1. 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

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

3. 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

4. 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

5. 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.

6. 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 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

7. 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
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

8. 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

9. 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!!!

10. 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

11. 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