chapter 8 notes

Jumpstart Assignment

Do you think it’s possible for America to ever experience a second Great Depression. Explain your answer.

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.

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.

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

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

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

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.

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.

Jumpstart Assignment

• Get into the groups you were in on Thursday and finish your summaries.