Chapter 3: The accident

October 1929
Unemployment: Heading toward 5 percent
Bow Jones Industrial Average (October 1): 343

Summary: 

The stock market crashed on Tuesday October 1929 due to inconsistent fluctuations in the market and over speculation. At the moment, it was not a concern to most politicians such as  Paul Douglas, who was preoccupied in a municipal battle, Andrew Mellon, and Samuel Crowther. It was regarded as "paper losses" and believed that the economy would recover in a timely fashion. It was people such as Tugwell who noted the crash and foreshadowed the future problem born from this incident. As the economy worsened and employment rates soared, as well as inflation which caused a problem in trading because it hindered international trade with Europe worsening the economy. Leaning towards the gold standard to fix the inflation problem and pull them out of the depression, citizens began looking towards President Hoover for help. He attempted so by proposing not to stop public works, but proposing new wage ideas of sustaining employment and wages requiring that companies to take the hit in profits instead of employment. He urged congress to endorse in public spending. Hoover also worked to improve farm prices to help support his idea of tariffs to support domestic economy, however the tariffs provided to be toxic to the general economy and deprived foreign governments of trade, hurting other nations and employees. Failure of the idea of tariff plummeted the US further into the depression and caused criticism on Hoover's part. Hoover then passed the flexible tariff  hoping that it would fix the economy and unemployment rate despite what the republicans and economist warned him about. Congress eventually granted Hoover his tariff. The tariff did not allow countries that were indebted to the US to pay back their loans, which would have provide useful to the Great Depression.
Roosevelt, running for re-election during this time criticized Hoover that he had failed to expand public spending sufficiently and insisted that inflation was the problem, which was a point Hoover failed to address properly. Roosevelt won the election against Tuttle in 1932 shifting favor of the house and senate to the democrats. The closing and failure of the Bank of United States affected many immigrants who invested their money in the bank. The caused more banks in the area to close, causing more people to lose their money.

Key Terms:
Wall Street
Flexible Tariff
Le Quotidien
AFL
The Dow
Liquidation
The Gold Standard
Inflation
Joseph Broderick

Questions:
Why was Inflation a major factor during the Great Depression?

Were there any positives to Hoovers Tariff policies?

Pictures:



New York Stock Exchange: crowds gathering on Black Thursday, 1929 , New York, March 16 2015.http://www.britannica.com/EBchecked/topic/68373/Black-Thursday