6. Impacts Of The Depression Flashcards
EFFECTS ON INDUSTRIES
- What industries were deemed ‘depression-proof’?
- GNP fell from ____ in 1929 to _____ in 1932
- General princes fell by about _______%
COAL - lost ___ workers, and wages were as low as ______ per day
TEXTILES - ____% of textiles companies were losing money
CARS - In ______, Willis Overland kept only ____ of their employees
ELECTRICS - number of empolyees at both _____ and ______ was _______
EFFECTS ON INDUSTRIES
- The cigarette industry was deemed ‘depression proof’
- GNP fell from $203.6 billion in 1929 to $144.2 billion in 1932
- General princes fell by about 25%
COAL - lost 300,000 workers, and wages were as low as $2.50 per day
TEXTILES - 75% of textiles companies were losing money
CARS - In Toleda, Willis Overland kept only 3000 of their employees
ELECTRICS - number of empolyees at both General Electrics and Westerhouse was halved
CREDIT AND BANKING
- Over _____ bank closures 1929-1932 - mostly small banks that were _____
- People lost _______ in their banks so _____, therefore _______
- People couldn’t afford _____
CREDIT AND BANKING
- Over 10,000 bank closures 1929-1932 - mostly small banks that were over lending
- People lost confidence in their banks so withdrew money, therefore forcing closure
- People couldn’t afford loan repayments
SOCIAL EFFECTS - unemployment
- Was the US well equipped to deal with unemployment?
- Who was blamed for unemployment? What about the psychological affects?
- What about family life?
SOCIAL EFFECTS - unemployment
- The US was poorly equipped to deal with unemployment - it has no kind of federal benefits
- Those who were unemployed were blamed - the psychological effects were devastating - people even pretended to still be in work to keep up appearances
- Intense strain on family - number of marriages greatly decreased, and suicides increased from 15% per 10,000 in 1929 to 17.4% in 1932
SOCIAL EFFECTS - relief
- Who offered relief?
- How were old people living?
- What were people forced to do?
- How did some states deal with relief applicants?
- Fortune magazine showed that _________
- Relief was offered by states, local authorities and charities
- Most old people lived below the poverty line and were not offered pensions
- People were forced to sell possessions
- Some states banned relief applicants from voting, and some churches banned them from services
- Fortune Magazine showed that only 25% of those entitled to relief actually received any
SOCIAL EFFECTS - hoboes
- By 1932, there were as many as ____ hoboes, mainly living in _____
- Southern Pacific Railroad claimed to have thrown out _____ from their trains
SOCIAL EFFECTS - hoboes
- By 1932, there were as many as 2 million hoboes, mainly living in shanty towns
- Southern Pacific Railroad claimed to have thrown out 68,300 from their trains
SOCIAL EFFECTS - strain on resources
- In Arkansas, schools were ________ and in Chicago teachers _______
- Charities could only offer __% of the necessary funds
- In sept 1932 around ___% had no income
SOCIAL EFFECTS - strain on resources
- In Arkansas, schools were shut for 10 months of the year, and in Chicago teachers went unpaid for a term
- Charities could only offer 6% of the necessary funds
- In sept 1932 around 28% had no income
SOCIAL EFFECTS - rural poverty
- In 1929, __/1000 farms changed hands, ____ forced by bank repossessions. By 1936, the number rose to ____ with ___ forced
- In Montana, wheat was ______
- In Oregon, sheep were ______
- On average each adult received ___ per week in relief funds, with ___ per child
SOCIAL EFFECTS - rural poverty
- In 1929, 58/1000 farms changed hands, 19.5 forced by bank repossessions. By 1936, the number rose to 76.6 with 41.7 forced
- In Montana, wheat was left rotting in the fields because it wasn’t profitable to harvest it
- In Oregon, sheep were slaughtered and left to the buzzards because meat prices were so poor
- On average each adult received $2.50 per week in relief funds, with $1.50 per child
WHY DID THE DEPRESSION LAST SO LONG?
List 5 reasons
- Foreign economic crises
- The nature of US business
- The extent of the depression
- Inadequate government intervention
- Monetary policy
WHY DID THE DEPRESSION LAST SO LONG? Foreign economic crisis - Why did Hoover blame foreign countries? - What does the counter argument state? - Why were the US criticised?
- Hoover had always blamed foreign economies for their lack of purchasing power, which stifled trade
- However, the counter argument states that although US was the richest country in the world, it had not assumed the role of world economic leader. Also, US tariffs restricted international trade eg Hawley-Smoot tariff
- The US were criticised for not devaluing its currency when others were losing value, so US good became more expensive to foreigners
WHY DID THE DEPRESSION LAST SO LONG?
The nature of American businesses
- A lack of ______ meant that businesses came under the control of _____ who could control ______
- On the surface, the system was _________ but in reality it was ______, so ________
- _______ and ______ meant that the population was consuming _____ then the economy produced - so the economy _______
The nature of American businesses
- A lack of federal intervention meant that businesses came under the control of individuals who could control wages, prices and output
- On the surface, the system was competitive and dominated by market forces, but in reality it was controlled by trusts and cartels, so competition was limited
- Low wages and uneven spread of prosperity meant that the population was consuming less then the economy produced - so the economy stagnated
WHY DID THE DEPRESSION LAST SO LONG?
The extent of the depression
- What happened to the old industries and why?
- What about the new industries?
- What can employees usually do? What happened in this case?
- What about the geographical spread of the depression?
- Old industries like coal, steel, textiles had lost business to the more modern industries
- However, these were also hit quite badly too
- Following the break down of old industries, the workforce can usually expect to find work in the new industries - but obviously this couldn’t happen. So many were unemployed, which prolonged the depression
- The geographical extent of the depression affected both rural and urban, so neither could help each other
WHY DID THE DEPRESSION LAST SO LONG?
Inadequate government intervention
- A group of radical economists (incl _______) argued that the depression was caused by ______
- The _______ economy called for federal intervention, which should have included ______. However, this didn’t agree with republican policies.
Inadequate government intervention
- A group of radical economists (including Rexford Tugwell and Adolph Berle) argued that the depression was caused by over production and a lack of consumers
- The unregulated capitalist economy called for federal intervention, which should have included increased taxation of the rich to help the poor, and using these revenues to generate employment. However, this didn’t agree with republican policies.
WHY DID THE DEPRESSION LAST SO LONG?
Monetary policy
- What do monetarist theories argue? How does this prolong the depression?
- By what percentage did the amount of money in circulation fall?
- How did the federal reserve board influence recovery?
- Monetarist theories argue that a decline in the amount of money in circulation often comes before a depression - failure to increase the amount of money will prolong the depression, because people have less to spend
- The amount of money in circulation fell by 33%
- The Federal Reserve Boards tight monetary policy only stifled recovery - as there was less money in circulation, so people had less to spend, so demand remained low
