America in the 1920s

1
America in the 1920s

• Part four
• The Wall Street Crash and its effects

2
The background

• USA in the 1920s a period of unrivalled
  prosperity
• Some did not share in it immigrants etc
• This boom was built on quicksand credit
• Too much speculation and buying on the margin
• The whole system was bound to crash one day

3
Causes of the depression

• Overproduction people did not need to buy new
  things once they has them
• As a result the prices dropped
• By 1928 factories began to cut production and
  jobs
• Gap between rich and poor was huge 60 earned
  less than 2000 per year the poverty line

4
Causes of the depression (2)

• Many did not share in the prosperity farmers,
  black people, immigrants, miners
• Tariffs helped US industry at first but made it
  hard to sell abroad once the US market was
  saturated
• Speculation more shares being bought on credit
  price rose rapidly bound to come down equally
  rapidly

5
The cycle of depression

• Reduced demand for consumer goods
• Reduced production of consumer goods
• Increased unemployment
• Less money to spend on consumer goods
• PANIC

6
The Wall Street Crash 1929

• People began to sell shares price began to
  crash panic set in
• Black Thursday 24th October 1929 13m shares
  sold prices fell
• Following Monday panic buying broke out again
• Tuesday 8000 million lost prices fell until
  November and then bottomed out
• By then the damage was done

7
24th October 1929
8
Effects of the crash

• Many rich Americans lost all their money
• Many companies had to close many millions of
  jobs were lost
• Ordinary people who had been encouraged to
  speculate on shares lost everything
• Banks lost money many went out of business
  people who had saved with them lost everything
• 1929 700 banks went bust