Book 2: The Crash And The New Deal Flashcards
What 6 things caused the Wall Street Crash?
Unequal distribution of wealth Industry Overproduction Banks Republican Policies Speculators
Evidence and explanation for unequal distribution of wealth causing the Wall Street Crash?
1/3 of the income went to the top 5% of the country
As poor people could buy more goods because of hire purchase, companies misjudged the distribution of rich/poor people, causing them to overproduce
Evidence and explanation for industry causing the Wall Street Crash?
Textiles and coal industries had been declining for years
People were losing their jobs, shareholders were losing money because the worth of their shares went down so they sold their shares in mass panic
Describe how the stock market works?
Most companies get money from INVESTORS to raise money to run the company
Investors own a share of the company and are called SHAREHOLDERS they get a share of the profit
Shareholders make money by receiving a yearly profit payment called a DIVIDEND
some people gambled and borrowed money to buy shares to sell on to make a profit, this is called SPECULATION
What happened on the 5th September 1929?
’ the Babson break ‘
Rodger Babson warns of crash
Sensible people sell shares
What happened on 29th October 1929?
16.4 million shares were sold
BLACK TUESDAY
What did Hoover keep reassuring the people?
Prosperity was just around the corner
What happened with banks in the Wall Street Crash?
1930 - 1352 banks went bankrupt
The bank of New York was included
Evidence and explanation for overproduction causing the Wall Street Crash?
The farming industry was overproducing
Farm income dropped from $22 billion in 1919 to $13 billion in 1928
People lost money that had shares in the industry
There wasn’t enough people to buy the goods
Evidence and explanation for banks causing the Wall Street Crash?
Banks lent out $9 billion for speculating in 1929 and people could use hire purchase
This caused the crash as people were buying things they couldn’t afford to pay back. Banks also speculated so lost money in the process
Evidence and explanation for Republian Policies causing the Wall Street Crash?
High tariffs reduced international trade ( fordney mccumber 1922 )
They didn’t interfere with banks or businesses
When people couldn’t afford US prices, it was then difficult to import, banks were left to make poor decisions and speculate causing them to lose money.
Evidence and explanation for speculators causing the Wall Street Crash?
By 1929, there were 20 million share owners out of 120 million people
The stock market went down as nobody was buying goods so many people lost money as shares became worth very little so were sold for very little. Causing the crash
What does “on the margin” entail?
Many speculators bought shares on the margin which mean that only needed to put down 10% of cash needed and could buy the rest from banks
This meant people could buy shares they couldn’t afford
What is a Hooverville ?
Shanty downs built on wasteland by homeless people during the depression
Named after Hoover who was widely blamed
What is a dust bowl farm?
Farm destroyed by dust storms , drought and over farming
Evidence that Hoover was a do nothing president? ( 4 mark )
He blocked the Garner-Wagner Relief Bill in 1932 that would have allowed congress $2.1 billion jobs
He still believed in Laissez- faire
He refused to accept there was a problem until 1932
He believed that people should rely on themselves and not the state ( rugged individualism )
Evidence Hoover wasn’t a do nothing president? ( 2 mark )
He cut taxes in 1931 and 1932
He set up the reconstruction finance company to prop up banks
Describe the War Bonus Marchers situation? ( 4 mark )
Veterans who were widely loved marched on Washington asking for their war bonuses to be paid early
General MacArthur thought of them as communist agitators
He went against Hoover’s instruction to be respectful and used tear gas and burned their camps
Hoover did not admit he could not control the general and thanked God America could still handle a mob
How did the War Bonus Marchers go down with the public?
It showed Hoover to be not in control of his general so he would not be voted in
Describe Roosevelt’s campaign and win of the 1932 election?
Hoover was a do nothing president and Roosevelt
promised a “new deal”
He travelled 20,800 km during his campaign making 26 major speeches and 60 from the back of his train
He won by 7 million votes - landslide
What were the 100 days?
Roosevelt got emergency powers from congress which started on the 9th of March.
He wanted to restore confidence and get America out of the depression
He presented his alphabet agencies
What was the AAA?
Agricultural Adjustment Administration
First new deal
Farming
Take fields out of production and help with morgages
What was the FERA?
Federal Emergency Relief Administration
First new deal
Poor people
$500 million was spent on in soup kitchens, blankets and nursery schools
What was the CCC ?
Civilian Conservation Corps
First new deal
Young unemployed
2.5 million people helped
They could sign on for six months and work on environmental projects
