The Nation’s Sick Economy

Economic TroublesO Industries in

troubleO Railroad,

textiles, steelO Mining and

lumberingO AutomobileO Consumer goodsO Housing

O FarmingO Agriculture

suffered the most

O Coolidge vetoed the bill enabling price-supportsO Gov’t buying of

surplus crops that they would sell on the world market

Economic TroublesO By the late 1920s, Americans were

buying lessO Rising pricesO Stagnant wages Unbalanced distribution of income

O Rich got richer / poor got poorerO The wealthiest 1% of the population rose by

75% / only 9% increase for the majority of Americans

O Overbuying on credit

Economic TroublesO Unrestrained buying and

selling O The Stock Market

O The buying and selling of company stocks

O Dow Jones Industrial Average

O A measure based on the stock prices of 30 representative large firms

O Many people invested in the 1920s but engaged in

O SpeculationO Buying on the margin

The Stock Market Crashes

O Black TuesdayO Stock prices plungedO Shareholders tried to sell

out before the prices fell even lower

O 16.4 million stocks were sold

O Many people who bought stocks on credit found themselves in huge debt

O Many people lost their savings

Financial Collapse O Bank and business failures

O BanksO After the crash, panic caused people to

withdraw their money from the banksO By 1933, 11,000 of the nations 25,000 banks

had failedO Because bank accounts weren’t insured,

millions of people lost their savingsO Businesses

O 90,000 businesses went bankruptO GDP cut in ½O Millions lost their jobs

Crisis at Home and Abroad

O 1930 – Congress passed the Hawley – Smoot Tariff ActO Highest protective tariff in US

historyOMeant to protect American

farmers and manufacturers but backfired O Many countries retaliated by

raising their own tariffs O Within a few years, world trade

fell by more than 40%