The 1920s EconomyThe 1920s Economy

Causes of the Stock Market Causes of the Stock Market Crash of 1929 and the Great Crash of 1929 and the Great

DepressionDepression

Post World War I Economy…Post World War I Economy…

The end of World War I brought an end to The end of World War I brought an end to wartime production in the United States.wartime production in the United States.

Only wealthy business owners profited from Only wealthy business owners profited from the return to consumer manufacturing.the return to consumer manufacturing.

Prices for goods soared while workers’ Prices for goods soared while workers’ wages slowly gained an increase resulting in wages slowly gained an increase resulting in an enequal distribution of wealth/income.an enequal distribution of wealth/income.

Plight of the FarmerPlight of the Farmer Overproduction of crops (corn, Overproduction of crops (corn,

wheat, barley etc.) from WWI led to a wheat, barley etc.) from WWI led to a decrease in prices.decrease in prices.

Lack of profit leads to a decrease in Lack of profit leads to a decrease in consumer spending.consumer spending.

Farmers eventually default on Farmers eventually default on mortgages, go out of business and mortgages, go out of business and foodstuffs eventually decrease foodstuffs eventually decrease driving prices even higher.driving prices even higher.

What is the relationship What is the relationship between wages and consumer between wages and consumer

spending?spending? Workers could not afford to buy Workers could not afford to buy

consumer products at high prices consumer products at high prices and therefore either decreased and therefore either decreased spending or became prime spending or became prime candidates for the: candidates for the:

““BUY NOW, PAY LATER” PLANBUY NOW, PAY LATER” PLAN

Credit offered people the chance to Credit offered people the chance to buy products upfront and pay for the buy products upfront and pay for the items monthly with interest.items monthly with interest.

False Security, False False Security, False prosperity…prosperity… Rising prices of stock during the late Rising prices of stock during the late

1920s gave people a false sense of 1920s gave people a false sense of security regarding the economy.security regarding the economy.

Many people purchased stock on Many people purchased stock on marginmargin, , paid a down payment and hoped to repay paid a down payment and hoped to repay the remainder of the loan/interest with the remainder of the loan/interest with profits from stock.profits from stock.

Stock Market Crash of 1929, people could Stock Market Crash of 1929, people could not repay their loans- stockbrokers and not repay their loans- stockbrokers and banks went bankrupt which led to a mass banks went bankrupt which led to a mass panic and the Great Depression. panic and the Great Depression.