1. False Prosperity

-Over dependence on mass production, consumer spending, advertising, welfare capitalism, high tariff, "invisible hand"

-Automobile was the leading industry

-Chemicals, appliances, radio, aviation, chain stores

-Overproduction in textiles, farming, autos

-Real wages increased by only 11%

-60% of the population was at less than the $2000 poverty minimum

-Top 5% earned 33% income- spending by the rich essential

-Andrew Mellon cut taxes

2. Speculation

-Fed loaned at 3.5%, gold inflow 1927, Great Bull Market 1928

-Broker loans on call rose from $3.5 billion in 1927 to $8.5 billion in 1929

-Goldman Sachs investment trusts, 50% margin trading at 5% interest

-Pooling tactics of "anglers"- John J. Raskob

-Charles Mitchell of National City Bank: "I know of nothing fundamentally wrong with the stock market." (October 21, 1929)

-Joe Kennedy: "Only a fool holds out for the top dollar" (sold after RKO merger in

October 1928)

3. Stock Market Crash

-Sep. 3: Dow high of 381

-Sep. 6: Babson break- market became erratic

-Sep. 20: collapse of hatry in Britain

-Oct. 23: JP Morgan buys to stop price decline

-Oct. 24: panic selling began 12.8m shares

-Oct 29: Black Tuesday- 16.4m shares

-Prices decline to Dow low 41.22 on July 8, 1932

4. Banking Crisis

-Deposits withdrawn, deflation

-9000 banks fail in 1930, 1932 waves

-Austria's bank failed May 1931

5. Unemployment

-Ripple effect as leading factories close

-Rose to 25-35% of total labor force, 80% in Toledo

-Farm income declined 60%; 1/3 lost land

6. Trade Collapse

-Foreign countries retaliate with high tariffs

-Weimar Republic unable to pay reparations or U.S. Bank loans

-U.S. had been creditor with $368m annual surplus

7. Republican Policy

-"The Ordeal of Herbert Hoover"

-Laissez-faire, balanced budget, trickle down, voluntarism

-No use of monetary or fiscal policies