Jason Saba

CHAPTER 22: ³The Great Depression Begins´ ______________________________________________________
Section 1: The Nation¶s Sick Economy
One Americans Story: [No longer added] Economic Troubles on the Horizon Both consumers and important industries struggled Industries in Trouble Key industries lost business Coal mining lost popularity because of new forms of energy Decline is housing decline in other industries such as furniture, textile, etc Farmers Need a Lift Demand for crops dropped after the war Farmers couldn¶t pay off their loans rural banks began to fail McNary-Haugen bill: called for federal price supports vetoed by Coolidge Price supports: the government would buy surplus crops at guaranteed prices and sell them on the world market Consumers Have Less Money to Spend High prices + stagnant wages + unbalanced distribution of income less spending Very large gap between rich and poor Living on Credit Many people in the 1920s bought their goods on credit debt less spending Credit: an arrangement in which consumers agreed to buy now and pay later for purchases Uneven Distribution of Income The rich got richer; the poor got poorer More than 70% of the nation¶s families earned less than $2,500 per year Most families couldn¶t afford basic household necessities (electricity, food, clothes, heat) Uneven incomes less participation in economic advances Hoover Takes the Nation The Election of 1928 Herbert Hoover (R) against Alfred E. Smith (D) Most Americans wanted a Republican leader to lead them back into prosperity Hoover was a mining engineer with no political experience Smith served 4 terms as governor of New York Hoover had won the election Dreams of Riches in the Stock Market Americans had high hopes of the stock market Dow Jones Industrial Average: the most widely used barometer of the stock markets health. The Dow is a measure based on the stock prices of 30 representative large firms trading on the New York Stock Exchange

Notes taken from, The Americans, by McDougal Littel

The Dow had reached 381 points Americans rushed to buy stocks and bonds ³bull market´: a period of rising stock prices Speculation: buying stocks and bonds in hopes of a quick profit, while ignoring the risks Buying on margin: paying a small percentage of a stock¶s price as a down payment and borrowing the rest The government did little to interfere b/c the buying and selling had fueled the market¶s upward spiral *** If the value of stocks declined, people who had bought on margin had no way to pay off the loans *** The Stock Market Crashes September, 1929: Stock prices peaked and then fell Black Tuesday Black Tuesday: shareholders frantically tried to sell before prices plunged even lower People who had bought on credit had huge debts Investors had lost about $30 billion Financial Collapse Stock market crash collapse of economy great depression Great Depression: the period from 1929-1940 in which the economy plummeted and unemployment skyrocketed Bank and Business Failures Banks invested people¶s money in the stock market and couldn¶t give it back Gross National Product (GNP): the nation¶s total output of goods and services GNP was cut in half thousands of businesses went bankrupt unemployment Worldwide Shock Waves *** The Great Depression limited America¶s ability to import European goods difficulty selling American goods abroad*** Hawley-Smoot Tariff Act: established the highest protective tariff (a tax on foreign goods) in U.S. history. Negative Effects: - It prevented other countries from earning American currency to buy American goods - Increased unemployment b/c businesses could no longer export to Europe - Other countries responded by raising their own tariffs Causes of the Great Depression 1) Tariffs and war debt policies that cut down the foreign market for Amer. goods 2) A crisis in the farm sector 3) The availability of easy credit 4) An unequal distribution of income

Notes taken from, The Americans, by McDougal Littel

Sign up to vote on this title
UsefulNot useful

Master Your Semester with Scribd & The New York Times

Special offer for students: Only $4.99/month.

Master Your Semester with a Special Offer from Scribd & The New York Times

Cancel anytime.