Georgia During the “Roaring” 1920’s These good times were not happening for most Georgians. Primarily a rural state, Georgia, was suffering though one of the worst droughts in its history. Additionally, a tiny insect called the boll weevil was devastating Georgia’s most important crop: cotton.

Destruction of King Cotton The Boll Weevil The beetle hatch in the yellow flower of the cotton plant. As the flower becomes a boll (the place where the fibers are formed), the larvae feeds on the growing white, fluffy cotton, making useless. Appeared in 1915 and quickly spread across Georgia. By 1923, cotton production had dropped from 600,000 bales from 2.8 million bales in 1914. Drought In 1924-1927, a major drought hit Georgia. The drought ruined most of Georgia’s other crops. Between 1920 and 1925 over 375,000 farm workers left Georgia and the number of working farms fell from 310k to 249k. Banks that had lent farmers money took huge losses and many farm related business closed.

Meanwhile in the rest of the country… The Roaring 20’s U.S. prosperity in the 1920s had been based to a large extent on the sale of houses and automobiles. Consumers for the first time could buy houses and cars on the installment plan, and they were eager to do so. These purchases created jobs for workers: Building homes, cars, furniture and appliances the steel and other materials that were used to produce cars Jobs were also created as business firms built new plants and bought new equipment to produce what consumers wanted. Governments built paved roads for the new automobiles and electric plants and water and sewage facilities to service the new households. The prosperity of workers in all these industries allowed them to spend a lot of money, thus providing income to other workers — income which they in turn spent to buy other goods and services. ( Multiplier Effect)

The American economy went from unprecedented prosperity in the 1920s to unprecedented misery in the 1930s. It was an extraordinary reversal. Why did it occur??? http://www.gpb.org/georgiastories/stories/great_depression

The Great Depression Hits the Country 1929 – 1939

What caused the Great Depression? It wasn’t just one factor, but many: Stock market speculation Over borrowing Personal Debt Bank failure Reduction in purchasing Laissez-faire attitude Overproduction of agriculture High Tariffs Stock market crash

Over-borrowing The people of the United States had borrowed more money than they could afford to pay back. This hurt the banks that loaned the money and the businesses waiting for their payments. Many business that did not get repaid had to lay off workers.

Stock market Crash of 1929 The stock market is a place where “shares” of corporations are sold. Stock Market Speculation This is speculating (betting) that share prices would go up, so banks and individuals purchased more than they had money to buy. Many were buying purchasing stocks on a margin, or portion of what it was worth. If a stock is $100 you can pay $10 now and then resell it later when the stock price rose The investor had the right to sell the stock even though it was not paid for and would sell it when the stock went up in order to pay the rest off. This caused the price to go up making them higher than what they were worth Stock prices began to decline in September and early October 1929, and on October 18 the fall began. Panic set in, and on October 24, Black Thursday, a record 12,894,650 shares were traded. Stock holders lost over $40 billion dollars and businesses were never able to recover. Video

Bank Failures aka: The Bank Run During the 1920’s and 1930’s, banks did not have insurance protecting deposits. If enough bank customers tried to withdraw their money, the bank would eventually run out. This is called a bank failure. After the stock market crash, this actually happened and many banks failed causing many people to lose their life savings. In 1931 alone, 31 banks failed in Georgia. The few banks that managed to stay in business were hesitant about making loan, which slowed the purchasing power of big businesses and the individual buyer.

Bank Closings during The Great Depression Year Number of Bank Closings 1920 1921 1922 1923 1924 1925 1926 1927 1928 1929 1930 1931 1932 1933 168 505 367 646 775 618 976 669 499 659 1,352 2,294 1,456 4,004

Laissez-faire Attitude Laissez-faire is a policy or attitude of letting things take their own course, without interfering. The people and government officials believed that the economy would work itself out without government help. Hoover continued to tell the people...”prosperity is just around the corner.”

Reduction in Purchasing After the stock market crash combined with economic fears, the average consumer stopped purchasing goods. People stopped buying goods, so companies lowered production rates causing many to lose their jobs. The unemployment rate reached 25% further reducing the purchasing power of the average consumer.

Overproduction Agriculture Industry Before major droughts hit the Midwest, many farmers overproduced. In the 1920’s, Midwest farmers produced record numbers of agriculture products leading to a dramatic drop in the price of these products. This limited the profit margin for farmers. In the 1930’s a major drought hit the Midwest driving thousands of farmers from their homes and added to the millions of Americans already out of work. Industry While agriculture struggled, industry soared in the decade preceding the Wall Street Crash. In the ‘boom’ period before the ‘bust’, a lot of people were buying things like cars, household appliances and consumer products. Importantly, however, these purchases were often made on credit. And as production continued apace the market quickly dried up; too many products were being produced with too few people earning enough money to buy them.

A Farm Foreclosure