rksuntil five o’clock am the next day to clear all the transactions. By the following Monday,the realization of what had happened began to sink in, and a full-blown panic ensued. Thousands of investors--many of them ordinary working people, not serious players--werefinancially ruined. By the end of the year, stock values had dropped by fifteen billiondollars.Many of the banks which had speculated heavily with their deposits were wipedout by the falling prices, and these bank failures sparked a run on the banking system. Each failed bank factory business and investor contributed to the downward spiral thatwould drag the world into the Great Depression.By 1930, the slump was apparent, but few people expected it to continue; previousfinancial panics and depressions had reversed in a year or two. The usual forces ofeconomic expansion had vanished, however. Technology had eliminated more industrialjobs than it had created; the supply of goods continued to exceed demand; the worldmarket system was basically unsound. The high tariffs of the Smoot-Hawley Act (1930)exacerbated the downturn. As business failures increased and unemployment soared--andas people with dwindling incomes nonetheless had to pay their creditors--it was apparentthat the United States was in the grip of economic breakdown. Most European countrieswere hit even harder, because they had not yet fully recovered from the ravages of WorldWar I.) The deepening depression essentially coincided with the term in office (1929-33)of President Herbert Hoover. The stark statistics scarcely convey the distress of themillions of people who lost jobs, savings, and homes. From 1930 to 1933 industrial stockslost 80% of their value. In the four years from 1929 to 1932 approximately 11,000 U. S.banks failed (44% of the 1929 total), and about $2 billion in deposits evaporated. Thegross national product (GNP), which for years had grown at an average annual rate of3.5%, declined at a rate...
