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

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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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