Ch. 22.1 The Nation’s Sick Economy

B. Farmers Need A Lift• famers’ debts increased in the 1920s • Prices for crops dropped and they ended up in debt.• In turn many banks failed cause farmers could not pay back loans

D. Living on Credit• credit- An arrangement in which consumers agreed to buy now and pay later for purchases.• This led to more debt and consumers cutting back on their spending.

1. Hoover Takes the Nation• Alfred E. Smith- Democratic candidate for president in the election of 1928.

B. Dreams of Riches in the Stock Market• Dow Jones Industrial Average- Most widely used measure of the stock market’s health. It is based on the stock prices of 30 representative large firms trading on the New York Stock Exchange.

Stock Market in Plain English

• speculation- Buying stocks and bonds on the chance of making a quick profit without considering the risks.• buying on margin- paying a small percentage of a stock’s price as a down payment and borrowing the rest.

2. The Stock Market CrashesA. Black Tuesday• Black Tuesday- The term that refers to the stock market crash on October 29, 1929.

3. Financial Collapse• Great Depression- The period from 1929-1940 in which the economy plummeted and unemployment skyrocketed.B. Worldwide Shock Waves• Hawley-Smoot Tariff Act- Established the highest protective tariff in U.S. history, designed to protect American farmers and manufacturers.• It actually led to a drop in world trade.

C. Causes of the Great Depression• tariffs on foreign goods• a crisis in the farm sector• the availability of easy credit• an unequal distribution of income

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