Andrew W. Mellon's tax reductions gave people more money and a lot of it went into the stock market.
Hoover told his broker to sell many of his stock holdings after he voiced concern about the "orgy of mad speculation" in April 1929.
Disaster was something he saw coming.
It was easy to invest in stocks because of the common practice of buying "on margin", where an investor could make a small cash down payment and then borrow the rest from a bank.
If stock prices rose as they did in 1927, 1928, and most of 1929, the investor made enough profits to pay for the "margin loan" and reinvested the rest.
If the stock price declined and the buyer failed to pay off the broker's loan, the broker could sell the stock at a much lower price to cover the loan.
By August 1929, the face value of the stocks that the investors were buying DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch DropCatch The stock prices kept rising despite the fact that few people seemed to be concerned about the bubble.
The economy was showing signs of weakness.
The rate of consumer spending slowed as steel sales slowed.
Industrial production, employment, and other measures of economic activity were all declining by mid- 1929.
The stock market rose.
The stock market fell in September 1929.
The world exchanges went into a steep decline by the middle of October.
Most investors remained positive.
The stock market values fell again the next week, triggering a panic among terrified investors.
The decline in stock prices accelerated as they rushed to sell their shares.
Black Tuesday was the worst day in the history of the stock market, as prices went into freefall and brokers couldn't find enough stocks.
The investors lost billions on that day.
They lost $50 billion by the end of the month.
The Jazz Age had ended with the crash on Wall Street.
There were rumors that fortunes were lost and careers were ruined.
People who had borrowed a lot to buy stocks were forced to sell their holdings because they couldn't pay their debts.
Some people commit suicide.
Two business partners jumped to their deaths from a room at the Ritz Hotel in New York after the president of a bankrupt cigar company jumped off a window ledge.
The room clerks started asking guests if they wanted a room for jumping or sleeping.
The economy began to decline.
In 1930, at least 26,355 businesses shut down.
The Great Depression came to be known as the result of the economic downturn.
The prosperity of the 1920s was built on weak foundations.
The stock market crash created a psychological panic that accelerated the economic decline.
People rushed to banks to withdraw their money as the news of the Great Crash spread.
The American Union Bank branch has a line around it.
This made things worse.
The nation's economy experienced a shocking collapse by the end of the 20th century.
A combination of interrelated elements is emphasized by most scholars.
The purchasing power of consumers did not grow as fast as manufacturing production during the twenties.
The economy was turning out more products than consumers could buy, and too many people had been borrowing too much money for useless purposes, such as speculating in the stock market.
Many business owners took large profits while denying wage increases to employees.
Employers created an imbalance between production and consumption because of the Reactionary Twenties stock dividends and business expansion.
Organized labor did not exert as much leverage with management over wage increases because they had plum meted.
factories were shutting down as the stock market crashed U.S. economic output dropped from 1929 to 1933.
A quarter of the workforce was unemployed by 1933.
The farm sector was stagnant.
During the Great War, the European nations needed American grains, beef, and pork.
Farmers took out loans to buy more equipment to boost output.
To make matters worse, record harvests in the summer and fall of 1929 caused prices for corn, wheat, and cotton to fall, pinching the income of farmers who had taken on mounting debts.
Government policies contributed to the Depression.
Herbert Hoover supported tariffs on imported goods to keep out foreign competition.
The Smoot- Hawley Tariff was written to help the farm sector by raising tariffs on agricultural products imported into the United States.
Corporate lobbyists convinced Congress to add thousands of nonagricultural items to the tariffs.
The average rate went from 25 percent to 50 percent, making it the highest in history.
More than 1,000 economists petitioned Hoover to veto the bill because it was flawed and would raise prices on most raw materials and consumer products.
Reducing European imports into the United States would make it harder for France, Great Britain, and Germany to repay their war debts.
On June 17, 1930, Hoover signed the bil, causing a steep drop in the stock market.
Other countries retaliated by passing tariffs of their own, making it more difficult for American farms and businesses to sell their products abroad.
The Depression was worsened by the decline in U.S. exports along with international trade.
The Federal Reserve Board's stance of managing the nation's money supply and adjusting interest rates contributed to the Great Depression.
The Federal Reserve tightened the money supply because they were concerned about inflation in consumer prices.
The money supply went down by a third between 1929 and 1932, leading to the closing of thousands of banks.
The chaotic state of the European economy, which had never recovered from the Great War or the Versailles treaty, fueled the Depression.
As their economies began to recover in the late 1920s, Great Britain, France, Spain, and Italy slowed their pursuit of American goods.
The German economy was drained by the war and had to pay France and Great Britain.
The Allied nations were unable to pay their war debts to each other.
Great Britain and France did not have enough money to repay the $11 billion the American government had lent them.
They had to borrow billions of dol ars from the U.S. banks.
American banks were unable to help the European economies after the stock market crash.
The amount of American money going abroad was slowed by the Federal Reserve's tight monetary policy.
As American loans dried up, the German economy was devastated.
The United States made it more difficult for Euro pean nations to sell their products there.
The European econ omy deepened the American depression.
The Great Depression brought the worst of times.
No business slump had been so long or so deep.
Most of the wage workers were unemployed by 1932.
Millions of people saw their working hours reduced.
Half a million people lost homes or farms because they couldn't pay their mortgage.
The twen ties were no longer a source of optimism.
The Reactionary Twenties stores and angry mobs stopped sheriffs from foreclosing on farms.
Many farmers in Iowa were unable to make their mortgage payments.
Sheriffs were showing up at farms.
The Farmers' Holiday Association was formed by frustrated farmers.
If their demands were not met, they threatened to go on strike and not sell their products in the nation's markets.
Groups of farmers blocked roads and prevented the movement of milk and grains before the Association could mobilize.
Some started a "Cornbelt Rebellion," invading courthouses and intimidating judges.
On April 27, 1933, angry farmers broke through a line of security and entered the courtroom to demand that the judge stop signing farm eviction orders.
They dragged him outside and forced him to kiss the U.S. flag.
A mob almost lynched another judge.
The National Guard and martial law were declared in several rural counties.
The farm protest movement gave way to hopes for improvement under a new president.
Many city workers were fired or had their wages cut as the economy spiraled downward.
Unemployment went from 4 million in 1930 to 8 million in 1931 and to 12 million by 1932.
The city dwellers became street- corner merchants.
New York ers who are unemployed sell apples on street corners.
Many struggling business executives and professionals went with out food and medical care to save money and avoid the humiliation of "going on relief."
The class lines had a sense of shame.
We had to crawl for our dinner.
One quarter of children in the nation's public schools suffered from malabsorption in the year 1932.
The families of unemployed workers had more il nesses than those of employed workers according to the U.S. Public Health Service.
100 cases of death by starvation were reported by New York City hospitals in 1931.
Churches and charities give out free food and water at soup kitchens.
Louise V. Armstrong wrote that they saw the city at its worst in Detroit.
A group of men were fighting over a barrel of garbage outside of a restaurant.
Homeown ers with monthly mortgage payments were squeezed by the contraction of the economy.
Millions of Americans were forced to move in with relatives or friends after losing their homes to foreclosure.
The public facilities were overwhelmed by the homeless by 1933.
People were forced to live in culverts, under bridges, on park benches, and in doorways and police stations.
The poor were subject to abuse and arrest.
Fourteen states banned voting by the poor.
Millions of homeless people lived on the road or the rails.
Hobos walked, hitch hiked, or sneaked onto empty railway cars and traveled from town to town.
The Missouri Pacific counted 200,000 vagrants in its empty boxcars.
Depression, numerous shantytowns who you were, and the fact that everybody was emerged in cities across the country to house the homeless are all things that life as a hobo was like.
Hundreds of homeless people lived on subway trains in New York.
Karl Monroe, an unemployed reporter, was able to sleep in his seat on the subway because he was able to pay a nickel.
They would get free meals and a bed when they were in jail.
Immigrants, the elderly, women, children, farmers, the urban unemployed and migrant workers were the hardest hit.
desper ate people who were desperate.
Street begging, homelessness, and prostitution all went up.
Although the divorce rate dropped because couples couldn't afford to live separately or pay legal fees, many husbands abandoned their wives and children.
A woman told a reporter that she didn't know what it was like when her husband was out of work.
He's unhappy all the time.
Life is not good.
Birth rates plummeted when married couples decided not to have children.
Many children were sent to live with relatives or friends.
More than a million children left their homes to join the growing army of homeless migrants.
More people left the United States than arrived during the Great Depression.
Women were put in a strange position during the Depression.
20 percent of working women were unemployed by the year 1932, which is slightly lower than men.
Women were often able to keep their lowest paying jobs because they held a disproportionate number of them.
Many women had the added burden of keeping their families together.
Magazines published articles about the challenge of maintaining households when the husband lost his job.
As the Depression worsened, married women became targets of layoffs.
A married woman should not steal a job from a man who may be a husband and father.
In October of 1938, the federal government opened six custodian positions and 15,000 African American women lined up to apply.
A policeman jumps over a hedge to keep the crowd under control.
Three fourths of the public school systems fired women teachers who got married during the Great Depression.
It was acceptable for single white women to find jobs that were considered to be in the realm of women's work.
Most African American women were limited to working as maids, cooks, or laundresses in the job market.
The states of the former Confederacy, where the farm- dominated economy was depressed before 1929 and worsened during the Great Depression, were home to most African Americans during the thirties.
African Americans in the South earned their meager livelihoods as ten ants and sharecroppers.
They were the most menial, lowest- paying jobs because of racial discrimination.
They were also victims of intimidation.
Most African Americans were not allowed to vote because of Jim Crow laws.
Black people were hardest hit by the Depression.
3 million blacks lived in cramped cabins without running water or a bathroom in the rural South.
The philosophy of "last hired, first fired" meant that the people who could least afford to be laid off were the first to go.
Black workers who had left the South to take factory jobs in the North were among the first to be laid off.
In the early years of the Great Depression, this group had the highest rate of joblessness.
Some charity organizations refused to give aid to minority groups.
Latino and Asian farm workers were competing with Impoverished whites for seasonal work on large corporate farms.
Many Chinese, Japanese, and Filipino farm laborers moved to cities.
Mexicans who came to the United States during the 1920s were mostly migrant workers who traveled from farm to farm to work during harvest and planting seasons.
California, New Mexico, Arizona, Col orado, Texas, and the midwestern states are where they settled.
Government officials called for the deportation of Mexican- born Americans to avoid the cost of providing public services as economic conditions worsened.
More than half a million Mexican Americans were deported by 1935.
People were suffering in the early 1930s.
The governments couldn't manage the misery.
Herbert Hoover, the "Great Engineer," was unable to provide Americans with answers.
Herbert Hoover was a genius during the Great Depression.
He denied that there was a calamity.
The do- nothing approach did not work.
Falling wages and declining land and home values made it even harder for struggling farmers, businesses, and households to pay their bills.
President Hoover was less willing to let events take their course as the months went on.
Various committees and commissions were formed to study the economic calamity.
President Hoover was a cheer leader for capitalism.
Hoover never felt com fortable reassuring a desperate nation.
No one is actually starving.
The nation was woefully unprepared to deal with the Great Depression, which was the greatest national emergency since the Civil War.
As personal income plummeted, so did tax revenues.
President Hoover tried to balance the federal budget by raising taxes and cutting budgets.
The Revenue Act of 1932 was the most poorly timed peacetime tax increase in history, raising the top rate from 24 percent to 63 percent.
The higher taxes took money out of consumers' pockets.
When the economy needed more consumer spending, people had less money to spend.
By the fall of 1930, many cities were in financial trouble.
The federal government had no programs to deal with homeless ness and joblessness as a result of the state and local governments cutting spending.
There were vacant lots where shantytowns sprouted.
The president's fear that the nation would be "plunged into socialism" if the government provided direct support to the poor was reflected in his refusal to address the social crisis.
He claimed that government assistance would rob people of the desire to help themselves.
Hoover hoped that the natural generosity of the American people and charitable organizations would be sufficient, and that volunteers would relieve the social distress.
His faith in traditional "voluntarism" was incorrect.
Herbert Hoover became the target of their frustration because the economic col apse was so unexpected and intense.
The Democrats exploited his predica ment.
They won a majority in the House and a majority in the Senate in November 1930.
Hoover didn't see the elections as a warning.
He became more resistant to calls for federal intervention.
He failed as an economist.
He failed as a business leader.
President Hoover was forced to do more with the new Congress in session.
The Emergency Relief Act authorized the RFC to make loans to states for infrastructure projects.
While the unemployed went hungry, critics called the RFC a "breadline" for businesses.
In the spring of 1932, 20,000 Great War veterans and their families descended on the nation's capital.
Many of the veterans who were owed cash bonuses are now homeless and unemployed.
Congress passed the Adjusted Compen sation Act in 1924, which gave veterans a bonus for their service in the war.
The Senate refused to approve the payments because they would have caused a tax increase.
Most of the veterans went back to their homes.
The rest, along with their families, had no place to go and were in a shantytown within sight of the Capitol.
They were the first large- scale example of protest in the nation's capital.
Hoover wanted to remove the veterans so he persuaded Congress to pay for their train tickets home.
Hundreds stayed, hoping to meet the president.
The buildings were ordered to be cleared by the Attorney General.
The soldiers used horses, tanks, tear gas, and bayonets to break up the veterans and their families.
The soldiers exceeded their orders and burned the camp.
Fifty-five veterans were injured and 135 were arrested.
The attack on the Bonus Army caused a public relations disaster and led to more people seeing Hoover and the Republicans as cruel.
The president sent a message to MacArthur telling him not to send his troops in.
The governor of New York is a democrat.
Franklin Roosevelt told an aide that he would be the next president.
Hoover's health was affected by the stress of the nation's plight.
He hated giving speeches, and when he did he was cold and impersonal.
He got along badly with the journalists, who often highlighted his sour demeanor and voice.
The organizational genius who promised Americans "permanent prosperity" lost the respect of most Americans and became a laughing stock.
Millions of people struggled to survive as wage levels continued to rise.
Hoover failed because he didn't understand or acknowledge the seriousness of the nation's economic problems.
Herbert Hoover was nominated for a second term by Republicans in June of 1932.
The Dem ocrats arrived in Chicago a few weeks later confident that they would win the election.
Franklin Delano Roosevelt won on the fourth ballot.
Roosevelt traveled to Chicago to accept the nomination in person.
Roosevelt said that the economy needed new ideas and aggressive action.
The country needs.
Hoover lacked vision and vitality.
Voters gave Roosevelt 23 million to 16 million votes.
Hoover won six states four years after he won forty.
He had to make one.
Many white Protestants felt that their religion and way of life were under attack.
The revival of the Ku Klux Klan promoted hatred of Catholics, Jews, immigrants, Communists, and liberals.
The teaching of evolution in public schools was opposed by fundamentalist Protestants.
Although the Eighteenth Amendment paved the way for prohibition and the Nineteenth Amendment guaranteed women's right to vote, the movement lost much of its appeal as a result of the Great War.
Calvin Coolidge and his fellow Republicans followed policies advocated by the Secretary of the Treasury that emphasized lowering taxes and government spending as well as raising tariffs to protect domestic industries.
The economy was revived by the plan.
In 1924, Coolidge won reelection and restored trust in the presidency.
Herbert Hoover, secretary of commerce under Coolidge, won a third straight victory for the Republicans in the 1928 election.
Business owners did not provide adequate wage increases for workers during the 20th century, thus preventing consumers' "purchasing power" from keeping up with increases in production.
Overproduction hurt the nation's agricultural sector.
The emerging economic depression was worsened by government policies such as high tariffs that reduced international trade and the reduction of the nation's money supply as a means of dealing with the financial panic.
Hoover's philosophy of voluntary self- reliance prevented him from using federal intervention to relieve the nation's suffering.
In March 1933, Franklin D. Roosevelt assumed the presidency and set in motion a New Deal that included scores of new federal agencies and programs designed to end the depression and put people back to work.
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