Causes of the Depression Flashcards
WSC is…
symptomatic of the problems of the 1920s
the trigger rather than the cause of the Great Depression
What did the WSC directly lead to
the Banking Crisis
Who did the Banking Crisis cause harm to that it can be seen as the cause of the Great Depression
ordinary investors
What did NYC buying stocks give ordinary people
confidence to invest on the stock market
What was happening to stocks in 1929 even prior to October
value of some stocks was declining, or growth rate slowing
e.g construction contracting
What % of people did not own shares?
97.5%
What statistic can be given for how the WSC did not affect the vast majority of people?
only 2.5% of people owned shares
X2 monetarist historians
Friedman and Schwartz
How many independent small scale banks in 1929
25,000
Examples of their being a lack of regulation pre 1933
no federal deposit insurance system
limited capital to protect all the individual banks
‘Ripple effect’ caused what after the banking and wall street crashes
people to lose confidence
= caused a run on the banks
How did the banks try to raise capital after the run on the banks?
liquidating assets
What did banks liquidating assets result in?
asset prices declining e.g property prices down
When did Bank of United States Crash? What did it lose?
11th December 1930
lost $286million
How many banks failed annually throughout the 1920s?
500
What organisation was responsible for determining interest rates?
Federal Reserve
Who suggested that the Federal Reserve was too timid to curb speculation through high interest rates?
Friedman and Schwartz
What did Friedman and Schwartz suggest the Federal Reserve was too timid to do to curb speculation?
Curb speculation via high interest rates
What did Friedman and Schwartz see the failure of the Federal Reserve as in relation to the Depression?
was too late to prevent the downturn 1930-31 via lowering interest rates (which would have stimulated demand)
How saw the forces of Depression as lying outside of the United States?
Hoover
Hoover’s quote on Europe’s role in the Depression
“the major forces of the Depression now lie outside of the United States”
When did the German economy collapse in early 1920?
1923
What did the Dawes plan do, when was it enforced?
1924
gave loans to Germany to pay reparations
Why was the Dawes plan enforced in 1924?
attempt to stimulate German economy to create demand for American goods
= would address the US’s problem of saturated markets