Apush Chapter 25
Stock market crash – 10/29/1929
Cause of crash #1- Bad Tariff Policy
-Fordney McCumber 1922
-Hawley-Smoot 1930 (after the crash)
-Closes European markets to US goods and vice versa, really hurts farmers
Overextension of credit
-Farmers are overleveraged from WW1 profitability and aren’t pay mortgages
-Consumers are overleveraged from easy store credit, they have purchased too many items and can’t keep up installments(debts payment)
-Brokers are overleveraged as they have purchased large amounts of stock on margin
Wild Speculation
-When prices are higher than actual value
-Florida Land Bust 1927
-Over-speculation on the stock market, thanks to stock purchases on margin (using purchased stock as collateral)
-Stock market correction occurs in October 1929
Overproduction of Durable Goods
-Increased production leads to increased supply, decreased demand, and decreased price
-Market is obviously unstable, proud in the 1927 Ford Recession due to shutting down Ford and retool for the Model A
Consolidation of Economic Power
-As industries consolidate (unite into one), CEO decisions are magnified
-Of decisions are magnified, bad decisions are really magnified (again see Ford)
Mal-distribution of wealth
-While production doubles in the 1920’s, real wages only raise by 1/3
-Resulting difference goes into corporate profit
-Rich can’t spend and re-invest fast enough
-Leads to an over-wealthy upperclass, and an under-wealthy working class
Agricultural Discontent
-A decade of hardships for farmers
-Competition and the free market fails famers, as supply goes up, price goes down, and farming becomes unprofitable
-FDR-New Deal=progressive(wants progress) and liberal (left on the scale) (democrat)
Roosevelt Family * Blue Blooded America Aristocrats (17th century Dutch Settlers) * Hudson Valley Landowners (Hyde Park near Poughkeepsie, NY) * Prestigious Cousin – Teddy Roosevelt (5th cousin) * Other cousin-Eleanor Roosevelt
Cause of crash #1- Bad Tariff Policy
-Fordney McCumber 1922
-Hawley-Smoot 1930 (after the crash)
-Closes European markets to US goods and vice versa, really hurts farmers
Overextension of credit
-Farmers are overleveraged from WW1 profitability and aren’t pay mortgages
-Consumers are overleveraged from easy store credit, they have purchased too many items and can’t keep up installments(debts payment)
-Brokers are overleveraged as they have purchased large amounts of stock on margin
Wild Speculation
-When prices are higher than actual value
-Florida Land Bust 1927
-Over-speculation on the stock market, thanks to stock purchases on margin (using purchased stock as collateral)
-Stock market correction occurs in October 1929
Overproduction of Durable Goods
-Increased production leads to increased supply, decreased demand, and decreased price
-Market is obviously unstable, proud in the 1927 Ford Recession due to shutting down Ford and retool for the Model A
Consolidation of Economic Power
-As industries consolidate (unite into one), CEO decisions are magnified
-Of decisions are magnified, bad decisions are really magnified (again see Ford)
Mal-distribution of wealth
-While production doubles in the 1920’s, real wages only raise by 1/3
-Resulting difference goes into corporate profit
-Rich can’t spend and re-invest fast enough
-Leads to an over-wealthy upperclass, and an under-wealthy working class
Agricultural Discontent
-A decade of hardships for farmers
-Competition and the free market fails famers, as supply goes up, price goes down, and farming becomes unprofitable
-FDR-New Deal=progressive(wants progress) and liberal (left on the scale) (democrat)
Roosevelt Family * Blue Blooded America Aristocrats (17th century Dutch Settlers) * Hudson Valley Landowners (Hyde Park near Poughkeepsie, NY) * Prestigious Cousin – Teddy Roosevelt (5th cousin) * Other cousin-Eleanor Roosevelt