2. ECONOMIC PROBLEMS OF THE 1920s Overproduction. Overproduction. –Industry produced more than people bought. Declining demand for products. Declining demand for products. "Junk Stocks." "Junk Stocks." –Some stocks were for businesses that produced no goods, but were set up just to sell stock certificates. Speculative Investing. Speculative Investing. –People invested in companies with the idea of selling the stock when its value went up instead of holding it to earn dividends.

3. ECONOMIC PROBLEMS OF THE 1920s Poor Banking Practices. Poor Banking Practices. –The government did not adequately regulate the banks' use of depositors' savings accounts to speculate in the stock market. –Savings accounts were not insured. If the bank failed, the depositors lost their savings. Declining prices and demand for crops. Declining prices and demand for crops. –Farmers had increased production during World War I. –The demand for crops was less after the war, but production was still up. As crop prices fell, the farmers lost purchasing power. Unemployment due to technology. Unemployment due to technology. –Fewer Americans produced more goods. Workers were laid off. Installment buying. Installment buying. –People went into debt. When they could not pay debts, the businesses lost money.

4. “Get Rich Quick”: The Speculative Mania Stock market speculating—buying a stock and expecting to make money by selling it at a higher price—ran rampant as more people saw the stock market as a certain route to riches. Stock market speculating—buying a stock and expecting to make money by selling it at a higher price—ran rampant as more people saw the stock market as a certain route to riches. Just as Americans bought their cars and radios on the installment plan, some also bought stock on credit—this was called buying on the margin. Just as Americans bought their cars and radios on the installment plan, some also bought stock on credit—this was called buying on the margin.

5. “Get Rich Quick”: The Speculative Mania Driven partly by real economic growth and partly by speculation, stock prices rose higher and higher. Driven partly by real economic growth and partly by speculation, stock prices rose higher and higher.

6. Huge credit problems Steady stream of bank failures in late 1920s as customers (many of them farmers) were unable to pay mortgages Steady stream of bank failures in late 1920s as customers (many of them farmers) were unable to pay mortgages Many bankers had small reserves as they attempted to capitalize on stock market growth. Many bankers had small reserves as they attempted to capitalize on stock market growth.

7. Other Causes Massive business inventories (up 300% from 1928 to 1929) Massive business inventories (up 300% from 1928 to 1929) Lack of diversification in American economy-- prosperity of 1920s largely a result of expansion of construction and automobile industries Lack of diversification in American economy-- prosperity of 1920s largely a result of expansion of construction and automobile industries Poor distribution of purchasing power among consumers Poor distribution of purchasing power among consumers –What does the above point mean?

8. Many farmers and factory workers were unable to purchase cars and houses and thus maintain economic growth Many farmers and factory workers were unable to purchase cars and houses and thus maintain economic growth Farm income declined 66% from 1920 to 1929 Farm income declined 66% from 1920 to 1929 By 1929 the top 10% of the nation's population received 40% of the nation's disposable income By 1929 the top 10% of the nation's population received 40% of the nation's disposable income

9. Decline in demand for American goods in international trade US demand for farm products from Europe Decreased Some nations, like Germany fell on economic hard times, unable to purchase from the US Unable to pay wartime debts, many European nations borrowed from American banks, further increasing indebtedness High American protective tariffs discouraged trade

10. Stock Market Crash, 1929 By October 1929, margin buying had reached $8.5 billion in loans to stock purchasers By October 1929, margin buying had reached $8.5 billion in loans to stock purchasers Stock prices began to fall in September 1929. On October 24 (Black Thursday) and October 29 (Black Tuesday), prices fell drastically as sellers panicked. By December $40 billion in stock value had been lost. Stock prices began to fall in September 1929. On October 24 (Black Thursday) and October 29 (Black Tuesday), prices fell drastically as sellers panicked. By December $40 billion in stock value had been lost. Hoover and business leaders attempted to calm Americans by assuring them that the country's economy was fundamentally sound Hoover and business leaders attempted to calm Americans by assuring them that the country's economy was fundamentally sound J.P. Morgan and other bankers bought $20 million of U.S. Steel to try to restore confidence J.P. Morgan and other bankers bought $20 million of U.S. Steel to try to restore confidence

11. Economic downturn accelerated by market crash Between 1929 and 1933, 100,000 businesses failed Between 1929 and 1933, 100,000 businesses failed Corporate profits fell from $10 billion to $1 billon Corporate profits fell from $10 billion to $1 billon Between 1929 and 1933, over 6000-9000 banks failed with over 9 million savings accounts lost ($2.5 billion) Between 1929 and 1933, over 6000-9000 banks failed with over 9 million savings accounts lost ($2.5 billion) By 1933, 13 million workers were unemployed (25% of the work force) and many were underemployed By 1933, 13 million workers were unemployed (25% of the work force) and many were underemployed Malnutrition increased, as did tuberculosis, typhoid and dysentery. Malnutrition increased, as did tuberculosis, typhoid and dysentery. –In 1932, 95 people died in New York City from starvation –Many turned to soup kitchens and breadlines for food

12. Bread line.

13. Serving for a bread line.

14. Being served in a soup kitchen.

15. Man eating in soup kitchen.

16. Hardship & Suffering during the Depression Family Problems Living conditions changed when multiple families crowded into small houses or apartments Living conditions changed when multiple families crowded into small houses or apartments Divorce went down because couples could not afford separate households and others postponed wedding plans Divorce went down because couples could not afford separate households and others postponed wedding plans Unemployed men felt like failures when they could not support their families and lost their status when they saw their wives and children working to the point when they were too ashamed to get relief or help from friends Unemployed men felt like failures when they could not support their families and lost their status when they saw their wives and children working to the point when they were too ashamed to get relief or help from friends Women were blamed for taking the jobs of men and in 1931, the Federation of Labor even endorsed it Women were blamed for taking the jobs of men and in 1931, the Federation of Labor even endorsed it Women continued to work doing “women’s work?such as nursing, and even if they were able to get an industry job which seldom hired women, they usually were paid less than men Women continued to work doing “women’s work?such as nursing, and even if they were able to get an industry job which seldom hired women, they usually were paid less than men

17. Hardship & Suffering during the Depression

18. Selling ties on the street

19. Hardship & Suffering during the Depression