Great Depression Notes 01 3/20/08

Causes

Laissez Faire

3 bad leaders

Harding

Dies in office

Fails to realize that the Treaty of Versailles is failing

U.S. is not getting any money from war debts

Coolidge

Business of America is business

Hoover

Crash happens one year into his term

Not his fault

Some business background

Responsible for sending food to Belgium

Sec. of Commerce

Creates voluntary programs

Reconstruction Finance Corp.

Provides Gov't loans to failing businesses

Bears and Sterns

One of the largest finance corporations in the U.S.

Wealthy company, with lots of assets, but could not liquidate them

People wanted money out, B+S couldn't provide

Gov't loans allow B+S to pay out to customers

Now B+S is on top of all that loan money

Morgan Stanley buys out B+S

Can afford to pay back loans

Over production of goods

Automobile Industry makes up 13 percent of the American production

Now it's about 1

Construction increases

More buildings built than companies to occupy them

Technological Advancements

Leads to increase in unemployment

Lack of Ability to Buy Goods

1% of American Public controlled the wealth of the country

Larger gap in social classes

Purchasing power reduced

Advertisement

Companies advertise "Buy on Credit", postpone payment

Buying stocks on margin

Agriculture

At the time, made up 60% of American industry

Mass prodcution

During WWI, America feeds Europe

After WWI, U.S. is at full production, but with no one to sell it

Prices plummet

Worldwide Depression

No market for American goods in Europe

1930

Hawley-Smoot Tariff

We want debt money from Europe, so U.S. creates a 32% tariff

Europe raises tariffs on the U.S.

Trade decreases

Finland is the only country to pay off WWI debts

1932

FDR Elected

New Deal

First President to address public through radio