Farmer´s problems• An agricultural depression in early 1920s contributed to this urban migration• U.S. farmers lost agricultural markets in postwar Europe• At same time agriculture efficiency increased so more food produced (more food = lower prices) and fewer labourers needed• So farming was no longer as prosperous, and bankers called in their loans (farms repossessed)• So American farmers enter the Depression in advance of the rest of society.
Overproduction They have By August 1929 more cars the factories to sell than had to lay off customers thousands of workers to buy DemandThey decided to decrease every sell the shares day Less demand , less production , more unemployment
Speculation1-This encouraged STOCKSPECULATION - people would buyand sell stocks quickly to make aquick buck.2- All this buying & selling, stockvalue increased (Ex: G.E stock $130 $396/share)3-This quick turnover didnt aidbecause they needed long terminvestments so they could pay bills(stock value was like an illusion)4-Unscrupulous traders would buyand sell shares intentionally toinflate a given companys stockvalue and all of this gave a falsesense of security/confidence in theAmerican market
CH. 24 – CRASH, DEPRESSION, AND NEW DEAL• 1920s had been a period of good economic times• Tues. Oct. 29th, 1929 - NYC Stock market crashed, causing a depression that would last until 1942
The crash is beginning Beginning in Oct. 1929, investors’ confidence dropped, leading to a market collapse All tried to sell at once and bottom fell out of market = panic selling… (many bankruptcies as banks called in loans) Only a tiny minority of people traded on the stock exchange, but they possessed vast wealth, and the crash had a ripple effect on the economy
Consequences Many American companies go Prices bust fall , crisis USA is poor Unemploymentbecause of wall risen rapidly in street crash USA USA government introduce s tariffs Other countries to protect US become poorer companies from cheap imports
Solution ; New deal, Why• 1. The companies were re-released to enterprises in difficulty with support• 2-Public companies were created in sectors where there wasn´t investment in private companies• 3-The destruction of agricultural stocks to rise the prices• 4-The State established a control of the banks forcing them to facilitate loans.• 5-The State stimulated the economy with a great public works construction plan• 6- It promoted a policy of support, subsidizing agricultural prices, increasing wages and reducing the work week to 40 hours of labour