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Ch.24: The Great Depression & the New Era & the New Deal -In 1933 after having the worse economic depression in US history, the American people were gripped by fear for their very survival. -depression of 1930s lasted longer and caused more business failures. -affected both middle and working classes.

-before it was over, Hoover & Roosevelt would devote 12yrs seeking the elusive path toward recovery. CAUSES AND EFFECTS OF THE DEPRESSION (1929-1933)
-business boom 1920s collapse in October of 1929.
Wall Street Clash:
-stock prices kept increasing for 18 mnths.
-The Dow James Industrial Average of major stocks reached an all time high of 381. -a investor who bought stocks at the time of Hoovers election would have doubled their money in less than a year. Black Thursday and Black Tuesday:-on Black Thursday there was an unprecedented volume of selling on Wall Street and stock prices plunged. -from October 29 and on, prices continued to decrease & by November, Dow Jones index fell from September high of 381 to 198.

Causes of the Crash:
-the depression was a result of a combination of factors that happened during the 1920s. Uneven distribution of income:
-economic success wasn’t shared by all.
Stock market speculation:
-ppl no longer invested their $ to share profits.
-speculating the price of a stock would go ^ & they could sell it for profit. -Buying on margin allowed ppl to borrow most of the cost of the stock. -when stock prices dropped, market collapsed & they lost everything they borrowed & invested. Excessive use of credit:

-advertising stimulated consumers’ desire for the exciting new appliances and cars that were being produced. Overproduction of consumer goods:
-Business growth produced a volume of goods that workers with stagnant wages could not continue to purchase. Weak farm economy:
-prosperity of 1920s never reached farmers who suffered from over production, high debts & low prices since the end of WWI. -1930s was severe weather which added to farmers difficulties. Government policies:

-Congress enacted high tariffs which protected the US industries but hurt farmers and international trade. -neglect & bad practices would prove difficult for the gov’t to correct. Global economic problems:

-Europe didn’t completely recovered from WWI but US failed to recognize Europe’s problems. -war reparations burdened Germany throughout the 1920s.
-some relief came w/ US loans under the Dawes Plan but the loans were suspended. Effects:
-Great Depression’s influence on American thinking and policies has even extended beyond the lifetimes of those who experienced. -economic statistics serve as indicators that track the health of a nation’s economy. -The US Gross National Product dropped whiles the nation’s income declined by over 50%. -by 1933, unemployment had reached 13million ppl or 255 of workforce not including farmers. -the power of fed. Gov’t would increase greatly as the people accepted dramatic, far-reaching changing in policies. -social effects were poverty and homelessness increased , mortgage foreclosures and evictions became commonplace. Hoover’s Policies:

-Hoover believed that the nation could get through difficult times if ppl took his advice about exercising voluntary action & restraint. -Hoover hesitated to ask Congress for legislative action on the economy afraid that gov’t assistance to individuals would destroy their self-reliance. -need for more direct gov’t action, he took the traditional view that public relief should come frm state & local gov’ts not the fed. Gov’t Responding to a Worldwide DEPRESSION:

-through the Dawes Plan for the repayment of war debts, European prosperity was closely tied to that of the US. Hawley-Smoot Tariff (1930):
-passed by the Rep. Congress set tax increases ranging from 31% to 49% on foreign imports. -political purpose was to satisfy US business leaders who thought a higher tariff of their own against US...
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