When Herbert Hoover became President in 1928, the attitude of the American people was a very positive one. The people were confident in their economy and in their government. Many Americans had experienced prosperity in the last decade, and believed that it would continue. On January 1, 1929, an editorial in the New York Times stated, “It has been twelve months of unprecedented advance, of wonderful prosperity. If there is any way of judging the future by the past, this new year will be one of felicitation and hopefulness.” Not all Americans were included in the “wonderful prosperity”, however. Farmers, coal miners, and textile workers were poverty stricken during the 1920s due to low prices. Many American workers couldn’t even afford to purchase the items they helped

Americans invested in the stock market during the late 1920s for numerous reasons. Rising stock dividends was one cause. New investors entered the market thinking they could “get rich quick”. There was an unbroken cycle of new investors coming in and old investors leaving that kept new money flowing.

During this time, industry was producing far more than what was needed and businesses were using their profits on new machinery and more workers, which in turn, increased the overproduction problem. This excess of manufacturing gave Americans a sense of security in business, which encouraged them to buy more stock.

An additional motive for investors was that the stock market had no effective legal guidelines on buying and selling stock. Because of this, corporations began printing up a surplus of common stock and investors bought stock on credit. In result, most of the money in the stock market wasn’t even there.

Increased manufacturing output played a vital role in separating the wealthy and the middle class. The average output per worker increased by 32% in manufacturing, while at the time, wages for manufacturing jobs grew by only 8%. As production costs decreased, wages increased, and prices remained constant, the bulk benefit of the increased productivity fell to corporate profits.

People began to get scared and worried over the weekend. They felt little security in the stock market after what had happened throughout the week. Naturally the next day when the exchange was open, Monday, October 28, many got rid of what stocks they had. The next day, October 29, 1929, began the infamous Stock Market Crash of 1929.

In the 1932 election, Americans voted Franklin Delano Roosevelt as their president. He had promised them the solution to end the Depression, which he called The New Deal. According to Volume Two of The American People, The New Deal was “based on the assumption that it was possible to create a just society by superimposing a welfare state on the capitalistic system, leaving the profit undisturbed.” During his first te

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