Issues leading to the Great Depression Dawes Plan: 192

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Issues leading to the Great Depression
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Dawes Plan 1924
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Hawley Smoot Tariff 1930

• Highest tariff in U.S. History
• Almost blocked all foreign imports
• VERY anti-Wilsonian
• 23 foreign govts raise tariffs on U.S.
• By 1932, US exports fall to lowest point in 30
  years
• Counters idea that opening trade fuels U.S.
  prosperity

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Farming Probs

• Farmers caught in boom and bust cycle of post war
• Peace brought end to govt guarantee of high
  prices
• New gas plows increase production
• Farmers simply produce more to keep up
• Coolidge vetoed McNary-Haugen Bill (govt purchase
  of wheat to sell overseas)
• Would keep agricultural prices high

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Overproduction and drought leads to Dustbowl
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Other Issues

• Mal-distribution of wealth Top 1/5 controlled
  60 of wealth
• Overproduction of goods Overstocked shelves
  cut-down of supply cut-down of labor
• Overseas depression overseas markets unable to
  pick up surplus
• Roaring 20s trends live beyond our means

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October 29,1929
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Black Tuesday

• Stocks fell avg 469-221 in one day
• A series of falls over the week
• By late 1929, DOW (stock market indicator) was at
  52
• Banks begin to seize assets
• Financial panic sets in

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Hoover Reaction to Stock Market Crash of 1929

• We are in a recession, not a depression
• Sec of Treasury Andrew Mellon Believed fall was
  a good thing because it would strengthen the
  market and cleanse economy of inflated values
• Asked employers to not layoff asked unions to
  not demand higher wages

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Hoover did attempt reform

• Financed Boulder Dam (aka Hoover Dam)
• Reconstruction Finance Corp 1932 Provided
  emergency financing for banks, life insurance
  companies and mortgage assoc
• Savings and Loans Association Gave to
  mortgage groups and financial institutions

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Bonus Army final straw for Hoover

• Beleaguered and haggard WWI vets march onto
  Washington to demand Bonus Pay
• The problem was that the certificates (like
  bonds), matured twenty years from the date of
  original issuance, thus, under extant law, the
  Service Certificates could not be redeemed until
  1945.

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Hoovervilles
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Happy days are here again?