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Chapter 25 Wrap Up

Chapter 25 Wrap Up - Chapter 25 Wrap Up The Depression Dust...

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Chapter 25 Wrap Up The Depression, Dust Bowl and New Deal I. Economics in the 1920s a. Consumerism/Debt i. As consumerism increased so did personal debt as many people made payments “on time” ii. But as the text points out, consumerism reaches a saturation point, and when the majority of working class could not afford items, it demonstrated that there was a limit to growth b. Agriculture i. American agriculture suffered during the 1920s as European markets rebounded from the WWI years ii. Canadian farmers also spread out into the western region of that country competing with American farmers for markets iii. Farmers were forced to put more land into production and invest in technology to try to make a profit, but had problems paying back loans as the price of wheat fell c. Belief in Permanent Growth i. There was a belief that the stock market would continually rise and in “modern” times all things would be better – so little preparation for economic recession d. Foreign Debts and High Tariffs i. As America passed protective tariffs other nations did the same. Germany in particular was forced to pay war reparations and had trouble making those payments. By instituting high tariffs, America made it difficult for Germany to sell goods and then repay those loans. So Germany defaulted. ii. Other nations also instituted higher tariffs to protect their own manufacturers, which helped prolong and exacerbate the depression e. Stock Market i. Buying on margin became popular – only paying 10% down for stocks, borrowing the rest from brokers or banks, and then selling quickly, making money and then repaying the loans 1. worked well in theory until the stock market became oversaturated f. October 1929 i. The Crash! II. Human Toll of the Depression a. Economic Crisis i. Banks closing, consumer pessimism, unemployment ii. As banks called in their loans and people couldn’t pay them, the banks closed and people lost their savings. iii. When people heard of other banks closing, they rushed to withdraw their money from their banks, causes a domino effect of banks running out of money and other people losing their life savings iv. With the stock market crashing, investors were tepid about re-investing in the market – which helped prolong the depression because corporations 1
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could not raise capital v. Unemployment reached very high levels in the 1930s b. “Hard Times” i. there were many documented cases of people losing all their money in the stock market crash and committing suicide. ii. As people lost their jobs, all sectors of the economy were influenced. Blue collar workers might have lost their jobs, but then doctors and lawyers lost clients as people put off medical care or legal assistance iii. Most people didn’t lose their houses (although many did) – they simply had to re-adjust their spending habits – which often included not buying luxury goods – something that had driven the economy during the 1920s c. People of Color i. Had always had it rough in America, so in some respects the depression
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Chapter 25 Wrap Up - Chapter 25 Wrap Up The Depression Dust...

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