The Boom Slows Down


When President Hoover took office in 1929, the American economy seemed to be booming still. But America was beginning to have trouble with its economy.

One problem was overproduction­ - producing more goods than people could buy. As you have learned, businesses greatly increased their productivity in the 1920s. Many began to produce far more goods than needed. So, businesses laid off workers. Those unemployed workers and their families then had less money to spend. Less goods were bought and sales fell off. Businesses then laid off even more people.

Another problem was in America's rural areas. A few years earlier, the economy had been booming for farmers and rural business people. World War I was being fought, and there was a great demand for American food in Europe. Farmers sold their products for high prices. But after the war, European farmers were able to farm again. The demand for American food decreased. Prices fell, and many American farmers could not make enough money. They could not afford to buy goods, and business in rural areas suffered.

Video Review

Time Out! 

  1. What is overproduction?

  2. Why was there less demand for American farm products after World War I?