked and rushed to the banks.
• The banks quickly ran out of money and
closed their doors.
• By 1933, 6,000 banks went out of business.
• Over 9 million Americans lost their life savings.
• 85,000 business went bankrupt
• Unemployment went from 3% to 25%
Bank lines