In the early 1920’s there was a stock market boom because businessmen and economists thought the newly born Federal Reserve Board would stabilize the economy (De Long). The Federal Reserve Board was created in 1913 to act as a last resort lender to help prevent bank panics like the one that occurred in 1907. The Federal Reserve attempted to raise interest rates in 1928 and 1929 to dampen stock speculation brought on by an initial recession. This change caused a chain reaction of firms cutting back on production, which in turn caused consumers to fear that they would soon be out of jobs. Worried consumers began saving. The problem with the stock market boom was that the values we

Well, I’ll tell you one of the biggest memories is the fact that everybody was having a hard time a gettin’ on. There was no money, not too many jobs, and the ones that had a job were very lucky to have it. Then they came along with the… W.P.A. and that was a thing sponsored by the government, and they began to pick up jobs and money and such as that at that time. So it helped out… I was taking to a fellow one time who was on the W.P.A. job… and he said, “Charlie,” he said, “I got down to the place,” and he said, “I was using tobacco.” And he said, “I got down to the place,” and he said, “I had a dime for a package of tobacco or use that dime for a loaf of bread.” Now that’s gettin’ down pretty thin. He said, “I bought the loaf of bread and quit chewin’ tobacco.” Now that’s how tough times were.

The unemployment rate rose simply because employers had taken such a loss that they could not afford to pay their workers. The money just was not there and people do not work for free when they have families to support. Explanations include that the government and the market are to blame for the long period of unemployment (DeLong). Government generated unemployment was prevalent. It is estimated that two or three percentage points of unemployment from 1929 to 1932 can be accredited to the operation of the relief system. Some unemployment of secondary and unskilled workers with large families is attributed to the “OXO” system where firms would methodically rotate two groups of workers between time receiving unemployment benefits and time actu

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