RB24

Chapter 24 Outline

Lindsey's Outline:

I. **Causes and Effects of the Depression, 129 – 1933** i. On the stock exchange on Wall Street in New York City, stock prices had kept going up and up for 18 months from March 1928 to September 1929 ii. Millions of people did invest in the boom market of 1928 – and millions lost their money in October 1929, when it collapsed iii. **Black Thursday and Black Tuesday** a. Black Thursday – Oct. 24, 1929 – there was an unprecedented volume of selling on Wall Street, and stock prices plunged b. Next day: group of bankers bought millions of dollars of stocks in an effort to stabilize prices; only worked until Friday c. Black Tuesday – Oct. 29 – bottom fell out, as millions of panicky investors ordered their brokers to sell, when there were practically no buyers to be found d. Prices on Wall Street kept going down and down e. By late Nov. Dow Jones fell from 381 in Sept. to 198; 3 years later 41 B. **Causes of the Crash** C. **Effects** i. Economic decline reached bottom in 1932, complete recovery came only with the beginning of another world war in 1939 ii. Economic statistics serve as indicators that track the health of a nation’s economy iii. US Gross National Product dropped form $104 billion to $56 billion in 4 years; nation’s income by 50% iv. 20% banks closed, wiping out 10 million savings accounts v. 1933 # unemployed reached 13 million, or 25% of work force, not including farmers vi. Politically, republican domination of government was at an end; power of the federal government would increase greatly vii. Farmers and African Americans had increased difficulties viii. Poverty, homelessness, and family stressed increased; mortgage foreclosures and evictions became commonplace II. Hoover’s Policies A. The president believed the nation could get through the difficult times if the people took his advice about exercising voluntary action and restraint B. Hoover urged businesses not to cut wages, unions not to strike, and private charities to increase their efforts for the needy and jobless C. He took the traditional view that public relief should come from state and local governments, not the federal government D. **Responding to a Worldwide Depression** i. Hoover’s first major decision concerning the international situation was one of the worst mistakes of his presidency ii. **Hawley – Smoot Tariff (1930)** a. Schedule of tariff rates highest in history b. Passed by republican congress c. Set tax increases ranging from 31% - 49% on foreign imports d. Political purpose: satisfy US business leaders who thought a higher tariff would protect their markets form foreign competition e. Retaliation: European countries enacted higher tariffs of thir own against US goods f. Effect: reduce trade for all nations; both national and international economies sank further into depression iii. **Debt moratorium** a. By 1931 Dawes Plan for collecting war debts could no longer continue b. Hoover proposed moratorium (suspension) on the payment of international debts c. Britain and Germany readily accepted, but France balked
 * A.** **Wall Street Crash**
 * i.** **Uneven distribution of income:** top 5 percent of the richest Americans received over 33% of all income
 * ii.** **Stock Market Speculation**: buying on margin allowed people to borrow most of the cost of the stock, making down payments as low as 10%
 * iii.** **Excessive use of credit**: led to installment buying
 * iv.** **Overproduction of consumer goods**
 * v.** **Weak farm economy:** severe weather and a long drought added to farmers difficulties
 * vi.** **Government policies:** congress enacted high tariffs which protected US industries but hurt farmers and international trade
 * vii.** **Global economic policies:** interdependent b/c of international banking, manufacturing and trade; Europe’s difficulties contributed to the depression in the US, which in turn became the worldwide Great Depression