This lesson focuses on the major economic factors during the 1920s contributing to the Great Depression and Stock Market Crash.

1. An Ailing Economy 1920s
America on the verge of
economic depression

2. Critical Thinking ? #1
• What would happen if you spent more money
than you actually had?

3. Don’t judge a book by its cover
• The economy appeared to be healthy in the
1920s
– Rising wealth and a booming stock market gave
Americans a false sense of faith in the economy
– There were many red flags!

4. 1. Industries in trouble
• Key industries like railroads, textiles, steel barely make profit
• Railroads lost business to new forms of transportation (trucks, buses,
cars, etc.)
• Mining, lumbering expanded during war; no longer in high
demand
• New energy sources compete with the coal industry
• Boom industries—automobiles, construction, consumer
goods— now weak
• Housing market in decline

5. 2. Farmers need support
• During WWI, demand for crops soared
– Farmers planted more and borrowed money for land and equipment
– The war ended, demand fell and crop prices dropped by 40%
• Many farmers fall into debt > banks foreclose and seize the
property
• Farmers defaulted on their loans, rural banks began to fail!
• Congress tries to help with price-supports and various
legislation, President Coolidge vetoes twice
• “Farmers have never made money. I don’t believe we can
do much about it” – President Coolidge

6. Critical Thinking ? #2
• Should the government be responsible for
bailing out key industries? Why or why not?

7. 3. Consumers spend less money
• As the 1920s progressed, Americans spending less
– Rising prices, stagnant wages, unbalanced distribution of income, and
overbuying on credit
• Ever-widening gap between the rich and the poor

8. 4. Credit crisis
• Businesses give easy credit;
consumers pile up large debts
• Consumers have trouble paying off
debt, cut back on spending

9. Create a political cartoon 
• Create a political cartoon or advertisement
promoting the innovation of credit!
• Your target audience is the every day
consumer who is new to credit
• Draw the political cartoon on your guided
notes handout (there is a space provided)

10. 5. Uneven distribution of income
• The rich get richer, the poor get poorer
• Almost 70% of families earn less than
minimum for decent standard of living

11. 6. False hope in the stock market
• Dow Jones Industrial Average tracks state of stock market
• Stock prices rise steadily; people rush to buy stocks, bonds
• Many engage in speculation, buy on chance of a quick profit
• Buying on margin—pay small percent of price, borrow rest

12. The Stock Market
Crashes…
https://www.youtube.com/watch?v=RJpLMvgUXe8

13. Critical Thinking ? #3
• Imagine if you had no home to live in, no
money to get food or clothing, and no
government programs to assist you. What
would you do? What would your priorities be?