(1b) Causes of the crash

Question 1

When was the Wall street crash?

What happened?

Answer 1

29th October 1929

the New York Stock Exchange crashed.

Question 2

How much was lost in the wall street crash?

Answer 2

$30 billion had been lost by mid november

Question 3

How did overproduction cause problems in the economy?

Answer 3

Manufacturing increased despite drop in consumer demand; workers laid off as businesses failed to sell products.

Question 4

in 1929 how many americans were living close to subsistence?

Answer 4

80%

Question 5

How did Land speculation cause problems in the economy?

Answer 5

Florida Land Boom crashed in 1926; investors lost $ millions.

Question 6

How did The bull market cause problems in the economy?

Answer 6

• peculation and get-rich-quick schemes on the stock exchange
• limited regulation of stock market led to insider dealing
• shares could be bought on credit.

Question 7

How did the weakness of the banking system cause problems in the economy?

Answer 7

• Outdated and unregulated; Federal Reserve system;

- 12 Federal Reserve banks and 30,000 small local banks.

Question 8

How many small banks where there?

Answer 8

30,000

Question 9

What was the health of the construction industry like?

Answer 9

The health of the construction industry is often an indicator of the health of the economy as a whole. By the late 1920s this was in recession.

Question 10

How many points did the Dow Jones Industrial index fall by?

Answer 10

drop of 38 points down to 260

fell another 30 posits to 230
11.73% fall

Question 11

What were the economic problems in the 1920?

Answer 11

=Uneven distribution of wealth
=Stability of employment
=The instability of ‘Get rich quick’ schemes’
=Weakness of the banking system
=the cycle of international debt
=Overproduction and the slowdown in the economy.

Question 12

What was the income of people in the northeast and far west?

What was this compared to the south east?

Answer 12

$921 and $881 income per capita

$365

Question 13

What was the income for people in south Carolina ?

Compare this to farmers in the region

Answer 13

$412

$129

Question 14

How many Americans had annual incomes of less than $2000?

Answer 14

60%

Question 15

What was the ‘yellow dog clause’ ?

Answer 15

workers not allow to join unions.

Question 16

How many workers belonged to a union?

Answer 16

During 1920’s stood at 4 million this declined over all by 1 million

7.1% of workforce by 1930

Question 17

Give an example of someone who benefited from the get rich quick schemes?

Answer 17

Charles Ponzi a former vegetable seller conned 1000s of gullible people into investing in his ventures. He promised 50% profit within 90 days.

Question 18

How did the population of Florida change from 1920-1925?

Answer 18

968,000 to 1.2 million

Question 19

How was land in Florida often bought?

Answer 19

Oftern they paid on credit, with a 10% deposit know as a binder

Question 20

What was a happened to cause the land boom to tail off?

Answer 20

Hurricanes in 1925 killing 400 people and leaving 50,000 homeless.

Question 21

What happened during 1927-1929?

Answer 21

people went Wall Street crazy and many people began to get shares and stocks

Question 22

What could stocks be bought on?

Answer 22

they could be bought on the margin

This was on credit with loans from their broker.

Question 23

What was the demand to buy shares know as?

Answer 23

Bull market

Question 24

What was the banks by 1920?

Answer 24

outdated

Question 25

What did the federal reserve board allow banks to do?

Why was this a problem?

Answer 25

regulate themselves

The reserve banks represented the interests of the bankers and so could not be completely relied on to act in the best interests of the nation if there was a conflict of interest.

Question 26

What was at the heart of economic problems?

Answer 26

The cycle of international debt

Question 27

What was Americans priority?

Why was this hard to do?

Answer 27

For European countries to repay the loans they had taken out to finance WW1.

most European countries were still suffering from depressed economic conditions arising from the war and couldn’t afford to pay them back.

Question 28

What tariff affected the cycle of international debt?

Answer 28

The Fordney-McCumber Act raised tariffs on imported goods.

This meant that European countries could not export their manufactures goods to the USA in great quantise so found it impossible to earn the money to repay the loans.

Question 29

In the 1920’s how many business succeeded too failed?

Answer 29

For every 4 businesses that succeeded, 3 failed

Question 30

What happened to the construction industry after 1926?

Answer 30

It began to tail off

Question 31

How many banks failed by 1932?

Answer 31

5000

Question 32

What happened as a result of falling consumer demand?

Answer 32

Stores were full of unsold goods

Firms cut back production which led to unemployment

Question 33

how many people were living close to subsistence in 1929?

Answer 33

80%