The Coming of Depression
MONEY |
FACTORY |
FARM |
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 |