" 'We were heroes in 1917, but we're bums now,' one veteran complained bitterly." (America, p. 748)
The Bonus Army was a large group of World War I veterans who descended on Washington, D.C., in May of 1932, demanding early fulfillment of a promise made to them by the U.S. government. In 1924, Congress had voted to give a bonus to veterans of the war but they couldn't collect it until 1945. But when the Depression hit and the veterans were out of work and desperate to feed their families and to survive, they organized themselves and about 15,000 of them marched on Washington and set up camps in various places. They created well-organized makeshift camps, complete with dug-out streets and latrines. Whole families lived in these camps while the veterans waited for Congress to agree to give them their bonuses immediately. But the idea was voted down and in July, General MacArthur was sent in to clear the veterans out of the camp. An ugly scene ensued in which MacArthur and his men set fire to the camp, burning it to the ground, forcing 10,000 people to flee, injuring some. "Newsreel footage captured the deeply disturbing spectacle of the U.S. Army moving against its own veterans..." (America, p. 748)
Thursday, April 17, 2008
Monday, April 14, 2008
"Stock prices had been rising steadily since 1921, but in 1928 and 1929 they surged forward, rising on average over 40 percent. At the time market activity was essentially unregulated. Margin buying, in particular, proceeded at a feverish pace, as customers were encouraged to buy stocks with a small down payment and finance the rest with a broker loan. But then on 'Black Thursday,' October 24, 1929, and again on 'Black Tuesday,' October 27, 1929, the bubble burst. On those two bleak days, more than 28 million shares changed hands in frantic trading. Overextended investors, suddenly finding themselves heavily in debt, began to sell their portfolios. Waves of panic selling ensued. Practically overnight stock values fell from a peak of $87 billion (at least on paper) to $55 billion" (America, P.724).
The "roaring '20's" were supposed to be a time of huge economic prosperity and growth for the United States. While that may be true--on paper--it also saw the extreme overextension of American investors, consumers, lenders and banks. The huge boom in the market led investors to borrow large sums of money and invest it back into the market, believing that the stock market would be their ticket to great prosperity. Speculation ran wild and, unfortunately, as investors were increasingly putting loaned monies and using margin financing to invest in the unregulated stock market , they were artificially swelling a market that was already at record high levels. The week of October 21st was an especially unstable week of trading, with record numbers of shares exchanging hands. On October 24th, this level of trading went through the roof and a panic quickly ensued--a record 12.9 million stocks were traded that day. According to the SEC, it is estimated that of the app. $50 billion in new securities offered during the 1920's, 50 percent became worthless.
"Black Thursday" was just the beginning of the economic crisis that would soon ensue, however. Tuesday, October 29, 1929 or "Black Tuesday" would see 16.4 million stocks trade hands as desperate investors and consumers sought to get their (loaned) monies out of a failing market. The hysteria that ensued would lead to the run on the banks, where thousands of Americans went to their banks to withdraw money in a panicked state, only to find that the banks didn't have enough money on hand to distribute to it's customers. Banks failed or were forced to temporarily close and the economy was in shambles.
The stock market crash and the run on the banks would lead to the formation of two major Government agencies--the Securities and Exchange Commission (SEC) and the Federal Deposit Insurance Corporation (FDIC). The SEC would provide regulation of the stock market and the FDIC would ensure that all consumers' deposits are insured by the Federal Government.
PBS: The First Measured Century -- The Stock Market Crash
The Securities and Exchange Commission -- How the SEC was Formed
The New York Times Web Special: Looking Back at the Crash of 1929