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Chapter 14 Section 1
Sick Economy
Industries in Trouble
Mining and lumber started to be in less demand during the 1920’sRailroads, textiles, and steel barely made profits during the 1920’s
Farmers Need Help
1919-1921, farm income in USA declined from $10 billion to $4 billionMany farmers lost their farmsGov’t tried to set price supports to help the farmers
Price Supports for Farmers Fails
Gov’t would buy surplus crops at guaranteed prices and sell on world market– President Coolidge vetoed the bill twice– “Farmers never made money, nothing we can
do about.” Coolidge
Living on Credit
People were living beyond their means during the 1920’sBought too much on credit/installment planPeople struggled to pay their debts which led to a decrease in spending
Rich/Poor Divide Grows Wider
During the 1920’s, rich got richer and poor got poorerRichest 1% saw their income rise 75%Rest of America saw their income rise 9%70% of Americans earned less than $2500/year
Election of 1928
Hoover (R) vs Smith (D)Overwhelming victory for HooverSmith was 1st Roman Catholic to run for president
Stock Market
More and more people invested in the marketStock prices rose steadily during the 1920’s4 million Americans owned stock in 1929 (3% of population)
People were buying on speculation, or for a quick profitWere also buying on margin, using an installment plan to buy stocks
Black Thursday
October 24 1929, stock market took a plunge and people began to dump or sell stocks
Black Tuesday
October 29, 1929 stock market crashes16.4 million shares of stocks were sold in one dayMillions of shares couldn’t find buyers
People who bought on margin now owed huge debtsOthers lost their life savings By mid November, $30 billion was lost by investors
Great Depression
Market crash signaled the start of the Great DepressionWas a time of record unemployment and a falling economy during 1929-1940
Bank & Business Failures
Gov’t did not insure banks Half of the country’s banks closed by 1933Millions lost their money in banks90,000 businesses failed
25% unemployment in 1933People who kept jobs faced pay cuts and hours reducedUSA GDP was cut in halfMost of the world fell into this depression
Hawley Smoot Tariff
Highest protective tariff in US historyPassed by Congress in 1930Was supposed to protect US businessesDidn’t work
Causes of Great Depression
Tariffs and war debts from WWI cut down on worldwide market for US productsFarming crisisAvailability of easy creditUnequal distribution of income
Shantytowns
Little towns made up of shacks
Soup Kitchens & Bread Lines
Offered free and low cost foodPeople waited in lines for food provided by charities or the gov’t
Effects on Minority groups
Latinos and African Americans faced a more difficult time during the depressionThey had a higher unemployment rateThey were the lowest paidFaced racial violence from angry whites who lost their jobs
Depression in Rural Areas
Was not as bad as in the citiesFarmers could grow food for their families
Causes of Dust Bowl
Drought began in 1930’sLand was overproduced by farmersFarmers had destroyed protective layer of grass
Effects on Family Life
More emphasis on family during the depressionFamilies played games together (Monopoly) and listened to the radioHigh suicide rate (rose 30%)Many men left their families out of shame
Hoboes
300,000 or more wandered the country during the 1930’sMostly men
Children Suffer
School years were shortenedSchools closed1933, 2600 schools were closed across USA
President Hoover Reacts???
Hoover kept telling Americans to keep faith in the economy and it will fix itselfHoover’s reaction or lack of one, angered many Americans
Mid Term Election of 1928
Democrats won control of Congress– More democrats in Congress than
Republicans
Federal Home Loan Bank Act
Lowered mortgage rates for homeownersHelped farmers refinance their farm mortgages and avoid foreclosure
Reconstruction Finance Corporation
Passed in 1932 by Congress$2 billion in emergency money for banks, life insurance, and large businessesMost of the money went to large corporations
Bonus Army
10,000 – 20,000 WWI veteransMarched into Washington DCDemanded their bonus they were promised from gov’t for serving in WWI
Bonus was $500 per soldierSoldiers wanted it NOW and not in 1945 President Hoover ordered 1000 soldiers to disband the bonus army
Hoover’s soldiers gassed the Bonus ArmyThe gassing killed a baby and blinded anotherTwo Bonus Army veterans were shot and others were injured
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