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Great Depression
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Stock Market Crash
In 1928, the first signs of trouble appeared in the American economy. Consumer demand began to lag somewhat, and this caused cutbacks in the auto and ancillary industries. Speculation on the stock and bond markets continued to grow, even when some of the securities sold had no underlying value. On the morning of October 24, after a week of falling prices, suddenly millions of shares went on sale. These shares were not matched by buy orders. An effort was made by the major Wall Street banks, led -
The Causes of the Great Depression
The 1920's were a period of rapid economic growth. All Americans did not equally share that economic growth. By 1929 factory inventories were rising. Despite rising inventory(when inventory grow it means products are not being sold) and signs of an economic slowdown, stock prices continued to soar. The stock rise was fueled by easy credit that allowed people to buy stocks on margin. With easy credit people could buy stock by putting down only 10% of the cost in cash. -
Hawley-Smoot Tariff
The Hawley-Smoot Tariff raised tariffs to their highest levels in US history. Its proponents, including President Hoover, believed that the high tariffs would help American industry and agriculture in a time of severe depression. In fact, the opposite occurred. As the United States was a net exporter of both agricultural goods and industrial products, the ensuing worldwide tariff war simply lengthened the depression. -
Japan Invades Manchuria
On September 18th, in violation of all its treaty obligations, Japan occupied Machuria, in northeast China. It was the first step on the path to World War II. American's reacted with the "Stimson Doctrine," which stated that the United States would not recognize any treaty that impinged on the sovereignty of China. -
Reconstruction Finance Corporation
With the jobless rate on the rise, and increasing bank failures (e.g., 158 in August, 305 in September and 522 in October), Hoover was forced to take action. In December 1931, he called on Congress to establish the Reconstruction Finance Corporation. The corporation was authorized to loan money to banks, railroads and other institutions. -
The Bonus Army
With the depression worsening, World War I veterans began to clamor for an early payment of the veterans' bonuses that had been promised them for 1945. They claimed that they needed the money immediately. Hoover opposed any action, but Congress passed a bill to allow the veterans to borrow up to 50% of their bonuses. Hoover vetoed the bill. As a result, an "army" developed, marched to Washington, and under the leadership of Roy Robertson, established temporary residence there. -
New Deal Begins
President Roosevelt moved decisively upon assuming office. His first act was to declare a national banking holiday for four days. He then called the Congress to a special session. Congress stayed in session from March 9 until June 16, in what became known as the "100 Days." Roosevelt framed his program as what he called the three R's -- relief, recovery, and reform. The overwhelmingly Democratic Congress passed all of the acts that the President requested. The first act was banking reform, whi -
The Banking Crisis
The Great Depression did not begin with a crisis in American banks. However, the financial crisis soon spread to banks. Bank after bank was forced to close, as one after another suffered a run on their bank. The worst year for the banks was 1931, when 2, 298 banks failed. In 1932, the situation had gotten better after Congress established the Reconstruction Finance Corporation to give emergency loans to banks. Still, as 1933 dawned, the state of US banks continued to worsen. Key banks were on th -
Social Security Act
The Social Security Act created a joint federal and state program for both unemployment insurance and old age pension. The social Security Act, which was considered radical when enacted, is today considered one of the mainstays of American society. -
Neutrality Act
The mood of the United States in the early part of the 1930's was extremely isolationist. A special investigation was undertaken by the Senate under the leadership of Senator Nye of North Dakota, to determine whether arms manufacturers had made undo profits during Word War I. The answer was overwhelmingly affirmative. Thus, the argument went that the United States became involved in World War I at the behest of the arms makers. -
Quaratine on Aggressors
In total opposition to the tone of the neutrality legislation, President Roosevelt, in a speech in Chicago, called for an international "quaratine of the aggressor nations." Roosevelt realized that he was ahead of public opinion; thus it would be a ahead of public opinion; thus it would be a long time before he would repeat the theme. -
Panay Incident
On December 12, Japanese planes bombed a US river gunboat, the Panay, in China. The panay sank, 2 were killed and 30 wounded. The State Department demanded an apology, which the Japanese provided. The attacked followed Japanese attacks against Chinese civilians.