14.1 problems at the end of the 1920s. economic problems 1920s businesses boomed but problems lurked...
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14.1 Problems at the End of the 1920s
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Economic Problems• 1920s businesses boomed but problems
lurked beneath– Steel, railroads, and coal mining businesses all
weakened– Farmers were able to plant a ton of their crops• Crop prices fell, Coolidge vetoed bills that would
have helped guarantee farmers a better price
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Economic Problems• Prices on goods like radios,
cars, etc. kept going up but wages weren’t increasing– Buying stuff on credit (w/
installment plans) meant many people bought more than they could afford.• Some people even used credit
to buy stocks (buying them “on margin”)
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Economic Problems• The income gap (difference between the
best paid workers and the rest of us) grew significantly– Top 1% made $10,000 and over– Bottom 70% made below $2,500
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Economic Problems• In the 20s, the New York Stock Exchange boomed– Stock: a small piece of a company you can buy/sell• Mr. Phelps’ stock market tip: buy when the stock’s price is
low, sell it when it is high• There is always a risk the price could go down.
– People would speculate that stock prices would keep going up (and never go down)
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The Crash• Stock prices reached their peak in Sept. 1929• Black Tuesday: Oct. 29, 1929, “everyone” tried to
frantically sell their stocks– But who was going to buy them???– Many people lost their life savings gambling in stocks– …and thus the Great Depression started
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The Crash• Banks and businesses failed in record numbers– “Bank run”: when everyone goes to the bank at
once to withdraw their money, which banks can’t handle• Banks loan out part of your money to people. That is
their business
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The Crash
• The rest of the world felt the crash too– Hitler rose to power in Germany by blaming
Germany’s problems on other countries and the Jews
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The Crash
• U.S. tried to protect American businesses with…– The Hawley-Smoot Tariff, extremely high tariff rates– European countries responded by protecting their
businesses with high tariffs too
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Summing it up• Who should we blame?!• The Government!– They made it easy for companies & people to
build up debt
• The Rich!– They were the ones making all the money &
calling the shots
• The Rest of Us!– We went into debt buying all that dumb stuff on
credit.