Charles Ponzi In 1920 Charles Ponzi, an Immigrant from Italy began a con game that is sometimes known as the Ponzi Pyramid Game. It relies upon getting people to invest money in a stock, and then getting those people to recruit new people to invest and then using the money that the new comers pay in to pay the first round and the people from the 3 rd round to pay the people at the 2 nd round. Eventually the pyramid has gone as far as it can go and the people in the later rounds get no money at all.

Herbert Hoover elected president in 1928 Hoover was: Orphaned at a young age, Graduated from Stanford University Degree in Geology Mining Engineer Millionaire at 30 Became hero in WWI when he Organized the Commission for Relief in Belgium (CRB) Secretary of Commerce Won Presidency with Landslide in 1928

Will Rogers I belong to no organized party. I am a Democrat. I belong to no organized party. I am a Democrat. I voted For Hoover, I wanted to know what it would be like to have a competent man in the Whitehouse.

October 28 th 1929 Hoover takes office in March of 1929 the Stock Market Crashes On Thursday the 24 th is bailed out but crashes again on Monday the 28, Tuesday the 29 is called BLACK TUESDAY

The Stock Market crash was only a symptom of the recession, but led to the Banking crisis, because of the millions of dollars Banks lent to stock brokers or invested directly into the market. Borrowing to buy stocks is called BUYING ON THE MARGIN… as a result of the crash all of the money invested disappears.

Farmers are having problems including the DUST BOWL from 1930 to 1936 (in some areas until 1940). The phenomenon was caused by severe drought coupled with decades of extensive farming without crop rotation, fallow fields, cover crops or other techniques to prevent erosion.drought crop rotation cover cropserosion

Dust Bowl. One storm could bury a car… be careful digging it out because of static electricity build up can cause injury

Migrants from Oklahoma and Texas flooded California searching for jobs in Agriculture… Farmers took advantage of the great numbers of workers and wages dropped severely

Smoot-Hawley act 1932 attempts to keep jobs in America, but Actually causes Europe to retaliate so that more jobs are lost.

Other Causes of the Great Depression An Uneven Distribution of wealth Over Production…. Or too many working class people who couldn’t afford to be consumers. Today Corporations avoid over production by using “Planned Obsolescence” Easy credit before the crash. No credit after the crash.

Shanty towns became “HOOVERVILLES” there were also Hoover Blankets and Hoover Flags.

Hoover does finally act in 1932, when he creates the Reconstruction Finance Corporation which lent $2 billion dollars for banks and large businesses and he created the the Federal Home Loan Bank Act which allowed home owners and farmers to refinance their farm and home loans to avoid foreclosure.

In 1924, congress voted to give veterans of WWI a $500. bonus to be paid out in Congressman Wright Patman proposed that veterans should be paid their bonus immediately. Veterans, the so called “Bonus army”, Marched to Washington to support this bill.

They came with their families and camped at a park. Hoover became convinced that these people were communists. The bill was voted down.

Hoover ordered them to leave but many had no place to go. Hoover gave General MacArthur the order to get them out. Hoover told MacArthur not to pursue the Bonus expedition across the bridge to their encampment, but MacArthur ignored the order.

MacArthur attacked with bayonets drawn, shooting tear gas and burning encampments. MacArthur then went on Radio and congratulated Hoover for giving him the order.

Hoover was up for reelection after this… Most Americans viewed his actions as hard hearted. Hoover lost to Franklin Delano Roosevelt

Unemployment

World War II cost about 1 trillion dollars The 7 years of the new deal cost $50 Billion.

War does not necessarily cure a depression and can hurt the economy such as the case with the Vietnam war which contributed to the Stagflation of the 70’s and the Afghan & Iraqi War which led to the Economic Crisis of The GI Bill diverted some soldirs from returning to the Job Market by paying for their college education. It also gave low interest loans for Housing, which put lots of people to work building homes.

During the 4 years of the war people were paid for building Jeeps, airplanes and ships or for putting on the uniform, but they had nothing to spend their money on because all the factories were building for the war effort. When the war ended They spent a lot of money and made sure the economy would be strong