The Stock Market Crash and Great Depression

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Presentation transcript:

The Stock Market Crash and Great Depression Chapter 21 The Stock Market Crash and Great Depression

What was right in the 1920s (or so we thought!) Booming economy b/c of the “Republican Formula” (Harding, Coolidge, Hoover) Strong business, little government, isolationist Post-War optimism New consumer goods bought up rapidly= more production and more jobs

Herbert Hoover Highly qualified public servant Easy victory to Presidency His opponent ,Al Smith (D-NY) was Catholic

The 2 sides of Hoover Campaign (1928): “By adherence to the principles of a decentralized self-government, ordered liberty, equal opportunity, and freedom to the individual, our American experiment in human welfare has yielded a degree of well being unparalleled in all the world. It has come to the abolition of poverty…than humanity has ever reached before.” During the G. D: "no one is actually starving . . . The hobos, for example, are better fed than they have ever been.” or “many persons left their jobs for the more profitable one of selling apples."

The Problems with the Economy Agriculture: 25% of workforce During war: high production and demand=need for more equipment=buy on credit (go into debt) After war: low demand= low prices= little money No way to pay off debt No money means no purchasing power (can’t share in the prosperity)

Problems continued Wealth distributed unevenly Good news: 1920s-Production up (32%), corporate profits way up (65%) Bad news: workers’ wages up only 8% Rich get richer, but can’t support a consumer-based economic system http://www.businessinsider.com/facts-about-inequality-in-america-2011-11#the-gap-between-the-top-001-and-everyone-else-hasnt-been-this-big-since-the-roaring-twenties-1 200 largest companies controlled ½ of corporate wealth Easy consumer credit leads to big issues later

Black Tuesday: Market Crash What was driving up stock prices? Speculation Same reason homes prices rose 5 years ago Stocks started to slide, then free fall on October 24, 1929 Part of the “business cycle”

Things Fall Apart Bank Failures Less money=less spending. Leads to fewer jobs (high unemployment) Hawley-Smoot Tariff Europe soon follows into depression Hit bottom in 1932