Emerging Problems Under Harding and Coolidge, the US became the most wealthy and prosperous nation in the world People buying, producing, and stock market was high High availability of consumer goods Electric appliances, automobiles Availability led to high demand for goods Companies began to produce more; attempt to meet demand

Emerging Problems Herbert Hoover (R) elected in 1928 He promised a “chicken in every pot”, or continued prosperity Promised a “chicken in every pot”

World demand amount of food being supplied by the US during WWI Emerging Problems Farmers were in deep debt after WWI Took out loans to pay for more land, seed, tractors, etc during WWI When European farmers returned to work, a world surplus of food caused crop prices to plummet Amount of crops being supplied by World demand amount of food being supplied by the US during WWI Also, new technologies made crops easier to grow, increasing crop yields US and Europe after WWI. A surplus means prices will fall

Emerging Problems Uneven distribution of wealth Wealthy consume a lot, but are few…they don’t consume enough to keep an economy booming Poor are many...once they stop buying, economy will bust Buying on credit The richest 1% had the same amount of money as the lower 42% combined The wealthy consume a lot, but are few…so they don’t consume enough to keep an economy booming The poor were many, and once they stop buying, the economy will start busting

Stock Market Crashes Stock market was sky high Reasons for this: Buying on margin: buying stock on credit. Speculation: Risky attempt to buy a stock with hopes of it going up, buyer sells for a quick profit.

Stock Market Crashes With many investors, stock market looked strong (Bull Market) Dow Jones Industrial Average- indicator of how healthy the stock market is Dow Jones Industrial Average is the indicator of how healthy the stock market is Here is a look at the “Dow” in 2008. Notice, confidence was high in early ’08. By October, the government action caused a loss of confidence in the economy. What happened? When the Dow goes down, investors lose confidence and begin selling stock

Stock Market Crashes October 24, 1929 – “Black Tuesday” 1929-1941 Collapse of the stock market Investors taking their money out (selling stock) was the cause 1929-1941 Poor economy and high unemployment Dow went from 381pts down to 198.7pts Over 16 million shares sold as prices dropped Loses exceeded $26 billion

The Great Depression Begins People had no confidence in the economy, so they began withdrawing money from banks Banks try to protect themselves by not giving out loans Americans could not spend $/get U.S. out of depression What does a bank need to operate?.....you got it, money 3,691 banks failed from ’29-’32

The Great Depression Begins Businesses failed Few had the money to buy goods, so businesses fire workers Intensifies the problem, those without jobs cannot spend By 1933, 25% of Americans were unemployed!!!

The Great Depression Begins Hawley-Smoot Tariff Supposed to protect American producers, keep foreign goods out of the US Europe retaliated by not allowing the US to sell goods in their markets

The Great Depression Begins Problem spread to the world European nations could not pay war debts Europe had relied on loans the US made to them, but the US stops doing this