The end of World War 1 – Treaty of Versailles. The treaty demands payments and repartions of war debts from the defeated countries. Some U. S. Banks fail because of bad investments and low prices for agricultural The stock market fails in October, which sends millions of investers into bankruptcy. Hawley-Smooth Tariff Act raises the import duties on a wide variety of raw materials Hostilities between China and Japan begin resulting in increased defense spending, and preperations for war to efficiently insulate Japan from an economic depression.
Hoover creates the Reconstruction Finance Corporation to lend money to businesses Franklin Deleno Roosevelt ( FDR ) is elected president. Adolf Hitler becomes chancellor of Germany and he puts into effect his 4 year plan of economic recovery. FDR declares a federal bank holiday, to determine which banks are solvent enough to re-open. FDR broadcasts the first fireside chat with America. The 100 days congressional session approves 15 major acts, this initiates the new deal. The World Economic Confrence is held in London.
They fail to agree on international polocies to cooperate combat in the worldwide depression. Wall Street trading is regulated by the Securities and Exchange Act. The new deal policies are mandated by the democratic majorities in Congress. Through the National Labor Relations Act workers get the right to orginize and the Social Security Act provides for old-age pensions nad unemployment insurances. Germany’s second 4 year plan focuses on defense and the build up of arms FDR begins his second term. The recession begins. 1937-1938 unemployment raises to 20%.
Congress defeats Supreme Court Reform Bill- emphasizing that the constitution must stay the principle of government. Germany invades Chechoslovakia, and resululting in defense spending buildup in in Great Britain, France and the United States. This ends the Great Depression of the Most people had to cut back on luxuries, and make old things last longer. The telephone was the first thing to go. People stopped buying furniture, household appliances, jewlrey, candy, etc. Yet on the other hand, gasoline, radios, electric refridgerators, and cigarette sales kept going strong.
Movies were one of the strongest sales. It was as if people looked to Hollywood as an escape from their problems. Families planted gardens on vacant lots. Fasion styles became simpler. The depression made people turn their backs on their families. Many people lost their homes. Divorce rates went down. Some Americans had it worse than others. People who lost their jobs couldn’t afford proper medical care or food. One out of every five kids were malnurished. In 1933, starvation claimed 29 people in New York. People used substitute cheap starched, like breat for milk.
People fought for food in the streets. There were food shelters to help people. The ironic thing about the depression is that while thousands of people were starving in the city, the farmers had more food than they could sell. The consumers didn’t have enough money to buy a lot of food. As consumer demand shrunk, prices for farmer’s products fell. Sometimes farmers could not even afford to pay the freight to send their livestock to market. This left the farmers with no choice but to shoot and bury their livestock and to let their crops rot in the feilds.
Unable to sell their crops, farmers couldn’t afford to pay their mortgages. Many farmers had their farms reposossessed by the bank. In 1930 parts of the South suffered a severe drought, and farmers there, couldn’t even afford to feed their families. During the depression, drought and dust storms plauged the land. Some of the dust storms were so severe they buried houses, forcing thousands of farm families to leave the Dust Bowl, as it was called. Eventully the Federal government was able to reclaim the land by planting grass and trees, and by using scientific agricultural methods.
In the 1920’s, things were really rocking in the US and around the world. The rapid increase in industrialization was fueling growth in the economy, and technology improvements had economists believing that the uprise would continue. During this ‘boom’ period, wages of workers increased along with consumer spending. This meant, higher wage caused consumers People became more prosperous, and had more and more money to spare. Shares were being bought in great numbers and this rose the value of the share. When the value of a share rose, it tempted others to invest in it.
Of course, the more you invest, the more you earn. Billions of dollars were invested in the stock market as people began speculating on the rising stock prices The enormous amount of unsecured consumer debt created by this speculation left the stock market essentially off-balance. Many investors, caught up in the race to make a killing, invested heir life savings, mortgaged their homes, and cashed in safer investments such as treasury bonds Easy credit was available. Although federal banks were prohibited from lending money to people for buying stock market shares, private banks could and did so.
The prices continued to soar and some fearful economic analysts began to warn of an impending correction. However, that thought was put away with and ignored by the leading pundits. Many banks, eager to increase their profits, began speculating dangerously with their investments as well. Finally, in October 1929, the buying craze began to dwindle, and was followed by an even wilder selling People were jubilant like the cartoon character beside when they earned some money from the rising shares, but greed took over them and they bought even more.
On Thursday, October 24, 1929, known also as Black Thursday, the bottom began to fall out. Prices dropped precipitously. People, afriad they would lose more if they did not act as soon as possible, rushed off to sell off their shares. This actually made things worse. The value of the respective shares continued to fall until they became worthless. With the shares worthless, people could not pay back their loans. Thousands of investors — many of them ordinary orking people, not serious “players” — were financially ruined. What could the banks do?
They could only declare the people who loaned money from them as bankrupt, without getting any single cent back. Many banks were therefore ruined. The New York Stock Exchange, crowded with frantic people rushing to sell their shares which By the following Monday, the realization of what had happened began to sink in, and a full-blown panic ensued. By the end of the year, stock values had dropped by fifteen billion dollars. The Stock Market has fallen, from what people thought a “strike-it-rich-in-a-minute” place to a “strike-it-bankrupt” hell.
