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The Nation ’ s Sick Economy Chapter 14.1

The Nation ’ s Sick Economy Chapter 14.1. U.S. History PHS 2013. The Great Depression. Began in 1929 and lasted until 1941 (WWII) A period of high unemployment and low economic productivity. 3 Main Causes of the Great Depression. Unequal distribution of wealth

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The Nation ’ s Sick Economy Chapter 14.1

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  1. The Nation’s Sick EconomyChapter 14.1 U.S. History PHS 2013

  2. The Great Depression • Began in 1929 and lasted until 1941 (WWII) • A period of high unemployment and low economic productivity.

  3. 3 Main Causes of the Great Depression • Unequal distribution of wealth • Overproduction on the part of American farmers • Excessive speculation in the stock market

  4. Speculation- buying stocks and bonds on the chance of a quick profit while ignoring the risks. • Buying on Margin - Paying a small percentage of a stocks price as a down payment and borrowing the rest.

  5. Speculation and buying on margin created a frenzy • Artificially drove the price of stocks up. • Companies became overvalued on the stock market.

  6. Black Tuesday • October 29, 1929 • 16.4 million shares of stock were “dumped” onto market. • Prices fall fast • Stock market investors were hurt most. • Many lost their savings, or found themselves in debt if they bought stocks on credit.

  7. Increasing Debt • Confidence in the market falls and investors start selling stocks. • Causes a panic among sellers. • Federal Reserve Bank kept interest rates low during the boom years of the 1920’s • Promoted increased borrowing • Citizens became used to being in debt! • Most had no savings for bad times

  8. Bank Run • After the market crashed, many people ran to withdraw all their money from banks. • Banks had also invested in the market and many closed their doors. • In 1929 600 banks closed. • By 1933, 11,000 of the nation’s 25,000 banks failed.

  9. Hawley-Smoot Tariff Act • Tax on imports • Designed to protect jobs by encouraging American’s to buy less expensive American products. • The plan caused other nations in the world to put up their own tariffs. • Caused U.S. exports to decline and 40% decrease in world trade within a few years.

  10. Soup Kitchens and Bread Lines • During the Depression, these were run by charitable groups • provided free or inexpensive meals for the unemployed.

  11. During the Depression, unemployment reached 25%. • For African-Americans the number reached 50%

  12. Shantytowns • Little towns consisting of shacks built on the edge of big cities. • Also called “Hoovervilles” to show disgust with President Hoover.

  13. Next Time • In addition to the economic hardships of the Great Depression, farmers in the mid-west also had to deal with a period of severe drought and crop failures known as “The Dust Bowl”

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