1. In-class reading and questions.
Chapter 14 Section 1
Pages
Main Idea Questions A – E
SkillBuilder Page 467 #1-3
SkillBuilder Page 468 #1-2
SkillBuilder Page 470 #1-2
Critical Thinking Question #3 Page 471
Define Terms & Names into Notebook

2. OPENING ASSIGNMENT
What would happen if you spent more money than you actually had?
What happens when many people and businesses spend more than they earn?
If this happened to many businesses across the nation who borrowed money from banks or from investors what will happen to the national economy?

3. Essential Learning Goal and Learning Targets.
The student will understand the causes and effects of the Great Depression and the New Deal.
Learning Targets:
Students will be able to summarize the critical problems threatening the American economy in the late 1920’s.

4. Economic Troubles on the Horizon
As the 1920’s advanced, serious problems threatened economic prosperity.
Though some Americans grew wealthy, many more could not earn a decent living.
Important industries struggled, and farmers grew more crops and raised more livestock than they could sell at a profit.
Both consumers and farmers were steadily going deeper into debt.
As the 1920’s ended, these shortcomings in the economy signaled the end of an era of Superficial Prosperity and the beginning of the Great Depression.

5. Industries in Trouble.
The superficial prosperity of the late 1920’s hid weaknesses that would signal the onset of the Great Depression.
Key basic industries, such as railroads, textiles, and steel had barely made a profit during the 1920’s.
Railroads lost business to new forms of transportation. (trucks, buses, and automobiles)
Mining and lumber, which had expanded during wartime, were no longer in high demand.
Coal mining was especially hard-hit, in part due to competition from new forms of energy, including hydroelectric power, fuel oil, and natural gas.

6. Industries in Trouble.
Even the boom industries of the 1920’s weakened. (Automobiles, construction, and consumer goods)
One important economic indicator that declined during this time were housing starts.
Housing Starts are the number of new homes being built during a month or year.
When housing starts fall, so do jobs in related industries, such as furniture manufacturing, construction, and lumbering.

7. Farmers Need a Lift
Agriculture, or farming suffered the most during this time.
During World War I prices rose and international demand for crops such as wheat and corn soared.
Farmers had planted more and taken out loans for land and equipment during WWI, however as demand fell after the war so did crop prices.
Crops dropped in price by 40%.
How do you think farmers will respond to this crisis?

8. Farmers Need a Lift
Farmers increased production in hopes of selling more crops, but this only reduced prices further.
Between 1919 and 1921 annual farm income declined from $10 billion to just over $4 billion.
Farmers who had gone into debt had trouble paying off their loans and many lost their farms when banks foreclosed and seized the property as payment for the debt.
As farms began to default many rural banks began to fail.

9. Congress Tries to Help Farmers
Congress passed the McNary-Haugen bill in 1924 which allowed the government to create price-supports for key products like wheat, corn, cotton, and tobacco.
The government would buy any surplus crops at guaranteed prices and sell them on the world market.
What would this government action do to the price of crops?
The bill was vetoed by President Coolidge who did not support government involvement in economics.

10. Consumers have less money to spend
By the late 1920’s many farmers and most Americans were buying less, mainly because of rising prices, stagnant wages, unbalanced distribution of income, and overbuying on credit in the preceding years.
Production had also expanded much faster than wages, resulting in an ever-widening gap between the rich and poor.
How were Americans able to buy up the products that expanded production created if their wages did not go up?

11. Living on Credit
Although the 1920’s appeared to be prosperous for many Americans the facts were that many were living beyond their means.
They often bought goods on credit, an arrangement in which consumers agreed to buy now and pay later for purchases.
Many times this was through the use of the installment plan, usually in monthly payments that included interest charges.
By making credit easily available, businesses encouraged Americans to pile up a large consumer debt. Many people then had trouble paying off their growing debts. Faced with debt, consumers cut back on spending.

12. Uneven Distribution of Income
During the 1920’s the rich got richer as corporate profits grew and the poor got poorer because of stagnant wages and inflation.
Between 1920 and 1929, the income of the wealthiest 1% of the population rose by 75%.
While the remaining 99% of Americans experienced an increase in income of only 9%.
Economists estimate that the average man or woman bought a new outfit of clothes only once a year. Scarcely half the homes in many cities had electric lights or a furnace for heat.
$2500 was considered the minimum a family needed to have a stable standard of living, put food on the table, have clothing, and shelter. 70% of Americans made less than $25oo a year.

13. Questions that need to be answered.
How did diminished demand affect farmers and businesses during the 1920’s?
How did the US government attempt to help farmers?
How did falling incomes affect consumer behavior?
How did people create an artificially high standard of living leading up to this time?
What percentage of people actually lived above the poverty line of $2500?

14. Homework
Complete the Worksheet handed out in class