Chapter 22 US

Chapter 22 US - Chapter 22: The Great Depression Begins...

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Section 1: The Nations Sick Economy -As the prosperity of the 1920s ended, several economic problems gripped the nation. Economic Troubles on the Horizon -Important industries struggled; farmers grew more crops and raised more livestock than they could sell at a profit. -RR’s lost business to new forms of transportation. -Congress tried to help with the McNary-Haugen Bill - which called for federal *Price- supports for key products such as wheat, corn, cotton, and tobacco. -The government would buy surplus crops at guaranteed prices and then sell them on the world market. -President Coolidge vetoed the bill twice. Consumers Have Less Money to Spend -Buying less because of rising prices, stagnant wages, unbalanced distribution of income, and overbuying on credit in preceding years. -During the 1920s Americans often bought goods on *Credit - an arrangement in which consumers agreed to buy now and pay later. -Large consumer debt piled up and led to people cutting back on spending. Uneven Distribution of Income -During the 1920s, the rich got richer, and the poor got poorer. Election in 1928 *Hoover - (R) Secretary of Commerce - was a mining engineer. *Alfred E. Smith - (D) a career politician who had served four years as governor of New York. -Because most Americans were happy with the previous Republican leadership, Hoover won an overwhelming victory. -The stock market had become the most visible symbol of a prosperous American economy. -Then, as now, the *Dow Jones Industrial Average - was the most widely used barometer of the stock market’s health. -As the Dow rose over the years people were eager to take advantage of the “bull market .” *Speculation - the buying of stocks and bonds on the chance of a quick profit, while ignoring the risks. -Many began *Buying on Margin - paying a small percentage of stock prices as a down payment and borrowing the rest. The Stock Market Crashes -Early September 1929, stock prices peaked and then fell. -Confidence in the market decreased as investor started to quickly pull out in a panic. 1
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Chapter 22 US - Chapter 22: The Great Depression Begins...

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