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Chapter 14 Sec 1: The Nation's Sick Economy
Transcript of Chapter 14 Sec 1: The Nation's Sick Economy
As the prosperity of the 1920s ended, severe economic problems gripped the nation. Why it Matters Now:
The Great Depression has had lasting effects on
how Americans view themselves and their government. Key Terms & Names:
Alfred E. Smith
Dow Jones Industrial Average
buying on margin
Hawley-Smoot Tariff Act Economic Troubles on the Horizon The crash of 1929, and the depression that followed, dealt a crushing blow to the hopes and dreams of millions of Americans.
The high-flying prosperity of the 1920s was over; hard times had begun. Big Problems in America:
Huge gap between rich and poor
Important industries struggled
Farmers grew more crops and raised more livestock than they could sell at a profit
Buying of credit during the Roaring 20s caused steady increase in debts
Production expanded much faster than workers wages Economic Background Industries in Trouble:
Key basic industries in trouble; railroads, textiles, and steel had barely made a profit
Mining and lumbering were no longer in high demand.
Automobiles, construction and consumer goods- weakened.
Vocab: Credit- an arrangement in which consumers agreed to buy now and pay later for purchases. Farmers Need a Lift:
1919-1921 farm income went from 10 billion to just over 4 billion.
Federal Price-supports- for key products such as wheat, corn, cotton, and tobacco.
Government would buy surplus crops at guaranteed prices and sell them on the world market.
What are some problems with this idea? Uneven Distribution of Income During the 1920s, the rich got richer and
the poor got poorer.
The income of the wealthiest 1% of the population rose by 75%
More than 70% of the nation's families earned less than $2,500 per year
This meant that 70% of the population couldn't afford to buy the manufactured goods that companies were producing.
These problems will continue to snowball until October of 1929 when the bottom falls out of our economy dragging American into disaster.