On December 4, 1928, in his state of the Union address, President Coolidge talked about the economic success of the country. “There was much good about the world of which Coolidge spoke… The rich were getting richer much faster than the poor were getting less poor. ” According to Galbraith, there was a high employment rate as well as production. “Wages were not going up much, but prices were still stable. ” People had high hopes that everything was going to get even better because of the success in the market. The Idea of getting rich quickly without having to do much rapidly caught on, causing the market to sky rocket. Often times, people would buy stock o

In other efforts to balance the budget, President Hoover announced a tax cut. Although a balanced budget was needed, this effort also had little effect. As little effect as this was, taxes still had to increase. “From 1930 on, the budget was far out of balance, and balance, therefore meant an increase in taxes, a reduction in spending, or both. ”

As Galbraith stated in the last chapter, the United States had become a creditor on international accounts. Once used to pay of loan interest to Europe, the United States used the surplus of exports over imports to in the following 10 years. The United States also tried to pay for the difference through private loans to other countries. One of these loans was to the government of Peru. In 1927, Peru’s President, Juan Leguia, negotiated a loan totaling up to $90,000,000 which later went into default due to Leguia being thrown out of office. War debts from World War I also went into default. The United States realized that countries could not pay off their debts; therefore they had to either increase their exports, or decrease their imports. The United Stated decided to place higher tariffs in order to restrict imports and create a surplus on exports. This only aided slightly and caused more hassle for the farmers.

In 1929, “the five percent of the population with the highest income in that year received approximately 1/3 of all personal income ” in the United States. The inequitable distribution of income affected the economy because the rich had what they wanted and we’re not going to buy large amounts of goods. Consumer spending was reliant upon the wealthiest people and the economy dependent upon high investments from that wealthy five percent. On the other hand, if the poor had more mo

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