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On this date, the Stock Market crashed, leading to the beginning of the Great Depression. Stocks worth billions of dollars were lost, wiping out thousands of investors. Banks and businesses closed, millions of people lost their jobs, and debts rose.
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President Hoover signed the Smoot-Hawley Tariff Act to help farmers. The tariff raised taxes on imports. Other countries retaliated by raising their own import tariffs, resulting in a trade war. Due to high tariffs on other countries, the United States couldn't export their goods, preventing the US from gaining money.
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Franklin Delano Roosevelt took office in March 4, 1933. He launched the New Deal program on March 9 with the Emergency Banking Act. He introduced the New Deal program to try and pull the US out of the depression.
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When Hitler conquered France and bombed London, FDR increased the defense budget and raised the top income tax rate to 81 percent. In result, the economy grew 8.8 percent and unemployment fell to 14.6 percent only.
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In response to US support for Israel during the Arab-Israeli War, the members of OPEC decided to put an oil embargo, which eventually included Western Europe and Japan.
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Henry Kissinger, Nixon's Secretary of State, introduced Project Independence. The program was designed to make the US less dependent on foreign sources of oil and gas.
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The Emergency Petroleum Allocation Act authorized federal controls over the price, production, and marketing of oil and gas. It was just one of many government efforts to manage the effects of the embargo.
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As gasoline became a rare resource in the winter, long lines formed at gas stations because of the scare of not having any gas. Having more demand than the supply, a lot of gas stations went out of business.
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In the third month of the OPEC Embargo, consumers started realizing how they can help. People bought smaller and energy-efficient cars to save gas. They also saved energy by lessening the use of hot water, heat, and air conditioning at home.
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OPEC agreed to end its embargo after Israel withdrew the last of its troops from the west side of the Suez Canal.
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By 2004, housing prices were skyrocketing. The Federal Reserve started raising interest rates to cool off the market. In 2006, the new Federal Reserve Chairman, Ben Bernanke, raised the rate four times, hitting 5.25 percent by June 2006
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Prices for houses fell because of the huge amount of unsold inventory. At the current rate of sales that year, it would take 7.5 months to sell that inventory.
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As home prices fell, bankers lost trust in each other. No one wanted to lend to each other because they would receive mortgage-backed securities. Because the banks didn't lend to each other, the whole financial system collapses.
