Henry County Public Schools



Chapter 32 The Politics of Boom and Bust (Causes of the Great Depression)

Consumer Goods Increase: With decrease in _________ people had more ___________income so business look to ________.New goods came on the ___________.Companies created new products for the home. Started mass ___________: small goods: electric razors, tissues, frozen foods, home hair ______ large goods: refrigerators, ___________, washing machines.

Easy Consumer Credit: One reason for economic boom 1920’s was use of individual ____________ or credit. Prior to 1920’s _______ was shameful. Now attitudes change because people believe they can _____it back. “Buy now & pay ______” became the advertising pitch & _________ racked up ________ buying all the new _________for their homes.

Mass Advertising: New gadgets /____________ needed to be sold to the ___________people. _______ convinced public there ________ for these goods. Ex. Easy credit _________, envy of peers, linking products w/ ________people.

Stock Market Soars: stock market experiences long period of ___________prices (bull market) 1920’s prolonged bull ________convinced people to ______ in stocks. Investors began ________________ =w/ $1000 investor could buy $10,000 worth of _______ & other ____________loaned by ______________(earned commission on sale & ___________on loan) Held stock as ____________. All is good as long as _________ continue to rise: if $10,000 stock rose to $11,000 investor could sell stock & repay the loan & make $1,000 in _________.

How Stocks Work: if company was making ________ or had good _________sales =stock price ________. Stock prices fell when companies __________ dropped. Speculation = buyers bet the market would continue to _____ & they would make __________ quick.

What Comes up Must Come Down: Bull __________ lasted only as long as __________ continue to put new money into ___________. By 1929, market running out of new _____________. Sept. 1929 professional __________ saw no new customers & started to _______ off their holdings. Prices slipped/ other investors ___________/prices fell ____.

Stock Market Crash:Oct. 21, 1929 __________ market plunged. Oct 24th stock market plummeted ___________. Oct. 29th ________ prices took _________dive yet (33% drop).Stock Market lost $________ billion in value. _____ billion was lost. That equaled ________wages earned in ________.

Banks Begin to Close: By 1929 banks had __________$6 billion to _________ speculators. Banks had put ____investments in _________ market (hoping for higher ________then if they loaned _____ to customers)So when_______collapsed banks lost _____ on investments & lost ______ from ________ who defaulted on loans. News of __________crisis sent customers running to get their ____=bank runs (banks only carry % of $ you give them)(so no _____) Banks begin to ______ w/ customers ________all their ________. Stock market crash was a __________ to other deep seeded issues that caused Great Depression:

Roots of the Great Depression:

1. Uneven Distribution of Income = Factories ________more then consumers could consume. So came up w/ ____________plan but w/ monthly payments increasing buyers

2. Stopped _________new goods. Decrease in _______ caused businesses to ____production & lay _____ employees.

3. Chain reaction: cut in ______sales caused decline in copper wire sales(cooper miners lost _____)wood cabinets (lumberjacks lost _______) & glass radio tubes (glassmakers lost jobs). ____________ businesses collapsed.

5. Loss of Export Sales: many jobs might have been __________if American Manufacturers sold more goods __________. Conservative ___________had raised the __________in the 1920’s to protect American businesses - ___________ Tariff (highest ever)Foreign countries responded by __________their own tariff. This meant fewer American __________sold overseas.

6.The Federal Reserve Failure - Failure to prevent widespread ________of the nation’s banking system. Lead to a severe ____________in the nation’s supply of _____ in circulation.

Depression Worsens: People w/ out jobs went _________ (bread lines blocks long to get ______ food)YMCA. Families couldn’t pay ________or mortgages so ________ #’s soar (evictions w/ belongings put on street) Unemployed began to wonder __________in search of work (_________)(jumping trains)

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