2/24/09 Notes

Great Depression and New Deal

Causes:
1.) Stock market speculation in the form of buying on credit
-Inflationary stock prices due to 10% increase in purchase price
2.) Poor decision making by Federal Reserve Board
-Made it harder for public to obtain credit
-Board decreased amount of money in circulation
-Credit starved economy deepening into Depression
3.) Nation's wealth very unevenly distributed
-Between 1918 and 1929, share of nation income went to the wealthiest. 20% rose by 10%. 60% of the poor fell almost 13%
-Deep gap of income slowed consumption
4.) Hawley-Smoot Tariff accelerated economic decline
-Raised rates on agricultural and industrial products at an all-time high
-International trade collapsed due to levied retaliatory tariffs

-Hoover attempts to resolve economic depression

-He first turned to voluntary cooperation
-He encouraged organizations of farmers, industrialists, bankers, etc. to share information to try to get recovery started
-Didn't work and he pursued more aggressive policies

-He secured 1 year moratorium on loan payments due to American banks from European banks

-He steered Glass-Seagall Act of 1932 through Congress to help American Banks meet the demands of European banks to transfer dollars to gold