1. Warren G. Harding and Calvin Coolidge

2. Warmup
What are stocks? Why are they important?

3. Objective: How industry leads to the stock market crash.
The Great Crash
Objective: How industry leads to the stock market crash.

4. An Appearance of Prosperity
Not great for everybody
Was still a period of growth
Gross national product (GNP) - total value of goods and services produced by a nation during a specific period
Rose 30%
Society was optimistic about this growth
Little known about economic principles
Leads to questionable and sometimes reckless activities

5. An Appearance of Prosperity
Explosive expansion and production
Production increase leads to job increase
Low unemployment and slow growth of unions
Feelings of prosperity leads to people buying consumer goods
Shorter work week and higher paycheck
More money on movie theaters, sporting events, and leisure activities

6. Stock Market Expansion
Stocks and shares
Prices trended sharply upward
Ordinary Americans began to invest

7. Faith in Business and Government
Harding and Coolidge
“The chief business of the American people is business.”
Prosperity means people support this idea

8. The Election of 1928 Coolidge decided not to run Herbert Hoover (R)
Never held an elective office but a lot of experience in public service
Quiet and shy
Quaker
Supported Prohibition
Al Smith (D) outgoing Catholic

9. Wealth Distribution Uneven – 1% Workers hit hard Miners and farmers
About 70% of families below standard of living by 1929
Savings declined
Credit limits reached
Purchases slowed
Warehouses began to fill with assembly line goods

10. Credit and the Stock Market
Buying on margin – buying stock with loans from a stockbroker
What if stocks price dropped?

11. The Federal Reserve Nation’s central bank
Concerned with buying on margin
Makes it more costly for brokers to sell on margin
Decrease in margin buying from banks
Corporations began to sell on margin
Drives stock prices up further
Economist Roger Babson, “Sooner or later a crash is coming, and it may be terrific.”
Meaning a sudden crash in stock prices
Banker Charles Mitchell “I see no reason for the end-of-the-year slump which some people are predicting.”

12. Question
What caused the Great Depression?

13. Compare
Compare the causes of the 1929 stock market crash to the economic issues of today. What are the similarities? Differences?