Chapter 22
Section 1
• http://www.youtube.com/watch?v=GCQfMWAikyU
• I-ndustry
• F-arming
• C-onsumers
• I-ncome
• C-redit
Industry
Some industries were less competitive
• Railroads
• Textiles
• Steel
• Energy
• Housing
Farmers produced more than they could
sell
• After WWI crop prices decline 40%
• Between 1919-1921 annual income went from 10 billion to 4
billion
• Farmers had taken loans- Equipment/Land
• Farmers can’t pay
• Bank Auction
• Banks begin to fail
• McNary-Haugen Bill
• Federal Price Supports
• Gov. will buy up surplus of agricultural goods sell them at a
loss.
• Coolidge vetoed the bill twice
• Farmers: No longer can buy goods
• Late 1920’s: rising prices, stagnant wages, unbalanced
distribution of income, and overbuying on credit.
• Widening gap between rich and poor.
• The rich got richer while the poor got
poorer
• Wealth of the 1% rose 75 %
• The rest only 9%
• 70% of American Families only made 2,500 a year
• Basics for a comfortable living
• Pretty on the outside. Problems building up
• People cannot afford the new goods of the time.
• Many people went into debt buying
goods on the installment plan
• People living beyond their means
• Stop spending
The Election of 1928
Democrats
Republicans
Alfred E. Smith
Herbert Hoover
Governor of New York
Sec. of Commerce
Witty / Outgoing
Formal / Reserved
Americans trusted the Republicans to
continue
prosperity
Many Americans practiced speculation
& buying on margin
Speculation – buying of stocks/bonds,
possible profit, very risky
Buying on margin – only paying for
part of the stock
• Companies worth is inflated
• Government did not discourage the high risks
• People were blinded by false hope of prosperity of the 1920’s
• October 24,
1929
• Black Thursday
• Stock prices
dropped
• Cause panic
• October 29, 1929
• Black Tuesday
• Shareholders sell
stocks
• Millions can’t find
buyers, stuck huge
debt
• Many Americans lost EVERYTHING in
the crash
• By mid-November 30 Billion lost
• Equal amount spent
for WWI
• Americans panicked and tried to
withdraw their money from the bank
• The banks ran out of money and
closed
• People lost their
savings
• Period between 1929-1940 in which the
economy plummeted and unemployment
skyrocketed.
• Total collapse of the
economy
• People try to withdraw money from Banks
• Banks had invested most money in Stock
Market
• In 1929 600 banks close
• By 1933 11,000 of the 25,000 banks had
closed
• Government did not protect or insure bank
accounts
• Loss of entire savings
• 1929-1932: GDP= 104 Billion- 59
Billion
• 90,000 businesses went bankrupt
• 1 out of every 4 people were
unemployed
• People who kept their jobs had cut
hours and less wages
• Highest tariff in US History
• Designed to protect farmers and
manufacturers from foreign
competition
• Opposite effect: other countries cant
buy American goods.
• http://www.youtube.com/watch?v=ccNilnpvbJg