The Great Depression

The Economy in the Late 1920’s

The Economy Appears Healthy

Wonderful Prosperity

The value of stock continued to rise from 1925 to 1929

Wages had risen 40% since 1914

Only 4% Unemployment (7.9% 01/13)

Employment Changes

Labor unions lost support during the 20’s due to higher wages and standard of living

Employers raised wages, gave paid vacations and provided health care

Economic Danger Signs

1. Uneven Prosperity

71% of people earned less than $2500 a year & had no savings

200 companies controlled 49% of American industry

2. Buying on Credit

Poor Americans accumulated personal debt

3. Playing the Stock Market

Widespread Speculation (high risk investments in hopes of financial gain)

Investors produced 10-15% of the stock price & borrowed the rest at very high interest rates (buying on margin)

4. Too Many Goods, Too Little Demand

Overproduction! Assembly lines outpaced the public demand

5. Slump in Key Industries

Drop in demand caused layoffs (auto, steel, rubber, glass industries)

6. Trouble for Farmers

Value of agriculture goods dropped after WWI - farmers could not repay loans taken during WWI

6000 rural banks were forced to close