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CHAPTER 14 SECTION 1 THE NATIONS SICK ECONOMY

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CHAPTER 14 SECTION 1 THE NATIONS SICK ECONOMY. MAIN IDEA: As the prosperity of the 1920s ended, severe economic problems gripped the nation. ECONOMIC TROUBLES ON THE HORIZON. Superficial prosperity Basic industries barley made profit

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chapter 14 section 1 the nations sick economy

CHAPTER 14 SECTION 1THE NATIONS SICK ECONOMY

MAIN IDEA:

As the prosperity of the 1920s ended, severe economic problems gripped the nation.

economic troubles on the horizon
ECONOMIC TROUBLES ON THE HORIZON
  • Superficial prosperity
  • Basic industries barley made profit
  • Coal mining hit hard b/c of new forms of energy (hydroelectric power, fuel oil, natural gas)
  • Automobile industry weakened
  • The number of houses being built fell
farmers need a lift
Farmers Need A Lift
  • Agriculture suffered the most
  • WWI prompted farmers to take out loans for land and equipment
  • Demand fell after war
  • Crop prices decline by 40% or more
  • 1919-1921 annual farm income declined from $10 billion to $4 billion
farmers
FARMERS
  • McNary-Haugen bill-Price Supports for wheat, corn, cotton and tobacco
  • Price Support-government buys a surplus of goods at a fixed price and sells then on the world market
consumers have less money to spend
Consumers Have Less Money To Spend
  • Americans buy less because:
    • Rising prices
    • stagnant wages
    • Unbalanced distribution of income
    • Overbuying on credit

LEADS TO…GAP BETWEEN RICH AND POOR

    • Look at page 466 in your texbook
living on credit
LIVING ON CREDIT
  • CREDIT-an arrangement in which consumes agreed to buy now and pay later for purchases
  • Credit easily available
  • Businesses encouraged Americans to pile up large consumer debt
uneven distribution of wealth
Uneven Distribution of Wealth
  • Rich got richer…poor got poorer
  • In come of wealthiest 1 percent of population rose by 75%
  • 9% increase for Americans as a whole
  • 70% of the nation’s families earned less than 2,500 per year
  • Average person bought one new clothes outfit a year
  • 1 in 10 city homes had an electric refrigerator
hoover takes the nation
Hoover Takes the Nation
  • 1928 Election Republican Herbert Hoover vs. Democrat Alfred E. Smith
  • Hoover won with an overwhelming victory
  • Message was clear: Americans were happy with Republican leadership
dreams of riches in the stock market
Dreams of Riches in the Stock Market
  • Stock market the most visible sign of a prosperous American Economy
  • Dow Jones Industrial- measure based on the stock prices of 30 representative large firms trading in the NY Stock Exchange
  • Barometer of stock market’s health
stock market
Stock Market
  • Dow reached a high of 381 points (300 points higher than 5 years earlier)
  • “Bull Market”-a period of rising stock prices
  • 1929 4 million Americans-3% of the nation’s population owned stock
  • Speculation- buying stocks and bonds on the chance of quick profit
  • Buying on Credit- paying a small percentage of a stock’s price as a down payment and borrowing the rest
the stock market crashes
THE STOCK MARKET CRASHES
  • Black Tuesday-October 29-the bottom fell out of the market
  • Shareholders frantically tried to sell before prices plunged lower
  • People who bought stocks on credit were stuck with huge debts
  • Others lost their savings
  • Investors lost about $30 billion by mid-November=how much American spent in WWI
financial colapse
FINANCIAL COLAPSE
  • Great Depression-1929-1940 economy plummeted and unemployment skyrocketed
  • Banks failed and people could not get their money because the bank had invested in the stock market
  • 1929-600 banks closed
  • 1932-11,000 of the nation’s 25,000 banks failed
  • Unemployment leaped from 3% to 25%
  • 1 out of every 4 workers was out of a job
world wide shock waves
World Wide Shock Waves
  • Europe suffered from high war debts
  • Great Depression compounded the problems b/c it limited America’s ability to import European goods
  • HAWLEY SMOOT-TARIFF: 1930; Established the highest protective tariff in the U.S.
  • Tariff made unemployment worse
  • Countries retaliated by placing their own tariffs
causes of the great depression
Causes of the Great Depression
  • Tariffs and war debts policies cut down foreign markets
  • A crisis in the farm sector
  • Availability of easy credit
  • Unequal distribution of wealth & income

Factors led to a falling demand for consumer goods

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