HIST-151.003 1st Edition Lecture 22 Outline of Last Lecture I. Chapter 23: “From New Era to Great Depression 1920-1932” cont.Outline of Current Lecture II. Chapter 23: “From New Era to Great Depression 1920-1932” cont.- Origins of the Great Depression- Hoover – Hoovervilles; Hoover blankets, hogs- R.F.C.- Sum Up the 1920’sCurrent Lecture Origins of the Great Depression- Economic institutions fell apart- By 1927, consumer spending had flattened and was beginning to drop- America was the only sovereign nation with a financial surplus - Businesses made too many products – started building inventories (Massive storage facilities)- European nations were not interested in America’s products, refused to buy, they were in their own economic crisis- Government did not get involved – Laissez Faire- U.S. loaned out cash to European nations and tacked on interesto Britain, France, Italy, Germany, etc. were borrowing – did not and would not be able to pay back the U.S. - U.S. Government began loaning Europe money to pay for the expenses caused by WWI- U.S. began running out of money – in the red- Housing construction slowed, and businesses ceased to be created - Protective tariffs in the U.S. went up, making it almost impossible for Europe to ship or receive goods because of the tax increase- With cuts in consumer buying, came cuts in employment – hourly-waged workers laid-off- By January 1929, U.S. had reached a recession- All of the U.S. had been buying on credit since the Progressive Era, no real money, but had real interest rates – many items bought on credit were repossessed by the companies providing the credit- October 29th, 1929, Wall Street - Manhattan, New York – Stock Market plunged, hit the floor, andkept going downo Stock market allowed anyone to purchase stockThese notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.o Allowed buying on margin – investors only had to pay 10% of the purchase price up frontwhen purchasing a stock, some did not have to pay up front, an “I.O.U” would often be how stocks were purchased- Largest one-day loss in stock market historyHoover –Hoovervilles; Hoover blankets, hogs- Hoover was initially blamed for the Great Depression even though he was only in office for eight months- Hoover administration did nothing to address the situation at firsto Told people that they should have learned to handle their money better- Shanty towns, ghettos were established – Hoovervilles – “tent cities” composed of cardboard boxes for walls and tarps for a roof- Those residing in Hoovervilles ate “Hoover hogs” (boiled rabbits) and slept with “Hoover blankets” (newspapers)R.F.C.- Hoover Administration puts into place the Reconstruction Finance Corporation- Money that happened to be accumulated by the government was to be saved and handed back out to large and small businesses in hopes to get the economy running again- Congress did not like the idea, kept the money, but did not hand it out to businesses- Ingenious idea, but too little too lateo When F.D.R. is elected into office, he picks up where Hoover administration left off, believed that the R.F.C. was a stroke of geniusSum Up the 1920’s- European stocks declined, did not purchase from the U.S.- The return of Laissez-Faire prevented Government interference, assisted in the drop of the economy- Once again, most of the wealth resided within the top 2% of the United States – similar to the situation during the Gilded Age- Unemployment level skyrocketed to