The reigning economic philosophy of the Roaring Twenties was laissez-faire ("leave it alone" or "let it be.") This was the belief that markets always know best and that government should not regulate or otherwise interfere with their self-correcting operations.
The policy was most strictly applied during the Republican presidencies of Warren Harding (1920-1923) and Calvin Coolidge (1923-1928). In fact, Hoover did respond to the deepening crisis through government action. As the time line in the next section will show, however, almost all this intervention occurred during his last year in office, long after the damage had already been done. Hoover lost the election in a landslide because the public perceived he had not done enough to arrest the plunging economy.
However, if you look at the economy even before Hoover took office in March 1929, or the stock market crash seven months later, it becomes clear the Depression had deep roots that extended back many years.
On 24 and 29 October 1929 prices on the New York Stock Exchange collapsed. The losses among 880 issues were estimated at between $8 billion and $9 billion. The "Great Crash" of 1929 ended a period of tremendous prosperity and inaugurated the Great Depression, but the crash and the Depression were not unprecedented. Since the Civil War, the American economy had suffered periods of depression every eight to twelve years.
The last major depression, from 1893 to 1897, had been a period of enormous suffering and widespread political unrest; the economy had been through a smaller depression as recently as 1920-1921. Such depressions had been devastating, but often their impact varied by region, with the worst effects being localized. In the 1930s, however, the United States was financially unified as never before. Harvests in California affected markets in New York.
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