However, the seeds of a depression had been planted in an era of prosperity that was unevenly distributed. In particular, the depression had already sprouted on the American farm and in certain industries.
The Hoover term was just months old when the nation sustained the most ruinous business collapse in its history. The stock market crashed in the fall of 1929. On just one day, October 29, frantic traders sold off 16,400,000 shares of stock. At year's end, the government determined that investors in the market had lost some $40 billion.
Previous to the 1929 collapse, business had begun to falter. Following the crash, the United States continued to decline steadily into the most profound depression of its history. Banks failed, millions of citizens suddenly had no savings. Factories locked their gates, shops were shuttered forever, and most remaining businesses struggled to survive. Local governments faced great difficulty with collecting taxes to keep services going.
Hoover's administration made a bad mistake when Congress, caving in to special interests, passed the Hawley-Smoot Tariff Act in 1930. The measure would hike up tariffs to prohibitively high levels. The president signed the bill into law over the objections of more than 1,000 economists. Every major trading nation protested against the law and many immediately retaliated by raising their tariffs. The impacts on international trade were catastrophic. This and other effects caused international trade to grind nearly to a standstill; the depression spread worldwide.
Meanwhile, the president and business leaders tried to convince the citizenry that recovery was imminent, but the nation's economic health steadily worsened. In spite of widespread... [continues]
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