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? • • • • • 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 – – – – 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 • • • • Tariffs and war debts hurt foreign trade Crisis with farmers To much credit available Unequal distribution of income