The Stock Market Crash and the Great Depression

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Stock Market Crash (October 24, 1929)
Stock Market Crash (October 24, 1929)
The speculative investments during the 1920’s led to “theoretical wealth”

caused by:
-Margin buying
-Pumping and Dumping
-Poor leadership during the 1920’s

One major cause of the Great Depression

Great Depression
Two major causes:
– Stock market crash
– Run on bank

also affected the globe due to a decreased amount of international trade

Margin Buying
Margin Buying
Method of making money on stocks during a bull market:

– Borrow a large sum of money to invest
– Sell it after a short period for a profit
– Repeat the process at higher value

Pumping and Dumping
A means to artificially increase the price of stock:

– A group of wealthy investors buy large amounts of stock in a company, and hire reporters to write positive reviews

– The perceived value of increases, and the masses buy more stock, increasing the price

– The investors sell off their stock at large profit, causing the price to crash

Herbert Hoover
Herbert Hoover
became the president before the stock market crash

was hoping natural economic forces would fix the situation (laissez faire), then convinced to launch the Reconstruction Finance Corporation

RFC: extend federal loans to banks and large corporations

Charles Mitchell
Charles Mitchell
President of National City Bank

Popularized trading stocks and risky investments during the 1920’s

Joseph P. Kennedy
Joseph P. Kennedy
as he saved the only Irish-owned bank he was appointed president of that bank

he invested other businesses and became the richest man in America

he played the stock market and pulled out all of his money right before the crash

was later appointed by FDR as the head of the new Securities and Exchange Commission, and he established the agency’s integrity

Reconstruction Finance Corporation (1932)
Reconstruction Finance Corporation (1932)
A tool used by Hoover to try and stop deflation

– Loans were made to large corporations
– The RFC was able to acquire and run corporations if necessary

Dovetailed with the New Deal

Bonus Army (1932)
Bonus Army (1932)
Veterans demanded their retirement bonuses be paid early

A political struggle ensued, but veterans goals were not achieved – leading to protest

The army was called on, and 4 killed – Hoover’s reputation was sullied

Election of 1932
Election of 1932
FDR v.s. Herbert Hoover
(472 electoral votes to 59)
Democratic won both branches of congress

FDR proposed direct operation of the American economy, an reassertion of the Progressive Reform on a massive scale.

Progressivism was then considered normal and proper in terms of government management ever since

Franklin Delano Roosevelt
Franklin Delano Roosevelt
– New Deal : Relief, Recovery, and Reform
– “The only fear is fear itself”
– Fireside chats through radio
– Served for 4 terms “not switching horses in midstream”
– Largely responsible for fighting the Axis power until they surrender during WW2 and for designing the international relationships in the post war period

New Deal
New Deal
– Alphabet soup (see doc)
– some criticized that it prolonged the depression

Eleanor Roosevelt
Eleanor Roosevelt
First Lady to FDR

Encouraged a tradition of active participation by First Ladies.

Helped the formation of the UN Universal Declaration of Human Rights

Frances Perkins
Frances Perkins
A social rights activist who continued the legacy of the Progressive Reform Era

Advocated for rights of women, workers, children etc.

Became Secretary of Labor under FDR (first women to hold a cabinet position)

Brains Trust
Brains Trust
– the Wisconsin Idea: smartest people were gathered to try to solve the problem

– Early New Deal Era: several handpicked professors advised for bank regulation and other aspects of the First Hundred Days.

– Later New Deal Era: lawyers, military officers, and etc. were all included. Very leftwards.

Relief, Recovery, and Reform
Relief, Recovery, and Reform
FDR’s strategy for recovery:

– He chose opportunities for employment in public works rather than direct welfare

– It aimed to provide for basic needs and restore economic confidence

– It also included laws to regulate the financial sector

First Hundred Days
First Hundred Days
FDR promised immediate action

8 major components and several minor ones were established (the Emergency Banking Relief Act March 1933 ~ the National Industrial Recovery Act June 1933)

Later, the Agricultural Adjustment Act and the National Industrial Recovery Act were judged to be unconstitutional by the Supreme Court

Presidents since then are compelled to accomplish significant strides within the first 100 days

Bank Holiday
Bank Holiday
a 4-day national bank holiday that officially ended all transactions of banks and other financial organizations

over 5000 banks were reopened after within the first 3 days of the holiday

1 week later FDR delivered his first fireside chat and explained his action using simple languages

2 weeks later stock prices started to rise and people were putting their currency and gold back to the bank

Huey P. Long
Huey P. Long
Governor of Louisiana

– Argued that FDR’s New Deal fell short, and held radical progressive reform views

– was assassinated in ’35, but his legacy helped make social security a reality

John Maynard Keynes
A British Economist

controversial “Keynesian economics” marked a turning point in 21st century

FDR adopted his view of “prime the pump”

We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy Stock Market Crash October, 1929. Signaled the start of the Great Depression. Black Tuesday Another name for the Stock …

We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy Election of 1928 Alfred E. Smith (D) vs. Herbert Hoover (R), Smith was a Catholic, Republicans took credit for …

We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy Warning signs in the economy Buying on Margin Purchasing stock with a little money down with the promise of …

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We use cookies to give you the best experience possible. By continuing we’ll assume you’re on board with our cookie policy Black Tuesday October 29, 1929; the day the stock market crashed. Lead to the Panic of 1929 Stock Market …

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