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Chapter 24: The Great Depression and the New Deal, 1929-1939

I. Causes of the Depression A. The Stock Market Crash · There was extreme prosperity in the 1920’s. · Prices were steadily rising and the stock market was values at $27 billion. · Some 9 million Americans were playing the stock market, borrowing most of what the stock was worth. · Margin buying - the use of credit, in which stockbrokers lent speculators up to 75% of the stock’s actual cost. · Black Thursday - October 24, 1929 - there was an unexpected volume of selling on Wall Street, and stock prices plunged. · Black Tuesday - October 29, 1929 - the bottom fell out as millions of investors ordered their brokers to sell, when there were no buyers to be found. · From then on the stock market continued to decline. B. Uneven Distribution of Income · Wages were barely rising compared to the rise in production and corporate profits. · The top 5% richest people received a third of the income. C. Excessive Use of Credit · Brought on by the increased desire for material things. D. Overproduction of Consumer Goods E. Weak Farm Economy · Farmers suffered from high debts and low cost for their products. · Severe weather and long drought. F. Government Policies · Government had high faith in businesses and did little to control them. · High tariffs protected U.S. industries, but severely hurt farmers. G. Global Economic Problems · Resulting in high debts from World War I. · Worldwide depression.

II. Effects of the Depression
· The U.S. Gross National Product - the value of all goods and the nation’s economy - dropped from $104 billion to $56 billion.
· 20% of banks close, wiping out 10 million savings accounts.
· People lost their trust in the banks.
· 25% of the workforce became unemployed.
· The power of the federal government

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