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The causes of the Great Depression. How the booming 20s became a huge bust!. Harding in Office. Had promised a “return to normalcy” but his time in office was far from normal Promoted laissez-faire Surrounded himself with the Ohio Gang His poker friends that were greedy and drunk
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The causes of the Great Depression How the booming 20s became a huge bust!
Harding in Office • Had promised a “return to normalcy” but his time in office was far from normal • Promoted laissez-faire • Surrounded himself with the Ohio Gang • His poker friends that were greedy and drunk • People looking to get rich off the government
Teapot Dome Scandal • Secretary of the Interior Albert B. Fall. Leased Federal oil reserves at Elk Hills, CA and Teapot Dome, WY to private companies in return for (Bribes) • Oil was for naval use • Went to Jail…1st Cabinet member to go to jail • Harding died in office before scandal could touch him.
Silent Cal (Calvin Coolidge) in Office “The man who builds a factory, builds a temple” “The business of America is business!” • Placed histrust in business, laissez-faire approach • Lowered taxes for businesses • Had honest people working for him • Economy was booming…but not for long
A Bull Market (rising stock prices) “A chicken in every pot and a car in every garage.” • During the Republican rule of Harding and Coolidge America was prospering and no one could see what was about to happen but there were signs • Another Republican, Herbert Hoover, gets a elected in 1928, another laissez-faire guy • …..things are looking good but are they???
Early Signs of the Great Depression • Farmers: were amounting large debts and were unable to sell their huge crops • Huge gap between the rich and poor • Leads to fewer consumers when products are overflowing in the market • Overproduction: new technologies increased output but wages remained too low for workers to buy the goods…leads to too many goods and not enough consumers (supply is greater than demand)
More Causes • Installment Plan: • People were buying things with small down payments then paying the rest in monthly payments • Consumers use this when they buy consumer goods like cars and washing machines • Buying on Margin: • People were buying stock on credit • Would give a small down payment and pay the rest in monthly payments
And More Causes • Speculation: • People were buying stock using credit hoping that stock prices would rise but if they didn’t people could loose everything • Easy Credit: • Buying on credit was a new idea, before the 1920s if you didn’t have the money you didn’t buy it (Christian Ethic) • Debt had been a thing to fear but now everybody was doing it
The Boom is a Bust • For a month stock prices had fallen…too many people are selling stocks which only makes the problem worse • Black Tuesday: October 29, 1929 • Sparked the Great Depression • 16 million shares were sold • Called the Great Crash • People lost their fortunes in hours
The Great Depression • 1929-1941 • Economy was ruined • Unemployment peaked which meant even fewer goods were bought • People run to the banks to withdraw their money but banks don’t have all the money on hand at that time…led to bank failures/closings
Hawley-Smoot Tariff • Hoover meant to help the situation by protecting American businesses from foreign competition • The Hawley-Smoot Tariff raised taxes on foreign imports so that American products were cheaper • In response foreign companies raise taxes on American goods coming into their country…hurt US because now US could not sell their products in America nor in other countries