Darcie-Lynne Chidester

Professor Cantera

HIST 1700

3 May 2012

Final Exam Essay Question Number 5

In 1929 companies in the U.S. hit the “Bubble Point”- Market price has soared far higher

than the "true" (based on fundamentals) value of the security or contract or house or product or

whatever it is- in which workers could no longer continue to fuel further expansion, leading the

stock market to slow down and eventually crash. What causes the stock market to crash? When

investors believe a stock is a good value they are willing to pay more for a share and its value

rises. When traders believe the value of a security will fall, they cannot sell it at as high of a

price. If all investors try to sell their shares at once and no one is willing to buy, the value of the

market 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 to

buy 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 day

progressed. For some stocks, no buyers could be found at any price. By the end of the day, panic

had erupted, and the next few weeks continued the downward spiral. In a matter of ten short

weeks the value of the entire market was cut in half (US History: The Stock Market Crash). The

Stock Market Crash plunged the U.S. unto its longest, deepest economic crisis in history. The

fundamental structural weakness in American Economic System led us into the Great

Depression.

After the Stock Market Crash many bank failures swept across the nation, which had a

major effect on the economy. Banks operated without guarantee to their customers, creating

panic when times got tough. Unemployment increased dramatically and 25% of all Americans

could not find a job. Unemployment was one of the worst things that happened during the Great

Depression. When the Depression spread across the Atlantic, Europeans bought fewer American

products, worsening the Depression. Also, Oklahoma was hit hard during the depression due to

the 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 people

turned to suicide. Women turned to Prostitution so they could pay for bills. Alcoholism increased

as well since many people turned to alcohol to escape from reality. Universities throughout the

nation saw their bodies shrink, though High School Attendance increased among males because

they decided to stay in school longer because the prospect of young man getting a job were so

slim. Despite the hard times, pop culture saw new trends. Classic Films deputed and even though

many 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 proper

relief in hard times. He is known as the “guy who won’t help”. Franklin D Roosevelt’s ability to

communicate helps him get elected in 1933. He is most famous for his message “Nothing to Fear

but Fear Itself”. What he means by this is that the worst had already happened so there wasn’t

anything else to fear but fear itself because fear was the only thing left to fear and why fear that

when nothing worse could happen. After he was inaugurated, FDR was quick to act. His first

priority after being inaugurated was remedying the failing financial institutions. A few days after

taking 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. The

law empowered the President through the Treasury Department to reopen banks that were

solvent and assist those that were not (US History: A Bank Holiday). After this the bank crisis

was 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 known

as the “Alphabet Soup”. The New Deal was a program established to provide relief for the

unemployed, also intended to boost both industries and working Americans (US History:

President Roosevelt). The first “Alphabet Soup” was the Federal Emergency Relief Act: gave $3

billion to state and local governments for direct relief payments. Roosevelt was hesitant to

continue this type of aid so after two years, efforts were shifted to "work-relief" programs. These

agencies would pay individuals to perform jobs, rather than provide handouts. There were many

Alphabet Soup agencies. FDIC allowed financial stability and public confidence in the nation’s

financial system. CCC allowed jobs to young people that helped them contribute to their families

household 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 and

Republicans charged FDR with abuse of power and failed to support his plan. During the 1938

Congressional elections, Roosevelt campaigned vigorously against anti-New deal Democrats. In

nearly every case, the conservatives won. The coalition of Southern Democrats and Republicans

dominated the Congress until the 1960s and effectively ended the reform spirit of the New Deal

(US History: Roosevelt’s Critics).