The Nation’s Sick Economy
Chapter 22 Section 1 Notes
End of an Era
• End of 1920’s
• Serious Problems
– Industries struggled
– Farmers grew more than they could sell
Problems with business
• Industry
• Not making Profits
• wartime Industries no
longer needed
• Loss of new Homes
– Signals a loss of Jobs
– Trickle Down Effect?
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• Farming
High prices and demand no
longer around
To many loans
Lost farms due to debt
Price supports
– Gov’t would buy excess
grain
– Vetoed twice!!!!!!!
Consumers Issues
• Consumers have less Money
– Low wages, Less income, buying less
• Living on Credit
– Went into deep debt, could not pay it off, had to
cut spending
• Uneven distribution of Income
– Production out paced wages: Explain?????
– Goods being made that no one can buy!!!!!
Election of 1928
• Herbert Hoover
– Never ran for
public office
– Was a republican
– Won easily
– Said the country
was great
The Stock Market
• Americans put money in the stock market
• Dow Jones Industrial Average
• Good Times
– Bull Market: Prices going up
– Investors and common people buying stocks
• Problems
– Speculation: Buying and hoping for a quick gain
– Buying on Margin: Only paying a small part of
the stocks price and borrowing the rest
Stock Market Crash
• Sept., Oct. of 1929
– Stocks plunge
• Black Tuesday
– Oct. 29
– Everyone wanted to sell, no
one wanted to buy
– Mid-November: $30 billion
gone
– People lost EVERYTHING
Financial Collapse
• Banks Failed
– People could not get money
– Banks had invested in stock market
• Business Failed
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Nations out put of goods cut in half
90,000 Business’s go bankrupt
25% of people lost their job
Jobs: Pay cuts, reduced hours
Causes of the Depression
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Tariffs and war debts hurt foreign trade
Crisis with farmers
To much credit available
Unequal distribution of income