Election of 1928• Incumbent – Calvin Coolidge

o “I do not choose to run for President in 1928” – August 1927• Republican – Herbert Hoover

o “We in America today are nearer to the final triumph over poverty that ever before in the history of any land.”

o If elected he would “go forward with the policies of the the last eight years.”

o Republicans took full credit for the nations prosperity• Democrat – Alfred Smith

o Governor of New York• And the winner is…oHerbert Hoover

Roaring Twenties…• 1921 – 1.5 million cars sold, by 1929 – 4.5 million were sold

• More Americans than ever owned their own home

• Approx. 80 million Americans visited Nickelodeons each week

• And stock prices were increasing dramatically

Economic Prosperity• Bull Market

o A continuous rise in stock prices

Economic Recession• Bear Market

o A continuous drop in stock prices

The Roaring Twenties • As stock prices demand for

stocks went • Investors were buying on margin

o Buying stocks on credit with a loan from a broker• Brokers borrowed $$$ from banks

oSpeculation – placing money in high risk investments with hopes of making money

The Stocks Crash• September 3, 1929

o Stocks hit all-time high but begin to slide shortly after• October 24, 1929

o Big time investor sold huge amounts of stock causing prices to drop more

o The market recovered by the closing bell• October 29, 1929

oBlack Tuesdayo The stock market collapseso https://www.youtube.com/watch?v=RJpLMvgUXe8

Black Tuesday• By the end of the day…

o 16 million shares traded o $15 billion in stock value gone

• Panic of 1929 – panic that took over investors as stock prices continued to fall

Panic of 1929• By November 13, losses totaled over $30 Billion

• Speculators who bought on margin lost everything. o Paid brokers with savings or valuable

• Bank closures increased causing more people to withdraw their money

• As customers tried to withdraw money from banks they found out the banks did not have their money

Great Depression• Andrew Mellon – Secretary of the Treasury

o Didn’t believe panic was a bad thing reset economy

• More banks closed • More businesses lost their operating accounts• Forced cutbacks • Locked our country into a downward spiral

Great Depression

2 Reasons the stock market crash hurt the banking industry (and vice

versa):1. Banks invested heavily in the stock market

2. Banks encouraged customers to buy stocks

Slowly the country falls into a recession…• Business Cycle – Economic pattern

of up and down periods of growth and decline in a free enterprise economy

Surplus – when more goods are produced than sold

How do you reduce a surplus?

1. Decrease prices to sell more goods (decreasing profits)

2. This decreases profits causing companies to decrease production and lay off workers

3. This causes unemployment to increase (Recession)…

4. Leading to the Great Depression

Review: causes of the Great Depression

• 1. People borrowing on margin to invest in stocks

• 2. banks investing heavily into stocks

• 3. banks encouraging customers to buy stocks

• 4. overproduction of companies (creating a surplus)