1. American History Chapter 21-1 The Great Crash

2. Beware of Appearances 1920s were a period of impressive economic growth. – Gross National Product: Value of goods & services produced during a specific period of time. Rose by 30%. The automobile industry drove the growing economy. – Two groups that did not do well in the 1920s: Farmers and Unions – Stock market boomed.

3. Election of 1928 Rep. Herbert Hoover v. Dem. Alfred Smith. – Hoover won easily.

4. Signs of Economic Weakness Unequal distribution of wealth: The wealthy enjoyed most of the prosperity.

5. More Warning Signs Buying on margin: Risky practice of buying stock on credit. Example? – Stock brokers could demand their money back if the stock falls below a certain price. Federal Reserve System: The nation’s central bank. – Tried to slow buying on margin by raising interest on loans. – Didn’t work as corporations began loaning money. Car sales began to decrease.

6. Stock Market Crash Thursday, Oct. 24, 1929: A huge sell-off of stocks took place. – Caused stock prices to plunge. – Leading bankers joined to buy stocks to stop the plunge. Tuesday, Oct. 29,1929: Black Tuesday – Investors panicked, dumping millions of stocks. – The stock market dropped in value by $16 billion.

8. Effects of the Stock Market Crash President Hoover downplayed it: Saying the economy would bounce back quickly. Many investors lost everything. Triggered a banking crisis: – Panicked customers rushed to withdraw their money. – Many banks had invested in the stock market. – Had made loans to stockbrokers. Many banks had to go out of business.

10. More Effects Businesses suffered: – No money available for growth. – Americans began buying only essential items. – Had to lay off workers. Effects Overseas: – Fragile European economies took a step backwards. – American banks wanted their loans back. – Couldn’t export as many goods to the U.S. – Tried to protect themselves with high tariffs.

11. Now how did they manage that?