Great Depression Begins Chapter 14 Section 1 Industries in Trouble Railroads, textiles, steel >barely make profit Mining, lumbering >expanded during war Coal sales drop >new energy sources Quick boom industries, now weak Automobiles Construction Consumer goods Housing declines Farmers International demand for U.S. grain declines after war, prices drop by 40% or more Farmers boost production to sell more, prices drop further Income declines Farmers default on loans Rural banks fail Price-supports govt. buys surplus crops to guarantee prices Coolidge vetoes bill Living on Credit Buy now, pay later Easy credit Consumers pile up large debts Have trouble paying debts 1920s Rich get richer Poor get poorer 70% of families earn less than minimum for decent standard of living most cant afford products Hoover Takes Nation Election of 1928 Democrats Alfred E. Smith 4 x governor of New York Republican Herbert Hoover WINS Dreams of Riches Stock Market Dow Jones Industrial Average 1920s, stock prices rise steadily, people rush to buy stocks and bonds Engage in speculation buy on chance of quick profit Buying on margin pay small percentage of price in cash, borrow the rest Stock Market Crashes Black Tuesday Sept, 1929: stock prices peak then fall; investors begin selling October 29, 1929: BLACK TUESDAY Shareholders sell frantically, millions of shares have no buyers People who bought on credit left with huge debts Others lose most of their savings they have in banks Financial Collapse Banks and Businesses FAIL Great Depression: economy plummets, unemployment skyrockets Banks crash, people panic and withdraw money Banks that invested in stock market fails 90,000 businesses go bankrupt 193325% of workforce jobless Those with jobs, hours and pay are cut Worldwide Shockwaves Great Depression limits United States ability to import European goods Hawley-Smoot Tariff Act sets highest protective tariff ever in the U.S. Other countries cannot earn American currency to buy U.S. goods International trade drops Unemployment soars around the world Causes of Great Depression High tariffs War debts Farm problems Easy credit Income disparity Federal government keeps interest rates low which encouraged borrowing Hardship and Suffering During Depression Section 2 Cities Shantytowns - settlements consisting of shacks that developed in cities Later called Hoovervilles Soup kitchens - offer free or low cost food Bread Lines - people line up for food from charities or public agencies African-Americans and Latinos higher unemployment and lower pay Rural Areas Most farmers grew their own food if they still had their farms DUST BOWL Area from North Dakota to Texas Great Plains exhaust land through overproduction 1930s drought, windstorms scatter dust for hundreds of miles many farm families migrate to Pacific coast Effects on Families MEN: 300,000 hoboes wander country, railroad cars No Federal System of direct relief>cash or food from government WOMEN: Budget, can food, sew clothes Those who did work, resented by men CHILDREN: Poor diets, health Schools shortened or closed completely Teenagers leave, ride trains searching for work Social and Psychological Effects 1928 1932 suicide rates rise more than 30% Admission to mental hospitals triples Financial security becomes goal Kindness to strangers Develop habit of saving and thriftiness Hoover Struggles Section 3 Hoover Said economy was sound Said government should foster cooperation People should take care of own families and not depend on government Some experts believe depressions a part of business cycle 1930 Congressional elections go to Democrats People blame republicans for hardship Boulder Dam Renamed Hoover Dam Creates jobs Provides electricity, flood control, water