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In 1929, the Fed did raise the discount rate, but the destructiveness of the excessive stock market speculation had already taken its toll on the US economy.The raising of the discount rate only hastened the inevitable recession.
So many people sold their stocks at a rapid rate that the corporations were unable to pay the shareholders.
Speculation arouse months before the crash when Roger Babson made his speech at the annual National Business Conference which he said “…..
Thus the recession that occurred after the discount rate was raised by the Fed in 1929 was only the beginning of a long period of recession that affected the entire national economy.
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Cheaper loans encouraged manufactures to invest in new equipment and hire additional workers.
The resulting expansion of production caused an upswing of the cycle.
Sooner or later a crash is coming which will take the leading stocks and cause a decline from 60 to 90 points in the Dow Jones Barometer.” This and many others speeches like this scared people into selling there stocks before the inevitable would happen.
This was a leading causes that assisted the Great Depression become one of the bleakest and most studied events in the history of our country: yet not the only cause.
Another large contributing factor was Mother Nature, I say this because in Oklahoma the weather was so dry that the farmers were unable to harvest their crops: these farmers became known as Okies.
The land was a barren wasteland of dust and dirt in which it got it’s name the Dust Bowl.