Americans prosperous called “Roaring 20’s” Depression started in 1929 with the crash of the Stock Market
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
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
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
THE GREAT DEPRESSION – the period from 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