1. The Nation’s Sick Economy

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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%