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The Roaring Twenties Come Crashing Down (1919 - 1929)

Significant changes in the economy, especially the events regarding the economic recession and the Stock Market Crash of 1929 eventually lead to the Great Depression.
by

Michael Ungar

on 4 March 2018

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Transcript of The Roaring Twenties Come Crashing Down (1919 - 1929)

The Business Cycle
QUIZ!
Good luck!
Feel free to use your notes
Recession
a general
slowdown
in economic activity
On
October 29, 1929
, stock prices on Wall Street
collapsed
.
Black Tuesday
These fluctuations occur around a long-term growth trend, and between periods of rapid
economic growth
(an expansion), and periods of
stagnation
or decline (recession).

Introduction
The era of the
Roaring Twenties
marks a period of optimism and prosperity. However, there were significant changes in the economy, especially the events regarding the recession and Black Tuesday. With the fall of the stock market, a chain of events lead to deep economic stagnation around the world.

This was the start of
The Roaring Twenties Come Crashing Down

Economic Stagnation and
Financial Downturn
1919 - 1929
Today, we will be discussing about:
Recession
Factors and Conditions
Economic Stagnation
Financial Downturn
Black Tuesday
The Stock Market Crash in 1929
The Business Cycle
Bibliography
Rosenberg, J. (2012). The Stock Market Crash of 1929: About.com 20th Century History. Retrieved on January 18, 2014, from http://history1900s.about.com/od/1920s/a/stockcrash1929.htm

http://www.thebubblebubble.com/1929-crash/
http://en.wikipedia.org/wiki/Roaring_Twenties
http://www.1920-30.com/business/
http://www.textileworld.com/Textile_Resources/History/1920-1930/The_Roaring_Twenties-Recession-Boom-Depression
http://www.bbc.co.uk/schools/gcsebitesize/history/mwh/usa/walldepressionrev1.shtml
http://www.investopedia.com/
http://www.businessdictionary.com/

The Great Depression.
G
ross
D
omestic
P
roduct, income, business profits
bankruptcy and unemployment rates
severe
(GDP down by 10%) or
prolonged
(three or four years) recessions are considered as an
economic depression
a
prolonged
period of
slow
economic growth is referred to as
economic stagnation
world economy was plunged into the
Great Depression
The number of
unemployed
people:
13 million

many lived in conditions close to
famine
Easy Credit

common
prior to the Stock Market Crash
consumers were building up
high debts
due to easy credit
wiped out
$16 billion
worth of market assets
decline caused
bankruptcies
and
difficulties
including business closures, loss of savings
offered by
businesses
to families who were
not
able to
pay

upfront
(similar to credit cards today).
As the nation’s economy grew worse, everyone stopped making purchases, therefore leading to an economic stagnation. Consumers were unable to pay for the items they had purchased on
credit
.
"Buy now, pay later"
boost corporate
profits

By 1929, over
20 million
people had invested in credit
That's all folks, we hope you
enjoyed our presentation!

Now, it's time for a...
Prosperity
Inflation
Inflation is when the level of prices of goods and services increase in an economy over a period of time. Money becomes more valuable and the government is forced to print more money because all the money is being spent in the market.
Recession
This is when things get intense. Recession is the drop of the market. If the market drops that means that there will be an increase in unemployment. If a recession goes on for a long period of time it can be classified as a depression.
Depression
Depression is similar to recession but it is more severe. Depression is basically a long recession. The Great Depression took place in the 1930s after WW2. It is known as the deepest depression in the 20th century.
Recovery
Recovery is the last stage in the business cycle. Recovery is a period of time in which there is an increase in business activity which signals the end of a depression. Unlike recession, recovery is hard to recognize until several months later. Economists use things like the GDP, inflation and unemployment graphs to notice the recovery.
The Business Cycle
Everything is going fine. The economy is doing well. Most people have a sufficient income for essentials and some have a bit extra income left. This means that companies are hiring and jobs are easy to get.
Trough
This is when the GDP (Gross Domestic Product) is increasing a bit. GDP is a method that is used to determine the health of a country’s economy. It represents the total dollar value of all goods and services produced over a specific time period. At this stage things are improving slowly.
• 4 stages:
Inflation, Recession, Trough, and Recovery

Lack of Financial Regulations
The Vulnerable Canadian Economy
Export Emphasis
Shrinking Demand for Canadian Exports
Trade Protectionism and Tariffs
The government did not have
control
of
financial services companies
in the US.
Canadian economy was very
dependent
of the
American economy
American parent companies responded by
cutting back
or
closing Canadian branches
.
With the severe
economic slowdown supply and demand decreased

Canadian economy was geared to the export of minerals, lumber, newsprint, fish, and
especially wheat.
33% of Canada's national income came from exports.
3 years after Black Tuesday, international trade dropped by 50%
massive unemployment throughout Canada and the world
Many countries dealt with the economic crisis by
imposing taxes

on imports
.
This had a huge impact on Canada because we're a
major exporting country
Investors would
borrow
money from
stock brokerages
for
stock purchase
.
When the
stock market crashed investors
had to repay theirs loans but they had
no money
. So many
brokerages were bankrupt
.
American banks
purchased stock shares
with
depositor's money
. When the
market crashed
, depositors worried that they might not be able to
withdraw their money
.
People
stampeded
to take out their savings.
The rush itself
emptied bank cash reserves
, bankrupting hundreds of American banks.
Canadian investors lost money on US and Canadian stock markets
Canadian was know for their wheat products.
Other countries increased their wheat production.
World wheat productions had been at an all-time high in the 1920s, there was a stockpile of 7 million bushels of unsold wheat.
Nations such as United States and Brazil were burning excess wheat to create an artificial demand.
Canada was producing too much wheat in world markets.
Wheat prices collapsed, sinking from $1.03 per bushel in 1928 to $0.29 by 1931.
HERE
ARE
&
conditions

SOME
FACTORS
What happens when the world's financial engine stalls and falters?
By 1929, American factories were turning out nearly half of the world’s industrial goods. The rising productivity led to enormous profits. However, this new wealth was not evenly distributed. The richest 5% of the population received 33% of all personal income in 1929.

Yet 60% of all American families earned less than $2,000 a year. Thus, most families were too poor to buy the goods being produced. Unable to sell all their goods, store owners eventually cut back their orders from factories.

Factories in turn reduced production and laid off workers. A downward economic spiral began. As more workers lost their jobs, families bought even fewer goods.

In turn, factories made further cuts in production and laid off more workers. And so the spiral downward begins . . .
How Did This Come About?

Let's See if You Can Beat the Market
Full transcript