Causes of the Great Depression

Mellon Tax Bills The Revenue Acts of 1924, 1926, and 1928 were known collectively as the Mellon Tax Bill. They were introduced by Andrew Mellon, who served as Secretary of the Treasury from 1921 through The tax bills, driven by supply- side economics, were intended to put more money into the hands of the consumers by lowering the federal income tax. They later learned that the tax bill contributed to the rampant spending trend of consumers, which in turn led to over production of goods. “ The history of taxation shows that taxes which are inherently excessive are not paid. The high rates inevitably put pressure upon the taxpayer to withdraw his capital from productive business and invest it in tax-exempt securities or to find other lawful methods of avoiding the realization of taxable income. The result is that the sources of taxation are drying up; wealth is failing to carry its share of the tax burden; and capital is being diverted into channels which yield neither revenue to the Government nor profit to the people.”

Coolidge and Economic Prosperity WWI stimulated development and investment in new technology that contributed to the business boom in the inter-war period. WWI stimulated development and investment in new technology that contributed to the business boom in the inter-war period. For the first time, consumers across the nation were reading many of the same books and news stories and purchasing the same goods. For the first time, consumers across the nation were reading many of the same books and news stories and purchasing the same goods. Communication innovations in radio, advertising, and film also contributed to the homogenization of ideas that led to the advent of national popular culture. Communication innovations in radio, advertising, and film also contributed to the homogenization of ideas that led to the advent of national popular culture. In his Sixth Annual Message to Congress, President Coolidge discusses the great economic prosperity of the nation. In his Sixth Annual Message to Congress, President Coolidge discusses the great economic prosperity of the nation. He attributes this prosperity to the good relationships between wage earners and employers, the tax cuts, and conservation of our natural resources. He attributes this prosperity to the good relationships between wage earners and employers, the tax cuts, and conservation of our natural resources.

Important Dates August 24, 1921: The Dow begins its post-war boom at points. August 22, 1922: The Dow tops 100 for the first time, closing the day at Between 1922 and 1929, the Dow rises 400 percent. September 3, 1929: The Dow hits its pre-crash high, closing at October 24, 1929 (Black Thursday): The crash begins. A record-breaking 13 million shares are traded, indicating panic. That afternoon, 5 banks pony up about $20 million each to buy stock and restore confidence in the market. It seems to work. There's a late rally, and the Dow closes at October 25, 1929: The rally continues, and the Dow closes at October 28, 1929 (Black Monday): The rally ends. Panic selling resumes. The Dow drops almost 40 points (nearly 13 percent) to close October 29, 1929 (Black Tuesday): The Dow drops another 30 points (nearly 12 percent) to close at on trading of 16 million shares. July 8, 1932: The Dow closes at 41.22, an 89 percent drop from its pre-crash high. November 23, 1954: 25 years after the crash, the Dow reaches its pre-crash high again, closing at

Black Thursday The rapid increase in American industrialization was fueling growth in the economy, and technology improvements had the leading economists believing that the up rise would continue. Billions of dollars were invested in the stock market as people began speculating on the rising stock prices and buying on margin. The enormous amount of unsecured consumer debt created by this speculation left the stock market essentially off-balance. Many investors, caught up in the race to make a killing, invested their life savings, mortgaged their homes, and cashed in safer investments such as treasury bonds and bank accounts. Finally, in October 1929, the buying craze began to dwindle, and was followed by an even wilder selling craze. On Thursday, October 24, 1929, the bottom began to fall out. Prices dropped precipitously as more and more investors tried to sell their holdings. This photograph was taken outside the NYSE on Black Thursday

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