Great Depression Flashcards
Living on the bread line
Living in poverty;
waiting in line for food and charity
Buying on margin
Buying stocks on credit, get stock now pay later
Hawley-Smoot Tariff Act
Raised tariffs on
imported goods to protect farmers (1930)
Stock
A share in a company ownership
Black Tuesday
Oct. 29th 1929
stock market crashed
underconsumption
not purchasing enough goods to support production
the new deal
FDR’s economic and social reforms implemented to solve the depression
hoovervilles
aka shantytowns
homeless encampments
repatriation
return of someone to their own country (voluntary)
deportation
the act of deporting a foreigner from a country
welfare/relief
assistance programs for the welfare of people (housing, money, health, food, etc.)
scapegoating
person blamed for unfortunate events or actions of others
GDP
Gross Domestic Product: total of all value added/created in an economy selling goods and services
what are the two things that characterize the Great Depression
high unemployment and low GDP
explain what people were trying to do on Black Tuesday
trying to sell their shares, but no one will buy, so it became worthless and record number or trading their shares
what led up to black tuesday
a bull market (businesses are doing so well, so they think they’ll get a lot in return so there’s a steady rise in stock prices) > investor optimism (thinking tomorrows stock will be higher) > buying on margin > speculation (investing even if its not successful, just to make money fast) > creditors that lent money demand money > couldnt pay so they sold their cars, houses, etc and companies that invested their profits into the stock market had to close
how do banks work and what was the problem during the great depression
banks lend your money for interest; banks lent money to brokers so they could lend money to investors; so brokers couldn’t pay the banks since they weren’t getting paid by investors, so people were trying to deposit their money but banks didn’t have all the money to deposit to everyone
what are two other contributors to the economic downturn
people couldn’t afford to buy products (demand low) underconsumption, so overproduction > companies shut down > unemployment
how did the wealth gap increase?
increased productivity led to increased business proft, but wages were not enough for people to buy products underconsumption; advertising promoted credit so more people went in debt
how did underconsumption affect farms
farmers borrowed money but they couldn’t pay their debts, so they seized their farms
how did the fed worsen the economy?
before the crash, interest rates were low which meant easier borrowing (money circulating), then they increased interest rates (money not circulating)
trade troubles
wanted to protect businesses so they rose tarriffs which started a trade war with UK, so they rose their tarriffs on US imported goods too, couldn’t sell overproduction leftovers to other countries
what were the causes of the great depression
stock market crash: bank panic and closures
financial crisis: banks lent out money to brokers who couldn’t pay them back so they had to close down, ppl lost their savings
unequal distribution of wealth
underconsumption: debt from credit increased so didn’t buy
overproduction: companies closed, unemployment
tight money: fed made money circulation decrease, so couldn’t produce, couldn’t spend
rising interest rates
decline in international trade
conservatives, liberals, economists
conservatives (laiss fair, local govt. charity)
economics (panics are normal)
liberals (make some changes)
