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Chapter 8 Notes


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Chapter 8 Notes

  1. 1. Jumpstart Assignment Do you think it’s possible for America to ever experience a second Great Depression. Explain your answer.
  2. 2. Causes of the Great Depression • The 1920’s were a time of great prosperity for most American’s. • Republican’s took credit for the bullish economy • 1928, Americans voted overwhelmingly for Herbert Hoover, prosperity, and the Republican economic policy.
  3. 3. Problems in the Economy - Farmers • Farmers made up 25% of the American workforce. • WWI caused prices of crops to soar, at the same time, new machines made farming more efficient. • Demand falls for crops at the end of war, and at the same time farmers are producing more crops.
  4. 4. Problems in the Economy - Wealth • In the 1920’s wages rise slowly (8%) while productivity increased rapidly (32%). • Corporate profits skyrocketed (65%). • 60% of Americans earned <$2,000/year • 24,000 families made more than $100,000/year • The rich weren’t buying 50 times as much, though they were making 50 times as much. • Lack of a strong middle class
  5. 5. Problems in the Economy - Credit • Easy credit (installment buying) makes American’s feel richer than they are. –60% of cars were bought on credit –80% of radios
  6. 6. The Stock Market Crashes • Many American’s poor money in to the stock market speculation – putting money that you don’t have in the market, gambling that it will go up. • October 29, 1929 - Black Tuesday – stock market crashes, fortunes are wiped out in a matter of hours. –Represented a hallmark of the nations business cycle – periodic growth and contraction in the economy
  7. 7. The Depression Begins • The Great Depression lasts from 1929 – 1941, a period in which the economy failed and unemployment soared. –Banks collapse – depositors fear that they might lose their money and storm the banks to get their money. – The Federal Reserve restricts money supply, which makes the problem worse.
  8. 8. Depression Continues • Businesses close, causing unemployment to rise. • Tariffs further slow down the economy –Hawley-Smoot Tariff – raises the price of foreign imports so high that they cannot compete in the American market. • The Depression spreads to the rest of the world.
  9. 9. Jumpstart Assignment • Get into the groups you were in on Thursday and finish your summaries.