ch12_Sec1p366to372.pdf - 1 Step-by-Step Instruction 1...

This preview shows page 1 out of 7 pages.

You've reached the end of your free preview.

Want to read all 7 pages?

Unformatted text preview: 1 Step-by-Step Instruction 1 䊴 Objectives As you teach this section, keep students focused on the following objectives to help them answer the Section Focus Question and master core content. • Discuss the weaknesses in the economy of the 1920s. • Explain how the stock market crash contributed to the coming of the Great Depression. • Describe how the Great Depression spread overseas. An affluent middle-class family, 1925 WITNESS HISTORY AUDIO Stock Market Prosperity SECTION SECTION hsus_te_ch08_s01_s.fm Page 366 Monday, January 12, 2009 10:06 AM As the 1920s roared along, millions of Americans poured their savings into the soaring “bull” market. Excited investors bought and sold stocks based on “tips” from friends or brokers. Many investors amassed huge fortunes on the strength of rising stock prices. Families who had to scrimp and save at the beginning of the decade found themselves fabulously wealthy by its end. In 1929, a prominent magazine printed a poem that captured the essence of America’s market fever: “Oh, hush thee, my babe, granny’s bought some more shares, Daddy’s gone out to play with the bulls and the bears, Mother’s buying on tips and she simply can’t lose, And baby shall have some expensive new shoes! —The Saturday Evening Post, 1929 ” 䊱 Stock ticker tape Causes of the Depression Objectives • Discuss the weaknesses in the economy of the 1920s. Prepare to Read Background Knowledge L3 Remind students that the United States experienced great prosperity during the 1920s. Ask students to predict what might have caused this prosperity to end in the next decade. Set a Purpose L3 쐍 WITNESS HISTORY Read the selec- • Explain how the stock market crash contributed to the coming of the Great Depression. • Describe how the Depression spread overseas. Terms and People Herbert Hoover speculation Black Tuesday business cycle Great Depression Hawley-Smoot Tariff tion aloud, or play the audio. Witness History Audio CD, Stock Market Prosperity Ask Why might Americans have invested their money in stocks instead of putting it into savings accounts? (They believed that the return on their investment would be far greater if they put their money into stocks.) Why It Matters During the Roaring Twenties, many Americans enjoyed what seemed like an endless era of prosperity. Then, in October 1929, the mighty bull market crashed. As production fell and unemployment rose, the U.S. economy lurched into a period of dramatic decline. Years after the Great Depression began, many Americans came to see this contraction as a regular feature of the nation’s business cycle. Section Focus Question: How did the prosperity of the 1920s give way to the Great Depression? Reading Skill: Recognize Multiple Causes Identify the causes of the Great Depression. Uneven distribution of wealth Depression Causes Prosperity Hides Troubles In 1928, Republican leaders exuded confidence about both their party and their country. The Roaring Twenties had been a Republican decade. In 1920, Americans sent Warren G. Harding to the White House, and four years after that they sent Calvin Coolidge. Neither election had been close. Once in office, both Presidents watched the country grow increasingly prosperous. As the decade passed, consumption went up, the gross national product went up, and the stock market went up. No matter what index an economist chose to consult, the conclusion was always the same: Times were good in America—and they were getting better. Republicans took credit for the bullish economy, and Americans heartily agreed. 쐍 Focus Point out the Section Focus Question, and write it on the board. Tell students to refer to this question as they read. (Answer appears with Section 1 Assessment answers.) 쐍 Preview Have students preview the Section Objectives and the list of Terms and People. 쐍 Reading Skill Have students use the Reading Strategy: Recognize Multiple Causes worksheet. Teaching Resources, p. 11 366 The Great Depression Use the information below and the following resource to teach students the high-use word from this section. Teaching Resources, Vocabulary Builder, p. 10 High-Use Word Definition and Sample Sentence converge v. to move or be directed toward the same purpose or result Republican leaders converged on Kansas City to participate in their nominating convention. hsus_te_ch08_s01_s.fm Page 367 Thursday, December 4, 2008 4:03 PM Optimism Sweeps Hoover to Victory When the Republicans met at their 1928 nominating convention, they chose Herbert Hoover—an accomplished public servant—to run for the White House. Born in Iowa, Hoover was orphaned as a child. But he overcame this personal tragedy and eventually graduated from Stanford University with a degree in geology. He became a mining engineer and worked all over the world. By 1914, after amassing a vast fortune, he retired from engineering and devoted himself to public service. Herbert Hoover came to the attention of Americans during World War I, first as the brilliant coordinator of the Belgium relief program and then as head of the Food Administration. During the Harding and Coolidge administrations, Hoover served as Secretary of Commerce. His philosophy was simple but effective. He stressed the importance of competition, but he also believed in voluntary cooperation between labor and management. American greatness showed itself, Hoover maintained, when owners, workers, and government officials converged on common goals. With a solid record of accomplishments behind him and seemingly endless prosperity in front of him, Hoover was a formidable presidential candidate in 1928. While his campaign ads noted how Republicans had “put the proverbial ‘chicken in every pot,’” Hoover spoke glowingly of ending poverty in America: 쐍 Note Taking Study Guide Vocabulary Builder converge –(kuhn VERJ) v. to move or be directed toward the same purpose or result ” Hoover’s contest with Democratic nominee Alfred E. Smith of New York was, in the end, no contest at all. Americans voted overwhelmingly for Hoover, prosperity, and the continuation of Republican government. When the new President took office in March 1929, America was awash in a sea of confidence. Few imagined that an economic disaster lay just seven months in the future. But even as Hoover delivered his victory speeches, economic troubles were beginning to worry some Americans. The prosperity of the 1920s was not as deep or as sturdy as Hoover claimed. Throughout the U.S. economy, there were troubling signs. Farmers Struggle to Get By Farmers who could not meet their debts faced bank foreclosures on their land, equipment, and livestock. Here, a horse is paraded in front of prospective buyers at a Missouri farm sale. Problems Plague the Agricultural Sector American farmers faced difficult times during the 1920s. Farmers made up one fourth of the American workforce during the decade. To meet the unprecedented crop demands created by World War I, they had increased harvest yields and bought more land to put under the plow. They also bought costly tractors and other mechanized farm equipment. Farmers contracted huge debts doing this, and the additional mortgage payments followed them into the 1920s. After the war, the demand for American crops fell sharply. Despite this drop, postwar production remained high because of increasingly mechanized farm equipment and more intensive farming methods. Farms were getting bigger and yielding bumper crops at harvest. However, farmers were failing to sell off their huge crop surpluses and to pay the debts they owed banks and other institutions. The result was a rural depression that affected millions of Americans. Hard-pressed to pay their debts, forced to sell in a glutted and competitive world market, and confronted by several natural disasters, farmers did not share in the boom times of the 1920s. They did not have the cash to buy the new consumer goods produced by Explain that many people who want to buy a home do not have enough money to pay for a property all at once. To buy property, they have to borrow money—usually from a bank—and then gradually pay back the money. When banks make such loans, they have borrowers sign a contract called a mortgage. This contract allows the bank to take possession of the property if the borrower does not pay back the loan. When a bank takes possession of a Prosperity Hides Troubles L3 쐍 Introduce: Vocabulary Builder government, ordered liberty, equal opportunity, and freedom to the individual, our American experiment in human welfare has yielded a degree of well-being unparalleled in all the world. It has come nearer to the abolition of poverty, to the abolition of fear of want, than humanity has ever reached before. —Herbert Hoover, campaign speech, 1928 L2 English Language Learners Teach Instruct “By adherence to the principles of decentralized self- L1 Special Needs Students Using the Paragraph Shrinking strategy (TE, p. T20), have students read this section. As they read, have students use a concept web to identify the causes of the Great Depression. Reading and L2 Less Proficient Readers property for such reasons, it is called a foreclosure. Encourage students to list any additional terms that may be new to them, such as index, disposable income, and credit. Then, have them create flashcards with the term on one side and its definition on the other. For English Language Learners, you may wish to have students add explanations in their first language on the flashcards. Pair students, and have them quiz each other, using the flashcards. Have students locate the vocabulary term converge. Then, write the word on the board, say it aloud, have students say it with you, and read the definition. Tell students that they will learn that several kinds of economic troubles in the United States converged during the 1920s to threaten the nation’s prosperity. 쐍 Teach Using the Idea Wave strat- egy (TE, p. T22), ask students to review the Primary Source quotation from Herbert Hoover’s campaign speech. Ask To what did Hoover attribute the economic prosperity of the United States? (Hoover believed that the decentralization of the national government and the assurance that all U.S. citizens have liberty, equal opportunity, and individual freedom caused the economic prosperity in the United States.) Then, have students discuss some of the signs of trouble for the U.S. economy. Ask Why did many farmers face economic difficulties during the 1920s? (During World War I, farmers accumulated debt by buying more land and new equipment to meet increased demand. After the war ended, demand for crops fell. Farmers continued to produce large amounts of crops that they could not sell to pay off their debts.) Why did the uneven distribution of wealth contribute to the economic troubles of the United States? (U.S. factories produced more goods than the average industrial worker could afford to buy.) What problem did the availability of easy credit create? (debt) Ask students to predict how these economic trends would affect the prosperity of the United States. Chapter 12 Section 1 367 hsus_te_ch08_s01_s.fm Page 368 Thursday, December 4, 2008 4:03 PM Independent Practice 쐍 Have students imagine that they are farmers living in the United States during the 1920s. Ask them to write paragraphs explaining their economic situations and providing possible solutions for how they can pay off their debts. INFOGRAPHIC Lured by luxury and easy credit, many Americans bought expensive new cars during the 1920s.  쐍 Have students analyze the Info- graphic and answer the questions that accompany it. Then, ask students to use the images on this page and the next to draw a political cartoon showing the differences between the rich and the poor during the 1920s. History remembers the 1920s as a decade of bull markets and new fortunes. However, by 1929, the surging American economy was on the brink of financial collapse. Soaring stock prices made rich people richer and concentrated more wealth into fewer hands. Excited by a stream of new products and buyer-friendly payment plans, consumers piled up huge debts as they purchased goods on credit. Everywhere, the economy expanded, soaring toward its peak in the summer of 1929 and then pausing on the verge of contraction—and economic chaos. (See the diagram below.) 쐍 Ask students to write short essays describing how the distribution of wealth might affect a nation’s economy, politics, and culture. American industries. They lived largely on credit from month to month, often teetering on the brink of financial ruin. Any downward slide in the economy was likely to hit America’s struggling farmers first and hardest. Wealth Is Distributed Unevenly Unlike farmers, industrial workers par American consumers racked up more than $6 billion of debt by 1929—more than double what they owed at the beginning of the decade. L1 Special Needs Students ticipated in the great national success story. During the 1920s, their wages rose steadily, as did their disposable income. Many purchased Model T Fords along with a variety of other consumer products. Though they were certainly not wealthy, industrial laborers were in a better financial position than their fathers had been a generation before. But the problem was that while wages rose gradually, worker productivity increased astronomically. Between 1923 and 1929, output per person-hour jumped 32 percent, but workers’ wages inched up only 8 percent. During that same period, corporate profits from worker output skyrocketed 65 percent. All these figures pointed to the fact that during the 1920s, the rich became much, much richer, while industrial workers simply became less poor. In few periods of the country’s history have so small a number of rich Americans dominated such a large percentage of the country’s total wealth. In 1929, for example, the wealthiest 1 percent of the population earned about the same amount of money as the bottom 42 percent. This uneven distribution of the nation’s wealth created economic problems. More than 60 percent of all American families had yearly incomes of less than $2,000 per year. Twenty-four thousand of the country’s wealthiest families enjoyed annual incomes of more than $100,000, which was 50 times more than what most families were earning. But these wealthy families did not eat 50 times more food than lower-income families. The wealthiest households did not L2 English Language Learners To help them understand the factors that threatened U.S. prosperity, ask student pairs to create threecolumn charts summarizing the problems farmers faced, the uneven distribution of wealth, and the problems caused by the availability of easy credit. 368 The Great Depression L2 Less Proficient Readers Have students use their charts to discuss the hidden problems underlying the U.S. economy. Then, tell students to write summary paragraphs of what they have learned and predict how these factors will affect the future of the United States. hsus_te_ch08_s01_s.fm Page 369 Thursday, December 4, 2008 4:03 PM As the pie chart below shows, income was distributed unevenly among Americans in the 1920s. The wealthiest 1 percent of the population, like the women at right, could afford luxurious homes and expensive clothing. But most Americans earned considerably less. The poorest segment of the population was sometimes reduced to begging for money, like the man below. Monitor Progress As students fill in their concept webs, circulate to make sure that they understand the multiple causes of the Great Depression. For a completed version of the concept web, see Note Taking Transparencies, B-104a. Easy credit and a steep rise in stock  prices encouraged investors to borrow money to buy stock on margin. Thinking Critically purchase 50 times more automobiles or radios or ovens. The rich undoubtedly spent a lot on consumer products. The problem was that the wealthiest few did not buy enough to keep the economy booming. A healthy economy needs more people to buy more products, which in turn creates even more wealth. In this way, a healthy economy avoids underconsumption that can limit economic growth. The uneven distribution of wealth in the 1920s pointed to an uncertain future for the American economy. From the overproduction of the struggling farmer to the underconsumption of the lower-income industrial worker, deep-seated problems created economic instability. Too many Americans did not have enough money to buy what they needed or wanted. 1. Make Generalizations Is it fair to suggest that the American economy stood “on thin ice” in 1929? Why or why not? 2. Analyze Costs and Benefits How did easy credit and buying stock on margin provide both costs and benefits to the U.S. economy? Easy Credit Hides Problems For a time, the expansion of credit partially hid this problem. Americans bought automobiles, appliances, radios, and other goods on credit. Using the installment plan, they paid a small percentage down and the rest over a period of months or years. By the end of the decade, 80 percent of radios and 60 percent of cars were purchased on installment credit. Americans even bought stock on credit, making such stock purchases on margin. Every year, Americans accumulated more debt. In the past, they had feared debt and put off buying goods until they had the cash to pay for those items. However, easy credit changed this behavior during the 1920s. The growing credit burden could mask the problem of Americans living beyond their means for only so long before the economy imploded. What economic problems lurked beneath the general prosperity of the 1920s? Consumer Debt Today Consumer debt did not vanish after the Great Depression. Americans continued to borrow large sums of money. Borrowing became much easier with the advent of the credit card. Lenders first issued credit cards in the 1950s, although real growth came with the innovation of the standardized magnetic strip in the 1970s. Credit card debt is a type of revolving debt. A lender allows customers to borrow against a certain amount of credit when purchasing goods and services. The lender then bills the borrower for that amount plus interest. The revolving debt of U.S. consumers increased from around $124 billion in 1985 to about $900 billion in 2007. In the mid-2000s, the average credit card debt among American households was more than $8,000. With such convenience, it is hardly surprising that many Americans are mired in debt. In 2005, Americans spent more money than they earned. For the first time since the height of the Great Depression, the United States experienced a negative personal savings rate. Answers Thinking Critically 1. Possible answer: Yes; unsustainable practices in finance, agriculture, and industry had been fueling economic expansion for too long. 2. Possible answer: Easy credit and buying on margin allowed people to purchase goods, services, and stocks they otherwise would not have been able to afford, but this practice led to increasing debt. While the overall economic picture appeared prosperous, it was also dangerous. Economic problems included agricultural overproduction, the uneven distribution of wealth, underconsumption, and the growing credit burden. Chapter 12 Section 1 369 hsus_te_ch08_s01_s.fm Page 370 Thursday, December 4, 2008 4:03 PM The Stock Market Crashes The Stock Market Crashes L3 Instruct 쐍 Introduce: Key Terms Ask students to find the key terms speculation, Black Tuesday, and business cycle (in bold) in the text. Then, write them on the board and provide the definitions. Have students discuss the ways that these terms are related to the economic troubles of the United States. 쐍 Teach Discuss with students the ways in which stock market speculation is similar to gambling. Ask What was the basis for the soaring stock prices during the 1920s? (the confidence of investors) What happened when investors in 1929 lost confidence in the stock market? (Investor...
View Full Document

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

Stuck? We have tutors online 24/7 who can help you get unstuck.
A+ icon
Ask Expert Tutors You can ask You can ask You can ask (will expire )
Answers in as fast as 15 minutes