The Nation’s Sick Economy The Great Depression (The Hoover Years):

Big Idea As the prosperity of the 1920’s ended, severe economic problems gripped the nation.

Major Topics Major industries in trouble Farmers in trouble Rising prices, stagnant wages Living on Credit Uneven Distribution of income Hoover’s Failures The Stock Market Comes Tumbling Down

Major Industries in Trouble Railroads, steel, and textiles barely made profits Mining and lumbering not in high demand Housing industry slowed throughout late 1920’s.

Farmers Need a Lift WWI helped out only temporarily Price continually dropped Massive debts due to overproduction McNary-Haugen bill was vetoed and died – Meant to provide price supports for farmers

Living on Credit (Personal Responsibility) Rising Prices and Stagnant wages Many Americans living beyond their means Bought goods on credit – Buy now, pay later Americans piled up debts

Uneven Distribution of Income 1920’s: Rich got richer, poor got poorer 1929: Top 5% of the richest Americans owned 70% of the income 70% of Americans lived on minimum standards to survive (2,500 a year)

Election of 1928 Herbert Hoover Able Republican administrator Hero of WWI Promised a triumph over poverty Alfred E. Smith 4-time New York governor Lost Democratic South in part to his Catholicism

Hoover vs. Smith

The Stock Market Stocks are units of ownership in a company Buying stock makes you a shareholder When the value of the company increases, so does your stock Companies sell stock to: – Research better ways to make things – Create new products – Improve products – Hire more employees – Modernize buildings

Speculation The buying of risky investments in the hopes for a quick return Think about….. Personal Responsibility Governmental Responsibility Corporate Responsibility Buying on margin – Paying a small % of a stock’s price as a down payment and borrowing the rest

Black Tuesday October 29 th : The stock market crashed Prices went spiraling down as people sold their investments 16 million stocks dumped in one day The stock market bubble had finally burst 30 billion dollars lost in the crash

Financial Collapse 1929: 600 banks closed 1933: 11,000 banks had failed Millions lost everything 90,000 businesses failed GDP: 104 billion-59 billion 25% of workers unemployed 13 million people Others faced pay cuts and reduced hours

Hawley-Smoot Tariff 1930: Highest protective tariff of all time Designed to protect American industries Contributed to world trade falling by 40% Increased unemployment m/watch?v=dxPVyieptw A m/watch?v=dxPVyieptw A

The Great Depression Economy was in a severe decline and millions were out of work Long Term Causes Tariffs and war debt policies Farming problems Consumer Debt Unequal distribution of income Major industries in decline