1. The Nation’s Sick Economy
What caused the economy to go bad at the end of the 1920s?

2. Signs of Trouble in Late 20s
Railroad, farming, coal were struggling, layoffs begin
Congress tries to pass price controls, Coolidge vetoes
Easy credit causes massive consumer debt, 80% have no savings causing much of the public to stop buying
Income gap between the rich & poor was widening
$5,000- 9,999(5%)
$10,000 or more (1%)
$2,000-$4,999 (29%)
$1,999 or less (65%)

3. Herbert Hoover Elected
Secy of Commerce Herbert Hoover easily wins election (Lassiez-Faire Republican)
Despite rising unemployment, Hoover states business will fix the problems itself – Discuss: Why could attitude be a problem?
“We in America are nearer to the final triumph over poverty than ever before.”

4. Bullish Stock Market
1929: Dow Jones Industrial Average (measures overall stock price) had gone up every year in 1920s – 4 million invest
But many stocks bought on 1) speculation (buy risky stocks, for a quick profit) or 2) buy on margin (small down pymt, borrow rest)

5. The Stock Market Crashes
1929: Investors worry about unemployment, begin selling stock
Stock market plunges, Oct 29th “black Tuesday” 16.4 million shares were “dumped”, stock market loses 25% of its value
$30 billion lost, panic ensues

6. Financial Collapse
People try to pull their remaining money out of bank, run on banks causes 11K of 25K banks to collapse
By 1932, 90K businesses go bankrupt, unemployment rate jumps from 5% to 25%, US GNP drops 50%