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History of American Capitalism
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Bucket Shops
Bucket shops were operations that sold stocks outside of the legal world. This operation was within bars and allowed individuals to put money into a bucket betting to see if the price of a stock will go up or down that day. This was not directly investing but was betting on the stock, which is gambling. This became extremely popular and got shut down as the NY stock exchange said it reflected poorly on their business. (Hochfelder, 335). -
Consumer Culture of the 1920's
The 1920s saw a period of post-war prosperity. Goods from cars to agricultural commodities were mass-produced. "Ford Motor Company brought about the largest surge in labor productivity ever recorded" (Levy, 356). Shortly after, manufacturers were producing more goods than they could sell. As a result, the economy crashed, which quickly led to another cause of the Great Depression. -
Black Tuesday
October 29th, 1929 became widely known as Black Tuesday. On this day, the United States stock market crashed. America's poor banking practices and individuals buying on margin slowly led to this downfall. When Americans realized their money was no longer secure, they flocked to the banks to withdraw all their savings. This led to more chaos and banks were forced to close. Between 1930-1933 9,000 banks closed throughout the country. (Appleby, 274-275) -
President Hoover attempts to help Americans
Herbert Hoover was the president of the United States at the time of the Depression. He believed in limited government and that they should not intervene in finance, or in general. This made matters worse for struggling Americans. The unemployment rate increased significantly during this time, as he emphasized people need to donate and volunteer more because the federal government was not going to help. Americans knew a new president was needed. (Thomson, class lecture, 2/27/23) -
The Glass- Steagall act
The Glass- Steagall Act was one of FDR's programs for the New Deal. This program created a new generation of banking and the FDIC, which is the Federal Deposit Insurance Corporation. This means if a bank goes under money will be saved. It also created the separation of banks, checking, and savings. Both of these creations were to resuscitate the financial system. "The Glass-Stegall Act was the US Legislative response to the bank runs" (Lucas, 43). -
1933 Banking Holiday
After FDR got sworn in as president, he created a National Banking Holiday of 1933. He closed banks from March 9th-13th in order to restore confidence in the economy. After 4 days, there was more confidence in the banks that had stayed open. "The banking holiday certainly disrupted
the flow of business across the economy.
But it also seemed to comfort those who
had been fearing more bank closures and
a general financial meltdown" (Martorelli, 20). This holiday prevented more bank runs. -
World War 2
10 years after Black Tuesday and the start of the Great Depression, was the beginning of a new concern for America. World War 2. This caused FDR to switch his focus on war efforts, he called it, "Dr. New Deal is dead, and has been replaced by Dr. Win the War.” Numerous jobs were created in different industries to help, like ships, tanks, and guns. These jobs generated economic growth, pulling America even further away from the economic crisis. (Thomson, Class Lecture 3/20/23.) -
Credit
In the 1960s there was an immense expansion of credit access. More and more goods were becoming available and so was the normalization of debt. "FNBC of New York saw an opportunity to increase business by creating an innovative system that would enable consumers to purchase a variety of goods and services on credit" (Zumello 551). The credit card was a substantial invention and still plays an extensive role in capitalism today. -
Capital Movement 1960's-1980's
Capital Movement was a time of great expansion in the United States. Manufacturing and production plants moved south and west and even expanded to other countries like Japan and Mexico. This was because labor was significantly cheaper there. However, there were consequences. This declined manufacturing in the US, taking away jobs for Americans and also weakened the US on the global economic scale, because not as much money was being created. Less production equals less money.(Thomson, Lecture) -
2008 Financial Crisis
2008 signified the worst economic crisis in the United States, since the Great Depression. Programs were implemented just as they were for the depression. The Troubled Asset Relief Program was a loan of $700 billion and helped stabilize the financial system. Additionally, this gave money to different industries including automobiles, to prevent a second depression. Shortly after Obama became president he gave stimulus money to help fix the economy. (Maslak, 201).