Great Depression 1930s Flashcards
What is a stock?
Shares of a company bought and sold
What causes stock market prices to increase/decrease? /2
Increase: demand is high
Decrease: demand is low or non-existent
What was the lifestyle of the wealthy in the 1930s? /4
Huge housings (multiple rooms and floors)
Having their own railway cars
In-house service (maids, servants)
Parties
What is consumer credit? /2
Borrowing money for purchasing power
“Buy now, pay later”
What is “buying on margin”?
Means to borrow money to buy stocks
What were the two economic problems that existed in 1929? /4
Many people have accumulated debt
Car sales drop
Steal production declines
Majority of the population is poor and getting poorer
What was the crash of 1929? /2(4)
October 29th, 1929 (Black Tuesday)
Everyone tries to sell their stocks all at once,
|-> causes demand to decrease substantially
|-> due to prices being so high—can’t be paid back
How often does a stock market crash happen? /2
Every 20 to 30 years (a generation or so)
People start losing faith in the economy
Why do people start losing faith in the economy? /2
Decrease in production
Stock market decreasing to a crash makes it worst
Did the Great Depression start immediately after the stock market crash?
No.
What is a speculator?
Someone who does something very risky, but that could yield profits
Ex. Buying on margin
What is the Bread line?
Lining up to get free bread
Why were there so many men in suits (middle class) occupying the Bread line? /2
Consequence of the stock market crashing
Those men lost all their money and savings in buying stocks
What is economic free-fall? /2
US economy was slowing down
Stock market crash accelerated the downturn in the economy
What is recession? /2
Gross Domestic Product falls for 2/4 of six months only
Common
What is Gross Domestic Product? /2(3)
The total value of all goods and services produced in a country in 1 year
Increase GDP:
- People are employed
- Production/economy is stable/flourishing
What is a depression? /3
A sustained, long-term downturn in an economy
Prolonged recession
Falls for over 2 years straight (rare)
What are the consequences of the American depression? /5
High unemployment: 25% unemployment rate in the 1930s
Lack available credit
Low production
Bankruptcies
Reduced trade
What is lack of credit in the 1930s? /3
Banks can not give loans
Due to not having enough of a revenue (money) to meet everyone’s request to borrow
Why:
Banks can only have a certain amount of money in their reserve
What is overproduction in the late 1920s to early 1930s? /3
One of the major causes of the Great Depression
Farmers experience this cause first
Companies are producing at a rate where they BELIEVE demand has/will increase
What is the cause of overproduction in the 1930s? /4
Companies banked on the fact that demand was high in the 1920s,
Companies expand and increase their production, BELIEVING it would continue in the 1930s’
Eventually more goods are produced than can realistically be sold
The gap between production and demand is too big
What is the consequence of overproduction in the 1930s? /3
Companies try to rid of their goods by lowering the prices
Companies slow down production by 1930
Massive lay-off of workers (eventually firing them)
What does lay-off mean? /2
Workers start to work less, resulting finally in unemployment
Full-time ⬇️ Part-time (payed half of their usual salary) ⬇️ Fired/unemployed
What are bank failures in the late 1920s to early 1930s? /3
One of the major causes of the Great Depression
Borrowers can not pay back their loans to banks
Money disappears LITERALLY
What is the cause of bank failures in the 1930s? /2
Banks also played in the stock market (BAD IDEA), using the money from their reserves
Banks play in the stock market ⬇️ Market crashes ⬇️ Banks lose money ⬇️ Banks can not give loans/unable to open people’s savings account ⬇️ Money disappears ⬇️ Banks close
What are the consequences of bank failures in the 1930s? /7
Americans owe banks approx. $45 Billion due to the inability to pay them back on the 1930s
Money disappears LITERALLY
Fewer banks to get a loan from
Savings account disappear
Lack of credit available
People lose their money with no hope of borrowing more
American money supply reduced by almost 1/3
Why are banks cautious of who they loan money to after the stock market crash?
If they were to loan to anyone, they too will become bankrupt
What was the worst year of depression for banks?
1933
4004 banks closed
What did it mean that you’re money would disappear LITERALLY in the Great Depression?
You must get your savings money out of the bank before it goes bankrupt and ultimately disappear
What is the distribution of wealth in the 1930s? /5
One of the major causes of the Great Depression
Unequal distribution of wealth
5% of Americans owned 33% of the nation’s wealth
70% of population at or below a decent wage
Disposable income of rest of population changed little
What is the cause of distribution of wealth in the 1930s?
The wealthy stopped spending/investing because they don’t need to
What are the consequences of the unequal distribution of wealth in the 1930s? /4
Consumer spending drops, when spending could have stimulated the economy
Disparity between the rich and the poor
Economy is at a still
Wages do not increase regardless of high employment
What ends the Great Depression?
WWII
What did the lower class do as employment in the late 1920s early 1930s? /3
Road workers
Have small wages
Cultivate other people’s land
What prolonged the Great Depression? /4
Little government attention (for 2 years)
Laissez-faire economics
Hawley-Smoot Tariffs
Drought/ Dust bowl
Why was there little government intervention during the Great Depression? /2
The government did not identify it as a depression yet
Saw it as a normal downturn in the economy
Who is the US president during the Great Depression?
Republican Herbert Hoover
What did president Herbert Hoover do for the Great Depression?
Introduced laissez-faire economics
What is laissez-faire economics? /2
The idea of the market fixing itself
Not something the American government should intervene/meddle with and wait for an outcome
What are the Hawley-Smoot Tariffs? /4
Designed to increase production in the US
Putting tax on imported goods = more expensive goods
People will want to buy domesticated goods
FAILS
Why does the Hawley-Smoot Tariffs fail? /2
Trading countries get mad
Put barriers in trading networks with the US
What is the SMILETTE poster? /4
Created by the Democratic government
Used as commentary on the republican “laissez-faire economy”/government
Stating the Republican government is not good for the nation
(Also) Election poster for future president: Franklin Delano Roosevelt
What is the drought of the 1930s?
Dust storms ravage the region until the late 1930s
What is the cause of the drought of the 1930s? /2
Overgrazing/excessive ploughing of the American plains in the 1920s rendered the soil fragile
Rains stop in 1930
What are the consequences of the 1930 drought? /4
Tracker introduced: good for speed and bad for ploughing
High infant/elderly death rate: pneumonia/suffocation on dust
Plagues of grasshoppers
The Great Depression is also called the Dirty Thirties
How does the depression spread worldwide? /5
US banks call in loans from foreign countries ⬇️ Foreign countries’ exports decrease |-> can no longer pay back their loans ⬇️ US banks fails ⬇️ With no exports to the US, foreign economics fail ⬇️ Britain, France, Japan are affected
What is the process (causes) that leads to the Great Depression? /6
High production ⬇️ Low demand ⬇️ Prices fall ⬇️ Lay-offs (potential firing) ⬇️ Demand decreases further ↗️ Production decreases further/prices fall again
What is unemployment like in the 1930s? /8
Over 1/2 of all households are impacted by the Depression
Companies closed
Reduced demand
Lay-offs became common
Large companies made all jobs part-time
Car industry laid-off almost half their employees
25% of Americans are unemployed
People use CV boards
How did the working class cope with unemployment? /10
Hover flag
Don’t go to doctors : buy sketchy medicine
Turn down heat/ wear lots of clothes= decrease living costs
Move to smaller apartments = decrease living costs
Do not buy meat or dairy: most expensive foods
Buy potato, onion and cheap food
Used all their savings
Bandit buggy: tie a horse to a car
|-> people can’t afford gas
People live with other families
Do chores for money
What is the Hover flag? /2
Empty pockets
Make front of Hover who did little changes
How did the middle and upper class affected by the Great Depression? /2
Lost a lot in the stock market, were ruined
Other lost their jobs, unemployed
How come some in the middle and upper classes were not impacted by the Great Depression? /3
Some investors profited from low stock market prices
Other industries, like advertising companies, exploded thanks to companies trying to increase demand
Sit on money, are patient
What consequence did the drought have on Canada? /5
Rural families leave for the cities
Single men find work
Many depend on soup kitchens
Kindness of strangers to survive
ALOT of immigration
What are hobos? /5
Leave their homes
Ride on rail and go around the country to find jobs
Illegal
Not a lot of jobs in cities either
Uses signs to help each other
What consequence did the Great Depression have on American migration? /4
Families leave the plains
Called “Okies” or “exodusters”
Many Americans leave for California
Find work as seasonal farm labourers or remained unemployed
|-> ex. Picking berries
Why do many Americans move to califomis Ain the 1930s? /3
Since California holds a lot of berries for farming
Good food resource
What is the FDR? /2
The Franklin Delano Roosevelt political party
Introduced programs to improve the economy
Why does the FDR take over?
1932 voters are dissatisfied with President Hoover and want to change
