HIST 1115 Lecture Notes - John Maynard Keynes, Autarky, Dawes Plan
The Great Depression
US Stock Market Crash: October 29 1929
There is a string of republican presidents
Herbert Hoover becomes president
There was a serious maldistribution of wealth in the US
There were a lot of concentrations of industries
oIndividuals had monopolies
The economy was dependant on ppl being able to buy thing
All the European countries were relying on the US
They all borrowed money from the US
The Europeans all depended on American Investments
oThere were trade relationships
oThe Americans needed to flow the capital into Europe
The US is the main source of capital in the world
The US doesn’t need the rest of the world because they had enough raw
materials to get by
A problem that benins in America goes to the rest of the world
In 1929 they thought that they were prospering
oThey thought that they were close to conquering poverty
oHoover thought that they were great
In October 29 1929 the stock market crashes
By 1932 the American industry was operating at about half the volume of 1929
oInvestments went from 10 billion to 2 bilion
Unemployment was about ¼ of the work force
oMillions out of work
oArchitechts, laywers, clergymen were unemployed d
the Market Crashed
oin the 1920’s there is speculation hysteria
oit was booming because everyone owed the US money
othe industry was doing very well
the price of the shares were going up, so people could make
money
othere is so much money to be made, people were “buying on the margin”
even if they really don’t have enough money
borrow money, buy a stock, sell the stock and pay them back with
the money that you sold the stock for
there was a fragile credit system
Bankers were even using their customers money to buy and sell stocks,
assuming that they are always would make lots of money
Prosperity depends on productive industries
At the end of the 20’s the auto industry starts to settle down
oThe steel industry, roads, gas, glass industry
find more resources at oneclass.com
find more resources at oneclass.com
Unemployment starts to rise a little bit
It was catastrophic that everyone expected prices to continue to rise
Black day-oct 24 13 million shares are put up on the market to be sold
Black Tuesday- oct 29 everybody’s trying to sell their shares
oPrices are going down
Many stocks continued to be solid and profitable, but their stocks are being sold
off so they started to falter
Everyone wants to get all their money out of the banks, but the banks don’t
actually have the amount of money that the people have in their accounts so they
can’t withdraw the money
oPeople lose faith in the banking system
Deepening Spiral
People did not belive that it made sense in investing in industries anymore
The healthy industries falter
oPeople are thrown out of work
oPpl can’t afford to buy things
oPpl can’t pay their morgages
Everyone gets kicked out of their houses
They slept in parks and made shanty towns
Hoover didn’t believe that the Gov’t should intervene
oHe wanted to build their confidence
o“prosperity is around the corner”
ohe wanted businesses to continue as they had
Hoover felt that they needed to cut their spending
oThey cut spending on civil servants
oThis made unemployment even higher
They are terrified of inflation like what happened in Germany
They are having DEFLATION
oThe prices of people and goods went way down
oThere’s a lot of money in the US but people didn’t want to buy things
Hoover’s saving is making things much worse
People wanted to raise tarrifs so Europeans couldn’t sell to the US
oThey made it pretty much impossible to get European gods inot the US
oEuropean countries raised their tariffs for US goods so they couldn’t sell to
them
Hoover prohibited government aid for the poor
oHe didn’t want to sap their will to work
oHe didn’t want to give government handouts
oThere was no welfare etc.
oThe Gov’t had promised the Veterans benefits (bonuses were promised in
1940)
They started to march to Washington DC
They demanded their bonus now
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
There is a string of republican presidents. There was a serious maldistribution of wealth in the us. There were a lot of concentrations of industries: individuals had monopolies. The economy was dependant on ppl being able to buy thing. All the european countries were relying on the us. They all borrowed money from the us. The europeans all depended on american investments: there were trade relationships, the americans needed to flow the capital into europe. The us is the main source of capital in the world. The us doesn"t need the rest of the world because they had enough raw materials to get by. A problem that benins in america goes to the rest of the world. In 1929 they thought that they were prospering: they thought that they were close to conquering poverty, hoover thought that they were great. In october 29 1929 the stock market crashes.
