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•Americans prosperous called “Roaring 20’s”

•Depression started in 1929 with the crash of the Stock Market

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• INDUSTRIES IN TROUBLE– Textiles– Steel– Railroads – replaced by trucks,

buses, and private automobiles– Building Houses declined• Affects job related industries

such as furniture manufacturing and lumbering

• FARMERS NEED A LIFT– Agriculture suffered most• WWI farmers do good and take out

more loans to by land and equipment so they could grow & sell more and make more money• But….this lowered prices of crops

so the farmer made less money because more of something the cheaper it is because people were not buying because of depression

• FARMERS NEED A LIFT (CON’T)

–Farmers therefore made less money so couldn’t pay loans

•As a result, banks failed because they were not getting the money back from the loans

• FARMERS NEED A LIFT (CON’T)– Congress tries to help farmers• McNary-Haugen Bill: federal

price-supports for key products like tobacco, corn, cotton, and wheat.–Government would buy the

surplus food from the farmers & sell it on the world market–BUT…President Coolidge

vetoed the bill twice

• CONSUMERS HAVE LESS MONEY TO SPEND–Americans buy less

because…•Rising prices• Stagnant wages•Unbalanced

distribution of income

• LIVING ON CREDIT

–1920s was prosperous for Americans so they took-out more credit than they needed

•When depression hit people could not pay-off their loans

• UNEVEN DISTRIBUTION OF INCOME– During 1920s• Rich got richer – income of

wealthiest 1% of the population rose by 75%• Poor got poorer – more than

70% of nation’s families earned less than $2,500 a year which was then considered the minimum amount to have a decent living

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• ELECTION OF 1928

–Herbert Hoover wins election of 1928 for President

•Why? Because the Republican party looked good during Roaring 20s so the people stuck with the Republicans

• DREAMS OF RICHES IN THE STOCK MARKET– Stock Market was a sign of

prosperous American Economy– Dow Jones Industrial Average –

is the indicator of the Stock Market’s health• Measures the stock prices of

the 30 large firms trading on the Stock Market

• DREAMS OF RICHES IN THE STOCK MARKET (CON’T)

–Points go up on Stock Market people buy stocks and bonds – is called a “Bull Market” when people are buying

• DREAMS OF RICHES IN THE STOCK MARKET (CON’T)– People start “buying on margin”• Buying on margin means that

people pay a small part of a stock’s price as a down payment and borrow the rest – like putting a down payment on a car and paying the rest each month

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• BLACK TUESDAY–October 29, 1929•Shareholders try to sell before prices of their stock plunged•People who bought stocks on “buying on margin” (credit) were stuck with huge debts and lost all their savings

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•THE GREAT DEPRESSION – the period from 1929-1940 in which the economy plummeted and unemployment skyrocketed

• BANK AND BUSINESS FAILURES– People try to withdraw

their money from the banks but the banks didn’t have the money because the banks invested in the Stock Market•Gov did not insure your money in the bank’s back then

• BANK & BUSINESS FAILURES–90,000 business

went bankrupt–Unemployment

rate went from 3% in 1929 to 25% in 1933

• WORLDWIDE SHOCK WAVES– The United States & Europe

were greatly effected by the Great Depression• Germany had to pay for

war damages• Limited America’s ability

to import European goods which made it hard for us to sell American products in Europe

• WORLDWIDE SHOCK WAVES (con’t)– Hawley-Smoot Tariff Act • Passed by Congress in

1930• It established the highest

protective tariff in US history• Was to protect American

farmers and manufacturers from foreign competition

• Hawley-Smoot Tariff Act– Reduced flow of goods into the

United States, thus preventing other countries from earning American currency to buy American goods

– Made unemployment worse to industries who could no longer export goods to Europe

– Countries retaliated by raising their tariffs

–World Trade fell 40%

• CAUSES OF THE GREAT DEPRESSION– Tariffs and war debt

policies that cut the foreign market for US goods

– Crisis in the farm sector– The availability of easy

credit– Unequal distribution of

income