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A bank run occurs when in a fractional-reserve banking system, a large number of customers withdraw cash from deposit accounts with a financial institution at the same time. This happened right after the stock market crash. All the banks ran out of cash and were stuck. Roosevelt then made all banks close down for 4 das and called this "bank holidays". This was a way to have time to sort things out and come up with plans.

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Bank Run - Facts & Summary - HISTORY.com

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Find out more about the history of Bank Run, including videos, interesting articles, pictures, historical features and more. Get all the facts on HISTORY.com

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During World War 1 farmers had a job to make as much food as they can for our troops. Well when the war ended, all the farmers were left with a lot of extra food. There was no longer a huge demand for it anymore and although their food was selling, it wasn't selling fast enough. So all the farmers had to mark down the prices of their food so it would sell better. This did not work as well as they thought because people were so poor they could not afford to buy food. When people didn't buy their food this made the farmers poor also which just worsened the Great Depression.

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Life was not much better for many industrial workers. Although profits rose by 80 percent, wages rose by only 8 percent. Recent immigrants got the worst jobs with casual work and low pay. Wages were low in the old industries facing world competition, like coal and textiles. Costs had to be kept low.

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During the 1920's since everyone was buying everything on credit, their was a high demand of things. So all companies made a lot of everything because they thought that they would sell very quickly like they had in the past 9 years. When the stock market crashed and no one had any money and people stopped buying things on credit, companies were left with millions of products no one was going to buy. This helped make the Great Depression worse also.

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The Smoot-Hawley Tariff Act is a U.S. law enacted in June 1930 which caused an increase in import duties by as much as 50%. The Smoot-Hawley Tariff Act goal was to increase U.S. farmer protection against agricultural imports. The increase in this tariff added economic strain to countries during the Great Depression. It only made things worse.

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What is the Smoot-Hawley Tariff Act?

The Smoot-Hawley Tariff Act, formally known as the United States Tariff Act of 1930 and sometimes referred to in reverse order as the Hawley-Smoot Act, is a law that raised U.S. import duties with the goal of protecting American farmers and other industries. It was named for its sponsors, Sen. Reed Owen Smoot (R-Utah) and Rep. Willis Chatman Hawley (R-Ore.).

Understanding the Smoot-Hawley Tariff Act

The Smoot-Hawley Tariff Act, enacted in June 1930, increased the United States' already high import duties on foreign agricultural products and manufactured goods. It had been preceded by the Fordney-McCumber Act, passed in 1922, which raised the average import tax on foreign goods to about 40%.

Key Takeaways

The initial goal of Smoot-Hawley was to increase protection for U.S. farmers against agricultural imports from overseas. As European farmers recovered from World War I, American farmers struggled with increased competition and declining prices from overproduction. When other sectors of American industry learned of the coming tariffs, many lobbied for similar protection for their own products.

The first effort to pass the bill failed, stymied by moderate Senate Republicans early in 1929. However, with the stock market crash of 1929, protectionist and isolationist sentiments found increasing appeal. The bill passed by a narrow margin (44-42) in the Senate, but easily (222 to 153) in the House. President Herbert Hoover signed the act into law on June 17, 1930, despite widespread opposition, including a petition signed by more than 1,000 economists urging him to veto it. Hoover optimistically noted that a provision of the act gave him the authority to increase or decrease specific tariffs by as much as 50%, allowing him to "expedite prompt and effective action if grievances develop."

Grievances did develop, almost immediately. The tariff increases in Smoot-Hawley added economic strain to countries already suffering from the Great Depression, some of which, like Germany, were also struggling to pay their war debts and reparations. As the Nobel Prize-winning M.I.T. economist Paul A. Samuelson noted in his widely used textbook, "Economics," "Cynics were delighted at the spectacle of a country trying to collect debts from abroad and at the same time shutting out the import goods that could alone have provided the payment for those debts."

66%

Some 25 countries retaliated by increasing their own tariffs. As a result, international trade declined drastically, resulting in a worldwide decline of 66% between 1929 and 1934. Both U.S. exports and imports also saw a substantial drop.

In the 1932 elections, President Hoover was defeated by Franklin D. Roosevelt and both Smoot and Hawley also failed in their reelection bids. On taking office, President Roosevelt began efforts to to decrease the high tariffs, and Congress passed the Reciprocal Trade Agreements Act in 1934.

Today, economists differ on the extent to which the Smoot-Hawley Act worsened the Great Depression. Some say its effect was minimal because international trade was still a minor part of the U.S. economy at that point; others see it as a major factor. But no one seems to think it was a good idea. Even the official U.S. Senate website refers to Smoot-Hawley as "among the most catastrophic acts in congressional history."

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The Smoot-Hawley Tariff Act, formally known as the United States Tariff Act of 1930 and sometimes referred to in reverse order as the Hawley-Smoot Act, is a law that raised U.S. import duties with the goal of protecting American farmers and other industries. It was named for its sponsors, Sen.

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A stock speculation is a stock with a high degree of risk. A speculative stock may offer the possibility of substantial returns to compensate for its higher risk profile. Speculative stocks are favored by speculators and investors because of their high-reward, high-risk characteristics. Right before the stock market crash there were a lot of High Risk stocks. It is also said to be a major cause of the Great Depression and in my opinion, the one most closely tied to it.

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Table of Contents

1. What Caused the 1929 Stock Market Crash?

2. Black Tuesday

3. Effects of the 1929 Stock Market Crash: The Great Depression

The Stock Market Crash of 1929 occurred on October 29, 1929, when Wall Street investors traded some 16 million shares on the New York Stock Exchange in a single day. Billions of dollars were lost, wiping out thousands of investors. In the aftermath of that event, sometimes called "Black Tuesday," America and the rest of the industrialized world spiraled downward into the Great Depression, the deepest and longest-lasting economic downturn in the history of the Western industrialized world up to that time.

What Caused the 1929 Stock Market Crash?

Stock Market Crash of 1929

During the 1920s, the U.S. stock market underwent rapid expansion, reaching its peak in August 1929 after a period of wild speculation in the Roaring Twenties. By then, production had already declined and unemployment had risen, leaving stocks in great excess of their real value.

Among the other causes of the stock market crash of 1929 were low wages, the proliferation of debt, a struggling agricultural sector and an excess of large bank loans that could not be liquidated.

Did you know? The New York Stock Exchange was founded in 1817, although its origins date back to 1792 when a group of stockbrokers and merchants signed an agreement under a buttonwood tree on Wall Street.

Black Tuesday

Stock prices began to decline in September and early October 1929, and on October 18 a big drop in stock prices began. Panic soon set in, and on October 24, Black Thursday, a record 12,894,650 shares were traded. Investment companies and leading bankers attempted to stabilize the market by buying up great blocks of stock, producing a moderate rally on Friday.

On Monday, however, the storm broke anew, and the market went into free fall. Black Monday was followed by Black Tuesday-October 29, 1929-during which stock prices collapsed completely and 16,410,030 shares were traded on the New York Stock Exchange in a single day. Billions of dollars were lost, wiping out thousands of investors, and stock tickers ran hours behind because the machinery could not handle the tremendous volume of trading.

Effects of the 1929 Stock Market Crash: The Great Depression

After October 29, 1929, stock prices had nowhere to go but up, so there was considerable recovery during succeeding weeks. Overall, however, prices continued to drop as the United States slumped into the Great Depression, and by 1932 stocks were worth only about 20 percent of their value in the summer of 1929.

The stock market crash of 1929 was not the sole cause of the Great Depression, but it did act to accelerate the global economic collapse which it was also a symptom. Stock prices continued to drop through 1932 when the Dow Jones Industrial Average-a widely-used benchmark for blue-chip stocks in the United States-closed at 41.22, its lowest value of the 20th century, 89 percent below its peak.

By 1933, nearly half of America's banks had failed, and unemployment was approaching 15 million people or 30 percent of the U.S. workforce. The Dow Jones Industrial Average would not return to its pre-1929 heights until November of 1954, about 25 years later.

African Americans were particularly hard hit, as they were the " last hired, first fired." Women during the Great Depression fared slightly better, as traditionally female jobs of the era like teaching and nursing were more insulated than those dependent on fluctuating markets.

Life for the average family during the Great Depression was difficult. Storms and a severe drought in the Southern Plains ruined crops, causing the area to be nicknamed the Dust Bowl. "Okies," as fleeing residents were called, moved to big cities looking for work.

Did you know? The Great Depression helped bring an end to Prohibition. Politicians believed legalizing the consumption of alcohol could help create jobs and stimulate the economy.

The relief and reform measures in the New Deal programs enacted by the administration of President Franklin D. Roosevelt helped lessen the worst effects of the Great Depression; however, the U.S. economy would not fully turn around until after 1939, when World War II revitalized American industry.

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Stock Market Crash: 1929 & Black Tuesday | HISTORY

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The Stock Market Crash of 1929 ushered in the Great Depression, as some 16 million shares were traded on Black Tuesday, Oct. 29, 1929, wiping out many investors.

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Overuse of credit (the installment plan)

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Overuse of credit (the installment plan)

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The American economy in the 1920's was unbelievably good. Everyone had money, everyone went to parties, and everyone just had a good time. Credit was introduced to the US in 1920's historians believe. During the 1920's American consumers bought 60 to 75 percent of cars, 80 to 90 percent of furniture, 75 percent of washing machines, 65 percent of vacuum cleaners, 18 to 25 percent of jewelry on credit. It looked like the economy was booming and doing great but it was all built on a lie. You can only build so many things on top of credit.  The installment plan is said to be one of the most major causes of the Great Depression.

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How did living standards change in the 1920's?

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Since many goods were too expensive, people could use installment plans to fix the situation. At the time, they had a bad reputation, so no one was really willing to use them. Companies decided to...

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A stock market crash is a sudden dramatic decline of stock prices across a significant cross-section of a stock market, resulting in a significant loss of paper wealth. This happened on "Black Tuesday" on October 29, 1929. It was the end of the Roaring 20's and the start of what would become known as The Great Depression. This happened because our economy started to be based off Credit. Our economy looked like it was booming on the outside but on the inside, it was all fake.

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The Great Depression: Crash Course US History #33