End of the Roaring 20’s

The Depression Begins

Things Were Going Well…

• By 1928 the Dow Jones Industrial Average had risen 122 points.

• Dow Jones-average of stock prices of major industries.

• People followed the Dow Jones like sports statistics.

OOPS!!!• Black Tuesday: On October 29, 1929, 16.4

million shares were sold.

• Overall losses totaled $30 billion

The Great Depression:

• A sever economic decline that lasted from 1929 to the U.S’ entry into WWII.

• It was felt throughout the U.S. causing millions to lose their jobs, farms and homes.

Things Get Worse:

• Henry Ford closed his Detroit Plant meaning 75,000 people were out of a job.

• People were forced to move to part-time or lost their jobs with no unemployment insurance.

Effects of the Depression

Restaurants and businesses were being forced to close because consumers could

no longer afford to go to them

Money In the Bank…not really

• Rural and City banks were being forced to close.

• Loans were not being paid and people rushed to withdraw money from the banks. But there was no money to give.

Reasons for the Depression: Over-speculation: People bought stocks in

the 1920’s with borrowed money and then promised to buy more stocks as collateral.

The Stock market boom was based on borrowed money and optimism, not real value.

Government Policies:

• Federal reserve system-regulates the amount of money in circulation.

• Cut interest rates to spur economic growth.

• Limited the amount of money to discourage lending…

Unstable Economy

• The economy lacked a stable base

• National wealth was distributed unevenly

• Industry produced more than it sold.