Essay

The Great Depression and the New Deal

President Hoover's First Moves

- Economy was roaring, but farmers and non-union wage earners were not getting their share of the prosperity

- Hoover did not believe in direct aid and wanted private sector response

- Agricultural Marketing Act, set up Federal Farm Board

- What does this cause and why it doesn't work

1. Farmers then turn to the tariff to cure their ills

2. Leads to the Hawley-Smoot Tariff of 1930. Which was one of the worst pieces of legislation in US history

a. The Hawley-Smoot Tariff was the biggest tariff in US peacetime history

Stock Market Crash

- Economy was near the bursting point

- Prices on the Stock market were vastly over-valued

- Many had bought on the margin, this however created a problem

- Black Tuesday on October 29th, 1929

1. In 2 moths investors lost 40 billion in paper value, more than the total cost of WWI

The Great Depression

- Opening bell of the worst and longest depression in US and World history

- By the end of 1930, more than 4 million were unemployed, by 1932, 12 million

- Wages and hours were slashed. People weren't buying, so factories weren't producing so there were no jobs

- Many lost their life's savings in the market

- Was a huge hit to American Psyche, where was manifest destiny and the american dream?

Causes of the Great Depression

- Over production of both farm and factory

- Too little was being paid in wages

- Over expansion of credit through installment buying helped over-stimulate production and over-extend the buying power of consumers

- Technology pushed people out of jobs

- Economic anemia overseas caused by the debt burden (and Hawley Smoot). Dried up purchasing from Europe

- Terrible drought in the Mississippi Valley caused a number of farm foreclosures, which put farmers out of business.

- Antiquated economic theory

- Lack of deposit insurance

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