exam 3 notes - The great depression o Herbert Hoover...

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February 27, 2008 The great depression o Herbert Hoover o October 29, 1929 “black Tuesday” o Bank and business failures o Underemployment Harding, Coolidge, Hoover after them this period was called the Boom o Was a time when business was going good. o Profits of cooperation’s were increasing o Less progressive era. o Radio was extremely important at the time o Cohesiveness, throughout America Hover elected in 1928. ran against Smith who was a republican and catholic o Hoover gets a bad reputation however was a good guy, was an engineer. o The depression was unstoppable no matter what party was in power o Hoover responded with some good ideas but was under so much pressure from all the problems Problems with the structure of the United States Lack of industrial industrification (concentrated on cars) More profits were put into production versus back into wages, so rising productivity when there was a decreasing ability to purchase products by the public Tax structure that it benefited the highest income groups 1/3 of cooperate profits went to 5% of the country Still on the gold standard so the country could not produce more money Debt - fixed amount of money with an amount of time to be repaid, interest rates would usually be low due to the level of security on return. o Over time the structure of the investment goes up and down Banking provided the bridge between dept and equity, which would have been the killer of the American economy Assets – loans, this is good to the bank as it given on the idea that it will be repaid over time with interest etc Liabilities – deposits (cash), this is because this is your money which they owe back to you. At the time, banks could use this money to put it into assets and hand out loans Investments – government bonds This was changed by the glass steeple act (Hoover)
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Corporations o Had control of information o Enron o Information in the hands of corporations can tilt the hand of of the physical playing field October 29, 1929 o Soften demand o The stock market dropped by 13% in one month o People thought that the system would correct itself especially if the government let it fix itself (invisible hand) o 1932, unemployment was 25% now its 4-5% o Some parts of the country was as high as 80%(Ohio), 1/3 of farmers lost their land o 1930’s there was a sever drought, which led to the dust bowl o Caused more movement of blacks out of the south o The depression destabilized families but it didn’t not increase the divorce rate o There was just no work so none could change the situation they were in. o A lack of diversification – a theory as to why the depression lasted so long was because re investment was going back into the same industries, and the new investment was going into aviation etc.
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