• 71% of the population earned less than $2,500 a year

• Increasing personal debts due to “credit”

• Overproduction in factories and farms causing prices to drop

• Risky investment choices (playing the stock market)

Post WWI Economics…

• Increasing unemployment in large industries (railroads, textiles, coal)

• Unequal distribution of wealth

• Weak banking structure

• Weak international economy (high tariffs & high foreign debt)

• Lack of government regulation on various industries

• Investing in stocks became popular in the 1920s

(stock = part ownership in a company)

• Many people could not afford to pay cash – so “Bought on margin” – investors pay part of selling price and borrow the rest from the broker

• In 1929 six billion loans and 600,000 investors

• “Black Tuesday” – Stock Market Crash on October 29th, 1929 (16.4 million shares were sold)

• An estimated $30 billion dollars were lost on the stock market by

November.

• lost money causes many people & businesses to go bankrupt

• leads to widespread bank failures

• Banks called in loans

• Public could not pay back money

• From 1929 to 1932 five thousand banks failed

• Farms were overproducing causing prices to drop

• Dust Bowl ruined crops in the mid 1930s

• 1/3 of Americans were farmers

• One million families lost their farms

• 25% of the population was unemployed by 1932

• People standing in bread lines for food

• Republican President from 1928 – 1932

•He opposed direct government intervention and direct relief to get out of the depression

• Only private charities should help

• Reconstruction Finance Corporation (RFC) – program to give loans to businesses

• Hoovervilles: homeless shanty towns that were blamed on Hoover

• Defeated in 1932 election due to his failure to address depression.