The Great Depression Roaring Economy of the Late 1920’s • While the Economy continued to grow, there were signs that the prosperity would not last: - Farming Crisis -farmers were not making $ -increased production -greater debt – Buying on Credit • Loans in 1928- $5 million • Loans in 1929- $850 million – Nation’s wealth was not spread evenly • 0.1% of the population held 34% of country’s savings • Rich got richer, poor got poorer • President Herbert Hoover elected - belief in small government and self-reliant business • Stock Market: • Many new buyers • Speculation • Buying on Margin Stock Market Basics • The American public spends money by buying stock in different companies • If the companies do well, the person makes money • If the companies do poor, the person loses money • One large gamble on the market The Market Before the Crash • Bull Market- The economy was in such great shape that stock prices kept rising • So many people wanted to buy expensive stock so they bought by using credit from a broker • The brokers borrowed this money from the banks Black Tuesday • October 29, 1929 • Thousands of worried investors began selling stocks to get their money out of the falling stock market. • In just one day, the market lost a full year of profit • People lost everything!!! – Forced to pay their brokers with savings – Sell china, clothing, or jewelry to get cash • Caused the “Great Crash,” where overall loses totaled 30 billion dollars. • Began a 12 year period known as the Great Depression Aftermath of the Stock Market Crash • By 1932, more than 12 million people (1/4 of the workforce) were unemployed • Banks were closing down and people were losing their money – By 1933, money from 9 million savings accounts had vanished •Global Economy began to crumble.
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