1. The Nation’s Economy Falters
Chapter 22, Section 1

2. Troubles on the Horizon
While many Americans grew wealthy, others grew poor
Consumers and farmers went into debt

3. Farmers lose money/land
Demand for crops falls after World War I, causing many farmers to go into debt.
Many farms lost when banks foreclosed to pay off debts

4. Congress to the Rescue
Congress tried to help out farmers with the McNary-Haugen bill.
Called for federal price-supports for certain crops
Government would buy surplus and sell on world market
Twice vetoed by Coolidge

5. Consumers spend less
As income fell, Americans bought fewer goods and services
Gap between rich and poor widens

6. Prosperity of 1920s was a false front
Many Americans appeared wealthy during the 1920s. They were buying goods on credit – buy now, pay later.

7. 1920S
RICH GOT RICHER AND POOR GOT POORER

8. Election of 1928
Republican – Herbert Hoover (Foods Administration, Sec. Of Commerce)
Democrat – Alfred E. Smith

9. Hoover wins
Hoover won easily – pointed to prosperity of 1920s under Republicans
Smith sounded bad on the radio

10. Stock Market
Stock Market becomes visual symbol of America’s prosperity
Dow Jones Industrial Average – barometer of stock market’s health – based on 30 firms in NYSE

11. By 1929, about 4 million Americans owned stocks.
Many were average Americans who were hoping to cash in on the “bull market”

12. Speculation – buying stocks and bonds on the chance of a quick profit.
Buying on Margin – paying a small percentage of a stock’s price as a down payment and borrowing the rest.

15. The Bottom Falls Out BLACK TUESDAY – October 29, 1929
Falling stock prices hit a low.
By mid-November, investors had lost about $30 billion.

16. Great Depression
Stock market crash signals the beginning of the Great Depression – the period from 1929 – 1940 in which the economy plummeted and unemployment skyrocketed.

17. Banks and Businesses Fail
People rushed to the banks in a panic.
Unemployment jumped from 3% to 25% in 4 years.

19. Europe also had economic troubles.

20. Hawley-Smoot Tariff
Established the highest protective tariff in U.S. History (1930)
Tariff worsened the worldwide depression (countries can’t buy U.S. exports)

21. Causes of the Great Depression
Tariffs and war debt policies cut foreign market for U.S. goods
Crisis in farm sector
Availability of easy credit
Unequal distribution of income

23. NO IMPORTS = NO EXPORTS