1. 22.1: The Nation’s Sick Economy OBJECTIVES: Understand the causes of the Great Depression

2. Economic Troubles Brewing Big industries (steel, textiles, railroads) not making profits Diminishing demand for new products and new construction Agricultural business withering Congress passes price supports for farmers Pres. Coolidge vetoes price supports twice, 1927 & 1928 HOW ARE THESE BUSINESS CHANGES RELATED TO WWI? “Farmers have never made money. I don’t believe we can do much about it.”

3. Innovation EX: Ford’s Assembly Line Increased Production AdvertisingIncreased Consumption Increased Credit Increased Profits THE MASS- CONSUMPTION ECONOMY =BAD HABITS

4. CONSUMER’S BAD HABITS Americans are buying less. Why? Business are producing more. Why? Americans use credit more. Why? OUTCOME: The gap between rich and poor was rapidly spreading. FACT: In 1929 5% of US controlled nearly a third of its wealth, while 40% of US only has 10% of its wealth.

5. ELECTION OF 1928 CANDIDATES: Al Smith runs for Democrats Herbert Hoover runs for Republicans ISSUES: Smith’s Catholicism, opposition to prohibition, and connections to NYC VERSUS the apparent prosperity under Republicans OUTCOME: Hoover wins handily.

6. http://fisher.lib.virginia.edu/collections/stats/elections/maps/1928.gif

7. STOCK MARKET CRASH CAUSES Buying on margin Speculation Why did these things contribute to the stock market crash?

8. STOCK MARKET CRASH EFFECTS Black Tuesday (10/29/29) Run on banks Great Depression

9. http://www.ambrosevideo.com/resources/docs/56.JPG

10. BEGINNING OF THE GREAT DEPRESSION CAUSESEFFECTS Old and decaying industrial base A crisis in the farm sector The availability of instant credit An unequal distribution of income Hawley –Smoot Tariff Buying on margin Falling demand for consumer goods Dow Jones Industrial Average drops from 381  81 Gross Nat. Product cut in half!!! Unemployment rises to 25%!!! Interests rates fall, people borrow $ and fall into deeper debt Collapse of investment and banks Global Depression

11. TERMS Price support Credit Alfred E. Smith Speculation Buying on margin Black Tuesday Great Depression Dow Jones Industrial Average Hawley-Smoot Tariff Act Summarize some of the problems threatening the American economy in the late 1920s Describe the causes of the stock market crash and of the Great Depression Explain how the Great Depression affected the economy in the United States and throughout the world