Darcie-Lynne ChidesterProfessor CanteraHIST 17003 May 2012 Final Exam Essay Question Number 5 In 1929 companies in the U.S. hit the “Bubble Point”- Market price has soared far higherthan the "true" (based on fundamentals) value of the security or contract or house or product orwhatever it is- in which workers could no longer continue to fuel further expansion, leading thestock market to slow down and eventually crash. What causes the stock market to crash? Wheninvestors believe a stock is a good value they are willing to pay more for a share and its valuerises. When traders believe the value of a security will fall, they cannot sell it at as high of aprice. If all investors try to sell their shares at once and no one is willing to buy, the value of themarket shrinks. On October 24, 1929, "BLACK THURSDAY," this massive sell-a-thon began.By the late afternoon, wealthy financiers like J.P. Morgan pooled their resources and began tobuy stocks in the hopes of reversing the trend. But the bottom fell out of the market on Tuesday,October 29. A record 16 million shares were exchanged for smaller and smaller values as the dayprogressed. For some stocks, no buyers could be found at any price. By the end of the day, panichad erupted, and the next few weeks continued the downward spiral. In a matter of ten shortweeks the value of the entire market was cut in half (US History: The Stock Market Crash). TheStock Market Crash plunged the U.S. unto its longest, deepest economic crisis in history. Thefundamental structural weakness in American Economic System led us into the GreatDepression.
After the Stock Market Crash many bank failures swept across the nation, which had amajor effect on the economy. Banks operated without guarantee to their customers, creatingpanic when times got tough. Unemployment increased dramatically and 25% of all Americanscould not find a job. Unemployment was one of the worst things that happened during the GreatDepression. When the Depression spread across the Atlantic, Europeans bought fewer Americanproducts, worsening the Depression. Also, Oklahoma was hit hard during the depression due tothe weather. Drought brought heavy dry wind, forcing people to pick up and move westward.The Great Depression is also known as the “Psychological Depression” because many peopleturned to suicide. Women turned to Prostitution so they could pay for bills. Alcoholism increasedas well since many people turned to alcohol to escape from reality. Universities throughout thenation saw their bodies shrink, though High School Attendance increased among males becausethey decided to stay in school longer because the prospect of young man getting a job were soslim. Despite the hard times, pop culture saw new trends. Classic Films deputed and even thoughmany could not afford to spend an evening out, many families saw at least one move per week.Games were also gaining popularity as was the Blues/Jazz. Many were frustrated with President Hoover’s because he was unable to provide properrelief in hard times. He is known as the “guy who won’t help”. Franklin D Roosevelt’s ability tocommunicate helps him get elected in 1933. He is most famous for his message “Nothing to Fearbut Fear Itself”. What he means by this is that the worst had already happened so there wasn’tanything else to fear but fear itself because fear was the only thing left to fear and why fear thatwhen nothing worse could happen. After he was inaugurated, FDR was quick to act. His firstpriority after being inaugurated was remedying the failing financial institutions. A few days aftertaking oath of office, he declared a “Bank Holiday” closing all banks from March 6 to March 10.
During this period, Roosevelt presented the new Congress with the Emergency Banking Act. Thelaw empowered the President through the Treasury Department to reopen banks that weresolvent and assist those that were not (US History: A Bank Holiday). After this the bank crisiswas over and many Americans were relieved and more confident in the banking system. After dealing with the bank crisis and resolving it, FDR started the New Deal also knownas the “Alphabet Soup”. The New Deal was a program established to provide relief for theunemployed, also intended to boost both industries and working Americans (US History:President Roosevelt). The first “Alphabet Soup” was the Federal Emergency Relief Act: gave $3billion to state and local governments for direct relief payments. Roosevelt was hesitant tocontinue this type of aid so after two years, efforts were shifted to "work-relief" programs. Theseagencies would pay individuals to perform jobs, rather than provide handouts. There were manyAlphabet Soup agencies. FDIC allowed financial stability and public confidence in the nation’sfinancial system. CCC allowed jobs to young people that helped them contribute to their familieshousehold and WPA allowed unskilled workers to carry out public work projects (construction,literacy, etc.). The New Deal was the most ambitious legislative program ever attempted.While FDR had many supporters he also had many enemies. Conservative Democratic andRepublicans charged FDR with abuse of power and failed to support his plan. During the 1938Congressional elections, Roosevelt campaigned vigorously against anti-New deal Democrats. Innearly every case, the conservatives won. The coalition of Southern Democrats and Republicansdominated the Congress until the 1960s and effectively ended the reform spirit of the New Deal(US History: Roosevelt’s Critics).