Depression Flashcards
why did the growth in share value in wall street occur
-so many people were buying and selling shares which increased demand and drove up prices
-Americans had great confidence in their economy, believing that prices would keep on rising, so they were prepared to keep on buying
-a bull pool encouraged inexperienced investors to speculate, artificially increasing prices
facts for the speculation
-in 1929 america had 20 million shareholders
-around 600,000 new investors were speculators
-in 1925 the combined values of the shares traded on wall street was around $34 billion, and rose to $64 billion by 1929
what caused the wall street crash
-Overproduction
-rich and middle class Americans already had the consumer goods they needed
-companies were producing more consumer goods than they could sell
US domestic market was weak
-not able to sell surplus to europe due to tariffs
-panic selling
consequences of the wall street crash
-shares lost around $26 billion in value
-rich lost most as they had invested most
-downturn in spending
-borrowers could not repay their loans and went bankrupt
-banks who had invested and could not recover their loans went bankrupt
-600 banks failed in 1929 and 1400 in 1931 and 2300 failed in 1931. They failed as many people lost confidence in them and wanted to withdraw money
-Bank of the United States in NY went bankrupt, it had 400,000 depositors (1/3 of all New Yorkers) most of which were recent immigrants
-confidence was gone. People did not buy shares or new goods, and production therefore fell
-between 1928 and 1922 industrial and farm production fell by 40$ and wages by 60%
-by 1933 there were 14 million unemployed
-farm income fell to $5 bn
-international trade collapsed from $10bn in 1929 to $3bn in 1932
how did the wall street crash turn into the great depression
-Americans lost their savings or had to cope with wage cuts
-caused a reduction in consumer spending, especially on luxury items like cars and electrical appliances
-newer industries struggled to find buyers for their products
- companies could no longer get a loan from their bank or sell shares on the stock market to raise money
-this would normally help them to grow their business or meet their day-to-day running costs
-they invested less, cut down production and began to lay off workers
-lower production rates, fewer wage earners caused the US economy to struggle
impact of the great depression in urban areas
-unemployment and homelessness were the two biggest problems
-cities were hit differently; In the steel city of Cleveland 50% of people were unemployed
-every town had a ‘Hooverville’ where migrants lived while they looked for work
-many relied on food distributed by charity workers, while others forced to search for food on rubbish dumps
-250 people were admitted to New York hospitals suffering from malnutrition or starvation in 1931
impact of the depression on agricultural areas
-many were already poor so the Depression made things even worse; huge number of farmers were unable to pay their mortgages are were evicted
-sheriffs came to evict the farmers but there were groups of armed farmers to resist them(most farmers did not do this)
-Overfarming and drought in the central southern states turned million of acres of land into a dust bowl
-these farmers headed to California to look for work
-at the lowest point prices for agricultural goods fell 60% below the 1929 level.-American farmers earned around $6 billion in 1929 but by 1931 it was $2 billion
what was the environmental crisis for farmers during the depression
-a drought affecting 17 million Americans ruined crops in the summer of 1930. Dry land and high winds created dust storms across the Great Plains
-In April 1933 179 dust storms were recorded (38 were black blizzards)
-storms blew away the surface layer where plants grew, leaving the land too poor for farming
-this left farmers without any source of income
-Americans from the Great Plains migrated to the west.
between 1930 and 1930 around 500,000 people left their farms on the Great Plains and headed to states where they thought work was available (most popular was California)
-migrants were nicknamed Okies and were required to pick fruit and harvest crops for starvation wages
how did Hoover try to deal with the depression
-he tried to stimulate the economy in 1930 and 1931 by tax cuts, hoping it will lead to people spending more money
-he tried to persuade business leaders not to cut wages
-he set of the Reconstruction Finance Company which propped up banks, stopping them from going bankrupt
-he tried to protect US industry by using import tariffs, although this failed as it just lead to less trade with the rest of the world and deepened the depression
-he blocked the Garner-Wagner Relief Bill which would have provided Congress with $2.1 billion to spend on creating jobs
-he believed in rugged individualism and did not think the government should help the poor as they would become dependant on the government and become less willing to work
what was Hoover’s reputation during the depression
-he was remembered for insisting that ‘prosperity was just around the corner’
-He was regarded as a do nothing president although it was not entirely fair
what were Hoovervilles
-homeless people joined together to create a shanty town called Hoovervilles because they blamed their problems on President Herbert Hoover
-they built their accommodation from scrap materials.
-Thousands could be found without running water, basic facilities or permanent shelter in the biggest shanty towns
What were bonus marchers
-in 1932 20,000 ww1 veterans marched on Washington demanding that their war bonuses be paid early, they camped outside the white house
-Hoover refused to meet the marchers and appointed General MacArthur to handle the situation
-MacArthur ignored Hoover’s instructions to handle the situation with tact, and branded the agitators as communists and using tear gas against the marchers and burning their camp
-The event made Hoover appear cold and out of touch, making him even more unpopular
-Congress rejected the bill but made $100,000 available to help the bonus marchers for their journey home
What were Roosevelt’s policies
-he believed in ‘active government’, believing that public money should be spent to get people back in work
-he consulted a wide range of experts (factory owners, union leaders and economists)
-he policies during the campaign were general; he did promised a ‘New Deal’ but did not give specific details
-on the campaign he travelled 20,000km making 16 major speeches and a further 60 from the back of this train
-he won the presidential election by 7 million votes. The Democrats also won a majority in Congress
