3. Europe in 20s trying to recover from war War Debt GermanyFrance Great BritainUnited States Difficult for U.S. companies to sell products to Europe Tariff: Tax rate on imported goods Fordney-McCumber Tariff Raised taxes goods that would compete with American goods. Made it impossible to Britain and France to sell goods in the U.S. and repay debts.

4. “Everybody ought to be rich” High confidence in business 1920-1929 prosperous years for U.S. Belief the prosperity would never end

5. Rich got richer and poor got poorer Uneven Distribution of Income Small percentage of families held most of the wealth Income of wealthiest increased by 75% Rest of America 9% High number of poor Americans 70% of families earned less than 2,500/year. Most could not participate in “Roaring Twenties”

7. Farm prices high during the war Farmers bought more land Also bought more expensive equipment After war prices went down 40% Farmers unable to repay debt/loans

8. Many who appeared to be prosperous were living beyond their means. Credit: Arrangement in which consumers agreed to buy now and pay later for purchases. Installment Plan: Monthly payment and interest Large consumer/personal debt=Cutting back on spending

9. Efficient Production + Personal Debt= Late 1920s warehouses had piles of un-purchased goods Overproduction caused economy to slow

10. Get Rick Quick Attitude Before the war only the wealthy buy stocks After the war “average joe” buys stocks often with life savings. Common Practices in the 20s: Speculation: High-risk investments for the hope of a high gain. Buying on Margin: Purchase a stock for a fraction of it’s cost and borrow the rest.

11. September 1929 stocks fell Investors began to worry Quickly sell stocks Business leaders and politicians told public not to worry Prices fall again

12. October 29 th, 1929 16.4 million shares sold (normally 4-8) Crash triggers the great depression By mid November investors lost$30 Billion (amount U.S. spent on World War I)

14. Panic public withdraws money from banks Banks invested in stocks-lost money 1929-600 Banks closed 1933-11,000 of 25,000 banks failed Millions of people lost savings