The Home Owners Loan Corporation refinanced mortgages to prevent foreclosures. June: The government stopped repaying dollars with gold. The Securities Act required companies to educate investors when issuing stocks. The Tennessee Valley Authority Act built power stations in the poorest area in the nation. The Emergency Farm Mortgage Act provided loans to save farms from foreclosure. The Agricultural Adjustment Act paid farmers to limit crops, thus raising prices. May: The Federal Emergency Relief Act created more federal jobs. He ordered everyone to exchange private gold for dollars. March 31: The Civilian Conservation Corps was launched to hire 3 million workers to maintain public lands.Īpril 19: FDR stopped a run on gold by abandoning the gold standard. March 22: The Beer-Wine Revenue Act ended Prohibition and taxed alcohol sales to raise revenue. March 20: The Government Economy Act cut government spending to finance the New Deal. March 9: Franklin Delano Roosevelt launched the New Deal with the Emergency Banking Act. The unemployment rate rose to 8.7%. Deflation set in as prices fell 6.4%. Worried about budget deficits, Hoover returned the top income tax rate to 25%. It was the fourth-largest bank in the nation, and the largest bank failure in history at that time. 11: The Bank of the United States failed. By the end of the year, more than 1,300 banks had failed.ĭec. In the fall of 1930, bank runs spread throughout the Southeastern United States. A bank run would quickly put it out of business. Banks held only 10% of all deposits, so they could lend out the rest. Non-members did not have enough access to reserves to fend off bank runs.Īs bank failures grew, depositors rushed to banks to pull out their savings. Only one-third of the nation's 24,000 banks belonged to the Federal Reserve banking system. Although the economy was improving, weaknesses in the banking system pulled it back down. This led to the failures of affiliate banks in the next few days. July 21: Hoover created the Department of Veterans Affairs. As the crisis worsened, Congress appropriated $65 million for seed, feed, and food boxes. At first, Hoover asked the American Red Cross to help. It was the first of what later was called the Dust Bowl drought, the worst in 300 years.Īs crops failed, farmers could not produce enough to eat. As a result, international trade began to collapse.Ī drought hit 23 states from the Mississippi River to the mid-Atlantic region. Other countries retaliated, setting off a trade war. It originally was supposed to help farmers but ended up imposing tariffs on hundreds of other products. June 17: Hoover signed the Smoot-Hawley Tariff Act, which raised taxes on 900 imports. vice president Charles Curtis, helps serve meals to the hungry at a Salvation Army soup kitchen on December 27, 1930. This created a ripple effect of personal and business bankruptcies.ĭolly Gann (L), sister of U.S. It also meant that debt cost more for lenders to pay back. That meant each dollar was worth more.Īs the value of the dollar rose, prices fell, which reduced revenue for businesses. As banks failed, it reduced the money supply because there was less credit available. There were more than 650 bank failures in 1929, part of a trend of such failures throughout the 1920s. Since unemployment is a lagging indicator, it hadn't started to worsen yet. 23: The stock market hit bottom and began trading sideways.ĭecember: The unemployment rate was still just 3.2%. When banks intervened this time, they worsened the panic. 29: On Black Tuesday, the market lost another 12% as a record 16 million shares were traded. 28: On Black Monday, stocks prices fell 13%. 25-26: Stocks gained 1% on Friday but lost 1% during a half-day of trading on Saturday. Wall Street bankers bought stocks, so only 2% was lost by the time the market closed. 24: Black Thursday kicked off the stock market crash of 1929. 3: Dow reached a closing record of 381.7. The stock market would not return to its pre-crash high for the next 25 years. That same month, the Federal Reserve raised the discount rate from 5% to 6% to prevent inflation and defend the gold standard. It was the true start of the Great Depression. As a result, he lowered the top income tax rate from 25% to 24%.Īugust: The economic activity from the Roaring Twenties reached its peak. He believed a free-market economy would allow the forces of capitalism to fix any economic downturn. His laissez-faire economic policies did little to stop the Depression. March 4: Herbert Hoover became president. The crowds on Wall Street, New York, after the stock exchange crashed.
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