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During World War I, federal spending grows three times larger than tax collections. When the government cuts back spending to balance the budget in 1920, a severe recession results. However, the war economy invested heavily in the manufacturing sector, and the next decade will see an explosion of productivity… although only for certain sectors of the economy.
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False Sense Of Prosperity Before The Great Depression The 1920s, known as “The Roaring Twenties” marked a time when America was overdependent on production, automobiles were the leading industry, and there was a great disparity between rich and poor.
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With only loose stock market regulations in place before the Great Depression, investors were able speculate wildly, buying stocks on margin, needing only 10% of the price of a stock to be able to complete the purchase.
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The Great DepressionPost WWI, European agriculture revived and grain from Argentina and Australia enter world market.
Farmers are in lots of debt, have high taxes and less income. -
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Raised American tariffs to protect farmers. he economic effect was that the tariff raised the purchasing power of the farmers by two to three percent, but there was a disparity between the burdens that the other industries imposed on farmers. In September 1926, economic statistics were released by farming groups that revealed the rising cost of farm machinery. For example, the average cost of an harness rose from $46 in 1918 to $75 in 1926, the 14-inch plow doubled in cost from $14 to $28.
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Coolidge restored public confidence in the White House after the scandals of his predecessor's administration, and left office with considerable popularity.[2] As a Coolidge biographer put it, "He embodied the spirit and hopes of the middle class, could interpret their longings and express their opinions. That he did represent the genius of the average is the most convincing proof of his strength."[3] Some later criticized Coolidge as part of a general criticism of laissez-faire government
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Revenue Act of 1926 passed, cutting taxes of those earning $1M or more by two-thirds
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May 20, Charles Lindbergh takes off from Roosevelt Field in Long Island, N.Y., aboard the Spirit of St. Louis on his historic solo flight to France
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The arrest of Sacco and Vanzetti had coincided with the period of the most intense political repression in American history, the "Red Scare" 1919-20. The police trap they had fallen into had been set for a comrade of theirs, suspected primarily because he was a foreign-born radical. While neither Sacco nor Vanzetti had any previous criminal record, they were long recognized by the authorities and their communities as anarchist militants who had been extensively involved in labor strikes, politic
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recognizing Broker's loans had gone too high issued a statement to individual Reserve banks regarding their position on speculative loans and insisted that Federal Reserve credit not be used for speculative purposes.
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Once the stock market crashed, fearful that banks would fail, millions of Americans began to withdraw their money. Virtually overnight, they put thousands of banks in peril.
With massive draws on funds during the Great Depression, banks had no money to lend, and this lack of available credit led to a further worsening of economic conditions. -
When consumer spending plummeted during the Great Depression, unemployment rose, reaching its highest level in 1933, when 25% of the workforce was idle.
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Congress passes the Smoot-Hawley Tariff, steeply raising import duties in an attempt to protect American manufactures from foreign competition. The tariff increase has little impact on the American economy, but plunges Europe farther into crisiis.
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Severe drought and Dust Bowl conditions began to ruin farmers’ land, a condition that lasted until 1935
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In addition to allowing the Bank panics to reduce the U.S. money supply, the Federal Reserve also deliberately contracted the money supply andraised interest rates in September 1931.
Such declines in the money supply caused by Federal Reservedecisions had a severe contractionary effect on output. -
mobster Al Capone was convicted of income tax evasion and sentenced to 11 years in priso
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Democrat Franklin D. Roosevelt defeats incumbent Republican President Herbert Hoover in a landslide to win the presidency
