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