The Nation’s Sick Economy

The Great Depression (The Hoover Years): 1929-1932

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 29th: 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

• http://www.youtube.com/watch?v=dxPVyieptwA

The Great Depression

• 1929-1941• 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