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Great Depression

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The stock market crash of 1929 had devastating effects on the economy, politics and the society itself. Though it was not the main cause for the Depression, it was certainly a factor. The Depression left many people homeless and jobless and without hope. On Tuesday October 29, 1929 the industrial index dropped 43 points and 16 million shares were sold off. This was called "Black Tuesday" and remains one of the worst days in US history to this day. There were a few signs that something was wrong, but these were not the only cause of the depression; only a few markets holding up the economy was a result of lack of diversification. The rich get richer and the middleman does not mean that there was a misdistribution of purchasing power. Banks were troubled by many farmers borrowing money to expand for WWI. Our position in international trade, Europe was in debt and couldn't buy any American goods. And we were lending Germany money to pay off Great Britain.

The economy was in shambles, unemployment shot through the roof people were getting laid off left and right, 9,000 banks closed their doors, depositors lost 2.5 million dollars, business and farmers could not get loans and production went way down. By 1933 25% of Americans were jobless and people believed that it was a personal failure to be in poverty. Up to 40% of the available money supply normally used for purchases and bank payments was destroyed by all these bank failures. The debt became heavier, because prices and incomes fell 20-50%, but the debts remained at the same dollar amount. There had been an enormous amount of stock purchasing during the 1920's. Newspapers and magazines were filled with stories of people becoming rich overnight by going into the stock market, and thousands of Americans rushed to buy stocks, even if they had to borrow money to make the buy them. Instead of looking for danger signs, most people assumed that prices would just keep on rising. The market peaked on Sept. 3, 1929, but then it began to waver. On Oct. 24, a dramatic fall of stock prices began, culminating in the crash of Black Tuesday, Oct. 29, 1929, when in a matter of just a few hours $10 billion worth of wealth disappeared.

Politics in America didn't suffer at first. Herbert Hoover's status of an American president did not go up at all during this time of the Depression. People blamed this slump of America on him and it would not get any better. The Republican Party dominated politics in the 1920's which controlled the White House and Congress throughout the decade. Many Americans felt that the 1920s were a very thriving period, and they gave the Republican Party credit for this. Presidents Warren Harding and Calvin Coolidge were very conservative men who believed strongly in laissez-faire and in the primary role of business in American life. Hoover was unwilling to give direct federal aid to the unemployed and many Americans increasingly saw his responses to the crisis as woefully inadequate.




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