•  Raw:
• AIM:
• What is
FALSE
PROSPERITY &
what were the
warning signs of
depression?
1920s America
I. False Prosperity
• Many people in the 1920s become
rich from buying stock in
Companies.
• Most Americans believe the stock
market is the way to make their
fortune.
• It was unregulated by the Federal
Government
• Underneath this massive growth
in wealth our economic system
was rotten.
Warning Sign:
• Farmers have huge debts(from buying cutting
edge farm machinery), & farm prices keep
dropp .
• Coolidge refuses to help struggling
farmers. They lose their farms!
ing
II. Installment Buying/Margin Buying
• Buying products for a fraction of
the price and paying the rest in
Installments.
• People buy up new products
and fall into debt.
• Radios, telephone, cars, appliances
• debt+unemployment=TROUBLE
• When debt can’t be repaid
businesses begin to fail.
• In turn, banks fail!
• Begins a terrible cycle.
• Margin Buying of Stock.
• Only have to pay 10% of
stock price.
III. The Stock Market Boom
• Many investors buy on margin
paying only a fraction of the stock
prices.
b throughout
• Stock prices clim
the 1920’s.
• Investors buy and borrow
irresponsibly.
IV. America in the 1920s
• Growth in American Industries
• Technological progress
• Increase in productivity
• The U.S. doubled national income
from 1914 to 1925
• Expectation for a great future and
massive optimism
V. The Crash
•  Black Tuesday: October 29,
1929. 16 Million shares sold.
Stock exchange closes for 4
days to stop selling.
•  In a single day, the market
lost $14 billion. This brought
the total amount of money
lost to $30 billion in a single
week!
•  America slides into the Great
Depression.
People were buying
so much on Margin
that when the selling
began they panicked
and sold everything at
basement prices
The Election of 1928
• Herbert Hoover(R)
• Al Smith(D)
• Hoover wins easily!!
Causes of the Great Depression
•  Unregulated Stock Market Action
•  Unbalanced Economic System(ex. FOOD
Production and poor distribution)
•  Unemployment on the rise (WWI)
•  Laissez-Faire Presidents(3 blind mice=
Harding,Coolidge,Hoover)
•  International Economic trouble
•  Too much credit buying
•  Huge g a p between RICH and poor
•  THE 1920’S GOT us OVER-CONFIDENT