The Nation's Sick Economy_1_

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The Nation's Sick Economy_1_ Powered By Docstoc
					Chapter 14.1
 Consumers  Have Less Money
 Living On Credit
    Living beyond means
    Interest charges rise
    Consumers began to cut back b/c they were in
 Uneven   Distribution of Income
    Gap b/t rich and poor grew
 Industries       in Trouble
     RR, Textiles, Steel, coal,
 Farms       Needed Lift
     Prices on goods declined
     Default on loans
     Price support – gov buys
      surplus of key products at
      guarantee prices & sells them
      on a world market
         Bill vetoed by Coolidge
 1928   Election
    He was quiet &
    People happy with
     prosperity u/
    Am. was confident
     business would bring
     continued prosperity
 Dow  Jones Industrial Average – measured
  stock market health
 Gov didn’t regulate the market
 Stock prices rose 1920s
    Bull market –rising stock prices in 1920s
    Speculation – bought stocks/ bonds on the chance
     they would make a quick profit
    Buying on Margin – borrowing $ to help pay for
        Couldn’t pay off loans when market dropped
 Sept 1929 – stock
  market quavers
 Investors sold stock fast
 Black Tuesday
     Market crashed
     Investors tried but could
      not sell stocks
     Investors who bought
      stock on credit (margin)
      were stuck
     $30 billion lost
1.    High tariffs on
     foreign goods
2.    Farm Crisis
3.   Availability of credit
4.   Unequal distribution
     to of income
 Great Depression 1929-1940
 Bank and Business Failures
 1.   Banks not insured
 2.   People lost all savings
 3.   Banks invested in stock market = suffered
 4.   90,000 businesses bankrupt
 5.   25% unemployment rate (that’s BAD)
 Worldwide   Effects
     US limited foreign imports = hurt Euro economy
 Hawley      – Smoot Tariff Act
    High protective tariff in US
    Supposed to protect from foreign competition
    Prevented other countries from making Am
     currency to buy Am goods
    Led to dramatic drop in world trade
 1932     Election
    Hoover v FDR
    FDR wins
        Public wanted gov to actively solve economic issues

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