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CHAPTER 14 SECTION 1 THE NATIONS

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CHAPTER 14 SECTION 1 THE NATIONS Powered By Docstoc
					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

 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
 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
 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
   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
 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
  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
 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
 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
   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
 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
   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
   1922-11,000 or 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
 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
1. Tariffs and war debts policies
   cut down foreign markets
2. A crisis in the farm sector
3. Availability of easy credit
4. Unequal distribution of
   wealth & income

Factors led to a falling demand
      for consumer goods

				
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