The Coming of Depression




normalcy and the return to laissez-faire economics

mass production/consumption - "economy of scales"

industrialization and increased farm output

Federal Reserve Board stacked against regulation

credit buying rampant - constant expansion of demand

high land and machine mortgages keep farmers on edge of ruin

wildcat banks/investors fuel stock market fervor - weak bank on edge of ruin

expanding demand negates need to diversified - specialization encouraged - single item production

over production for available market - declining prices

margin buying/pyramid creates inflated stock worths - useless collateral

Fordney-McCumber Tariff kills already dwindling foreign trade - single market

call for "parity bill" vetoed twice (McNary-Haugen bill) - foreign market killed off with Smoot-Hawley Tariff

stock-market crash - adjustment turn to panic - wildcat banks fold - investors wiped-out

sudden demand contraction crushes weak companies - single item industry faces inventory back-ups - stop production - begin lay-offs

mortgage defaults kills small farmer - kills small banks - land and banking consolidated - "landless families"

panic and run on good banks sparked by collapse of wildcat banks - non-insure investments (life savings) gone

cities plague by homeless - hoboes ride rails looking for work - unemployment

dust bowl adds tragedy to misery - Okies move west looking for land

fear of banks promotes holding cash - bank instability - no finance capital - no credit

unemployment: no pay - no demand

employed: fearing unemployment save - no demand

no farm - no production - no income - no demand

cycle of depression