Chapter 23.1 A Prosperous Nation. Review: Describe the economy of the 1920’s. Query: What did Americans assume about the economy?

Chapter 23.1A Prosperous Nation

A Prosperous Nation

• Review: Describe the economy of the 1920’s.

• Query: What did Americans assume about the economy?

Hoover – A Symbol of America!

• Symbol of success•Rugged

Individualism• Economic

Darwinism?

Stock Market Boom• Stock = shares in

corp.• Company profit =

dividend• 1921 – 1929 =

bull market• Impact• Bestseller

Query

•Would you play the stock market today?

Stock Market Growth

How It Works• Dow Jones IA–

average stock price of major industries

• Buy stock = –Price–Dow

• Sell stock – –Price–Dow

Buying on Margin

• Pay a little up front…• … and borrow the

rest• Stock goes up• Stock goes down• 1921 – 1929

Reality

Danger Signs

1. Unequal distribution of wealth

2. Speculation

3. Personal Debt

4. Overproduction

Query

•Did any of the danger signs exist in the Great Recession?

Chapter 23.2

The Great Crash

Economic Cycle

Expansion

Peak

Contraction

Trough

Economic Cycle – Over Time

Countdown…

September 1929Black Thursday

(10/24/29)Government

ResponseBank Response

The Great Crash• Market falls…again

• Black Tuesday (10/29) =

• Massive selling off

• Prices fall steeply

• Loss = $14 billion

• Weeks to Months

• Overall = $40 billion

Black Thursday

The Great Crash

Black TuesdayBanks Buy Stock

Great Crash - 1929

Great Crash – 1987

Negative Business Cycle

No money to invest

Businesses Lose Money

People Lose Jobs

No money to spend

Buy fewer products

International Problems

•WWI Loans•Hawley Smoot Tariff •Stagnation!

Bank Problems

Impact

• Social Impact

Marches • Public Demands• Republican

Response• Bonus March• Hoover

Response• Public Response

• B

Too Little, Too LateMid-term woesResponse:1. Public Works2. Reconstruction Finance Corp.3. Federal Home Loan Bank ActBut NO HANDOUTS!

And Along Comes FDR

• Happy Days Are Here Again!• Roosevelt

campaign song• New Ideas…• Provides hope