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14.1 Problems at the End of the 1920s

14.1 Problems at the End of the 1920s. Economic Problems. Like the “Gilded Age” at the end of the 19 th century , 1920s businesses boomed but problems lurked beneath Steel, railroads, and coal mining businesses all weakened Farmers were able to plant a ton of their crops

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14.1 Problems at the End of the 1920s

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  1. 14.1 Problems at the End of the 1920s

  2. Economic Problems • Like the “Gilded Age” at the end of the 19th century, 1920s businesses boomed but problems lurked beneath • Steel, railroads, and coal mining businesses all weakened • Farmers were able to plant a ton of their crops • Crop prices fell, Coolidge vetoed bills that would have helped guarantee farmers a better price

  3. Economic Problems • Prices on goods like radios, cars, etc. kept going up but wages weren’t increasing • Buying stuff on credit (w/ installment plans) meant many people bought more than they could afford. • Some people even used credit to buy stocks (buying them “on margin”)

  4. Economic Problems • The income gap (difference between the best paid workers and the rest of us) grew significantly • Top 1% made $10,000 and over • Bottom 70% made below $2,500

  5. Economic Problems • In the 20s, the New York Stock Exchange boomed • Stock: a small piece of a company you can buy/sell • Mr. Phelps’ stock market tip: buy when the stock’s price is low, sell it when it is high • There is always a risk the price could go down. • People would speculate that stock prices would keep going up (and never go down)

  6. The Crash • Stock prices reached their peak in Sept. 1929 • Black Tuesday: Oct. 29, 1929, “everyone” tried to frantically sell their stocks • But who was going to buy them??? • Many people lost their life savings gambling in stocks • …and thus the Great Depression started

  7. The Crash • Banks and businesses failed in record numbers • “Bank run”: when everyone goes to the bank at once to withdraw their money, which banks can’t handle • Banks loan out part of your money to people. That is their business

  8. The Crash • The rest of the world felt the crash too • Hitler rose to power in Germany by blaming Germany’s problems on other countries and the Jews

  9. The Crash • U.S. tried to protect American businesses with… • The Hawley-Smoot Tariff, extremely high tariff rates • European countries responded by protecting their businesses with high tariffs too

  10. Summing it up • Who should we blame?! • The Government! • They made it easy for companies & people to build up debt • The Rich! • They were the ones making all the money & calling the shots • The Rest of Us! • We went into debt buying all that dumb stuff on credit.

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