Thinking Slide: What materialistic item could you not do without? excessively concerned with physical comforts or the acquisition of wealth and material possessions, rather than with spiritual, intellectual, or cultural values. 

Roaring Twenties… During the 1920s, The Stock Market went up, The Gross National Product went up, and American consumption went up. 1921 – 1.5 million cars sold, by 1929 – 4.5 million were sold More Americans than ever owned their own home Approx. 80 million Americans visited Nickelodeons each week

Election of 1928 Herbert Hoover Incumbent – Calvin Coolidge “I do not choose to run for President in 1928” – August 1927 Republican – Herbert Hoover “We in America today are nearer to the final triumph over poverty that ever before in the history of any land.” If elected he would “go forward with the policies of the the last eight years.” Republicans took full credit for the nations prosperity Democrat – Alfred Smith Governor of New York And the winner is… Herbert Hoover

Herbert Hoover: Orphaned as a child Graduated from Stanford with a mining engineer degree After amassing a fortune, he retired and dedicated himself to public service.

As Hoover delivered his victory speeches, economic troubles were beginning… Farming had issues: Farmers made up ¼ of the American workforce Farmers increased their harvest to match the demand from WWI Many took out loans to expand their farms When WWI ended, they were left with a surplus and couldn’t pay their debts. Many lost their farms.

Gap between the Rich and the Poor Industrial Workers: Corporate Profits: Many people purchased Model T Fords and other consumer products Their wages rose gradually (8%) Worker output increased dramatically (65%) The difference in % shows that the rich got richer while industrial workers simply became less poor. 1929, The wealthiest 1% made the same as the bottom 42%

Do you believe the wealth gap is better, worse, or the same today?

Wealth in America today… https://www.youtube.com/watch?v=QPKKQnijnsM

As stock prices demand for stocks went Investors were buying on margin As Hoover delivered victory speeches, economic troubles were beginning… As stock prices demand for stocks went Investors were buying on margin Buying stocks on credit with a loan from a broker Brokers borrowed $$$ from banks Speculation – placing money in high risk investments with hopes of making money

The Stocks Crash Black Tuesday September 3, 1929 October 24, 1929 Stocks hit all-time high but begin to slide shortly after October 24, 1929 Big time investor sold huge amounts of stock causing prices to drop more The market recovered by the closing bell October 29, 1929 Black Tuesday The stock market collapses https://www.youtube.com/watch?v=RJpLMvgUXe8

Black Tuesday The Day the Stock Market crashed (Oct. 29,1929) By the end of the day… 16 million shares traded $15 billion in stock value gone

Panic of 1929 By November 13, losses totaled over $30 Billion Speculators who bought on margin lost everything. Paid brokers with savings or valuable Bank closures increased causing more people to withdraw their money (By 1931, more than 3,691 banks closed) As customers tried to withdraw money from banks they found out the banks did not have their money

Great Depression Andrew Mellon – Secretary of the Treasury Didn’t believe panic was a bad thing  reset economy More banks closed More businesses lost their operating accounts Forced cutbacks Locked our country into a downward spiral  Great Depression

2 Reasons the stock market crash hurt the banking industry (and vice versa): Banks invested heavily in the stock market Banks encouraged customers to buy stocks

Why not print more money?

Business Cycle – The period of growth and decline of the economy. By 1933 the unemployment rate went up to 25%!!

Surplus – when more goods are produced than sold How do you reduce a surplus? 1. Decrease prices to sell more goods (decreasing profits) 2. This decreases profits causing companies to decrease production and lay off workers 3. This causes unemployment to increase (Recession)… 4. Leading to the Great Depression

Hawley-Smoot Tariff Raised taxes on foreign imports. Foreign goods couldn’t compete in America. European countries retaliated with tariffs of their own. Led to a Global Depression

Review: causes of the Great Depression 1. People borrowing on margin to invest in stocks 2. banks investing heavily into stocks 3. banks encouraging customers to buy stocks 4. overproduction of companies (creating a surplus) 5. Hawley – Smoot Tariff