The Nation’s Sick Economy

Economic Troubles Industries in trouble Farming Railroad, textiles, steel Mining and lumbering Automobile Consumer goods Housing Farming Agriculture suffered the most Coolidge vetoed the bill enabling price-supports Gov’t buying of surplus crops that they would sell on the world market

Economic Troubles By the late 1920s, Americans were buying less Rising prices Stagnant wages Unbalanced distribution of income Rich got richer / poor got poorer The wealthiest 1% of the population rose by 75% / only 9% increase for the majority of Americans Overbuying on credit

Economic Troubles Unrestrained buying and selling The Stock Market The buying and selling of company stocks Dow Jones Industrial Average A measure based on the stock prices of 30 representative large firms Many people invested in the 1920s but engaged in Speculation Buying on the margin

The Stock Market Crashes Black Tuesday Stock prices plunged Shareholders tried to sell out before the prices fell even lower 16.4 million stocks were sold Many people who bought stocks on credit found themselves in huge debt Many people lost their savings

Financial Collapse Bank and business failures Banks Businesses After the crash, panic caused people to withdraw their money from the banks By 1933, 11,000 of the nations 25,000 banks had failed Because bank accounts weren’t insured, millions of people lost their savings Businesses 90,000 businesses went bankrupt GDP cut in ½ Millions lost their jobs

Crisis at Home and Abroad 1930 – Congress passed the Hawley – Smoot Tariff Act Highest protective tariff in US history Meant to protect American farmers and manufacturers but backfired Many countries retaliated by raising their own tariffs Within a few years, world trade fell by more than 40%