130 likes | 138 Views
Explore the economic downfall of industries like railroad, textiles, and agriculture due to the Great Depression. Learn how factors like price support, credit, and tariffs worsened the situation, leading to widespread bankruptcy and unemployment.
E N D
The Beginning of the Great Depression • Price Support • Credit • Alfred E. Smith • Dow Jones Industrial Average • Speculation • Buying on Margin • Black Tuesday • Great Depression • Hawley-Smoot Tariff Act
Industries • Railroad, textiles, and steel were facing more competition • Mining and lumber were also facing tough competition and were not needed as much as they once were • Housing market began to fall
Agriculture • Prices for wheat and corn rose during the war • Farmers planted more to make a larger profit • Bought new equipment on credit • Annual farm income began to decline • 1919 $10 billion to 1921 $4 billion • Farmers began to default on their loans and banks began to fail
Save Us! • Congress tried to create the McNary-Haugen bill that would have allowed for price support • The government would buy surplus crops at a guaranteed price and then sell them on the world market • Cotton, corn, tobacco, wheat • Pres. Calvin Coolidge vetoed the bill twice
Deeper Down • Since farmers had more debt they had less money to spend • This had a trickle down effect • Many Americans were buying on credit • Buy now, pay later with interest • When faced with debt, people spent less money in order to pay off debt • Only 5% of the population earned $10,000 or more per year • 70% of the population earned $2500 per year
Election of 1928 • Secretary of Commerce Herbert Hoover • Alfred E. Smith • Governor of New York • The first Roman Catholic to run for president • Hoover won based on the past success of his party
Stock Market • Some people invested their money in the stock market • The Dow Jones Industrial Average is used as a barometer of the nation’s economic health • Based off of the prices of 30 large firms traded on the NYSE • The market rose steadily through the 20s • About 3% of the nation owned stocks
Stock Market cont. • Many people were involved in speculation • Buying high risk stock with a high interest rate • Others were buying on margin • Paying a small percentage of the stock price as a down payment and then borrowing the rest • There was little gov’t regulation of the stock market
CRASH!! • Early Sept. 1929 stock prices began to fall • Investors quickly began to sell their stock. • Oct. 24 the market took a plunge • October 29, 1929 Black Tuesday • 16.4 million shares of stock were dumped • People who had bought on margin were left with a huge debt but not product to show for it • Other people lost their savings • By mid-November $30 billion had been lost • Signaled the beginning of the Great Depression
The Great Depression • 1929-1940 • The U.S. economy plummeted and unemployment skyrocketed • People began to withdraw all of their money from banks • 1929- 600 banks closed • By 1933 11,000 of the 25,000 had failed • The government did not protect or insure banks
The Great Depression cont. • 1929-1932 the GNP was cut in half • $104 billion to $59 billion • 90,000 businesses went bankrupt • Unemployment went from 3% in 1929 to 25% in 1933
Hawley-Smoot Tariff • Much of Europe was hit by the Depression as well • The U.S. had difficulty importing European goods • 1930: Congress tried to protect American farmers and manufactures from foreign completion with the Hawley-Smoot Tariff • Reduced the flow of European goods into U.S. • Made things worse: Europe wouldn’t buy American products
Causes of the Great Depression • Tariffs and war debt policies cut down the foreign market for American goods • A crisis in the farm sector • The availability of easy credit • Unequal distribution of wealth • The federal government did little to avoid disaster • Hoover encouraged Americans to stay confident