hist 1302 chapter 25 notes

hist 1302 chapter 25 notes - CHAPTER 25: THE GREAT...

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CHAPTER 25: THE GREAT DEPRESSION AND THE NEW DEAL 1929—1939 I. HARD TIMES IN HOOOOVERVILLE A. Introduction 1. The prosperity of the 1920s ended in a stock-market crash that revealed the flaws honeycombing the economy. As the nation slid into a catastrophic depression, factories closed, employment and incomes tumbled, and millions lost their homes, hopes, and dignity. B. Crash! 1. During the preceding two years, the market had hit record highs, stimulated by optimism, easy credit, and speculators’ manipulations. 2. But after peaking in September, it suffered several sharp checks, and on October 29, “Black Tuesday,” panicked investors dumped their stocks, wiping out the previous year’s gains in one day. 3. The market hit bottom in July 1932. By then, the stock of U.S. Steel had plunged from $262 to $22, Montgomery Ward from $138 to $4. Much of the paper wealth of America had evaporated, and the nation sank into the Great Depression . 4. The Wall Street crash marked the beginning of the depression, but it did not cause it. The depression stemmed from weaknesses in the New Era economy. Most damaging was the unequal distribution of wealth and income. 5. With more than half the nation’s people living at or below the subsistence level, there was not enough purchasing power to maintain the economy. 6. A second factor was that oligopolies dominated American industries. Their power led to “administered prices,” prices kept artificially high and rigid rather than determined by supply and demand. 7. Banking presented other problems. Poorly managed and regulated, banks had contributed to the instability of prosperity; they now threatened to spread the panic and depression. 8. International economic difficulties spurred the depression as well. Shut out from U.S. markets by high tariffs, Europeans had depended on American investments to manage their debts and reparation payments from the Great War. 9. Government policies also bore some responsibility for the crash and depression. Failure to enforce antitrust laws had encouraged oligopolies and high prices; failure to regulate banking and the stock market had permitted financial recklessness and irresponsible speculation. 10. Reducing tax rates on the wealthy also encouraged speculation and contributed to the maldistribution on income. Opposition to labor unions and collective bargaining helped keep workers’ wages and purchasing power low. 11. The demand for cash caused banks to fail, dragging the economy down further. And the Federal Reserve Board prolonged the depression by restricting the money supply. C. The Depression Spreads 1. Unemployment skyrocketed, as an average of 100,000 workers a week were fired in the first three years after the crash.
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2. Moreover, the depression began to feed on itself in a vicious circle: Shrinking wages and employment cut into purchasing power, causing business to slash production again and lay off workers, thereby further reducing purchasing power. 3.
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This note was uploaded on 01/05/2009 for the course HIST 1302 taught by Professor Powers during the Summer '08 term at Lone Star College.

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hist 1302 chapter 25 notes - CHAPTER 25: THE GREAT...

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