Initial reactions to the crash

Question 1

what was business reaction to the crash (industry)

Answer 1

Manufacturers instituted massive cuts to production (LK)
Almost all private construction and contract work ceased
Enormous rise in unemployment
Speculative crash = half of businesses damaged
Car production (leading industry in industrial boom) fell

Question 2

how much did building construction decrease by

Answer 2

92%

Question 3

how much did car production (leading industry) decrease by

Answer 3

80%

Question 4

what happened to banks

Answer 4

The banking system struggled to keep up w the public’s increasing demand for cash withdrawals = decreased the money supply & forced banks to resort to short or liquidate existing loan

Question 5

how many banks closed & suspended

Answer 5

Over 800 banks closed by January 1931
The economy as a whole experienced a massive reduction in banking footholds across the country amounting to more than 9 thousand closed banks by 1933
By October 1931 over 2100 banks were suspended

Question 6

how much did GNP drop

Answer 6

GNP dropped by almost 50%

Question 7

what was the knock on effect leading to bank closure

Answer 7

mass unemployment → people withdraw savings → banks lose investing money → bank goes bankrupt → closure

Question 8

What corporation wasnt in place at the time of the banking crisis

Answer 8

The Federal Deposit Insurance Corporation

Question 9

how much did the Federal Deposit Insurance Corporation lose & where did they come from

Answer 9

loss of 20% of the total $6.8billion

These losses came directly from peoples’ savings, investments and bank accounts

Question 10

main social effect

Answer 10

Destruction of Confidence = confidence in the stock market, economy and the ‘American Way’ had plummeted.

Question 11

what was the impact of banking crisis for people

Answer 11

Closure of banks (banking crisis) resulted in a massive withdrawal of deposits by millions of Americans, estimated at neat $6.8billion

Question 12

what was the psychological effect on ppl

Answer 12

devastating psychological effect due to mass unemployment as unemployment was considered one’s own fault

Question 13

how much did birth rate fall

Answer 13

Birthrate: 21.2 per thousand in 1929 → 19.5 in 1932

Question 14

what was suicide rate

Answer 14

Suicide rate: 14 per 10k → 17.4 in 1932

Question 15

how did it impact the American Dream

Answer 15

After the ‘roaring 20s’ the people believed that their prosperity was perpetual so when the businesses and banks they had trusted with said prosperity fell, so did their confidence and belief in the “American Dream”.

Question 16

Hoover introduced a series of effective measures in 1932 to relieve the crisis, what were they

Answer 16

Reconstruction Finance Corporation 1932
Home Loan Bank Act 1932
Emergency Relief Act 1932
Glass-Steagall Act 1933

Question 17

what was Reconstruction Finance Corporation 1932

Answer 17

largest federal aid given → US$2 billion in loans to ailing banks, insurance companies, railroads & private corporations

Question 18

what was Home Loan Bank Act 1932

Answer 18

encourage banks to offer cheaper home mortgages
12 regional banks set up with a collective fund of US$125 million, offering up to 50% assistance for those who couldn’t afford to pay off mortgages

Question 19

Emergency Relief Act 1932

Answer 19

gave relief money (US$300 million) to states for federal & local public works

Question 20

Glass-Steagall Act 1933

Answer 20

offer a wider range of community loans

Question 21

how much did Hoover persuade state & local city govs to expand their public works programmes & spending

Answer 21

US$1.5 billion

Question 22

what does Clements say ab the RFC 1932

Answer 22

it can be argued that even tho the federal aid helped in the recovery of society, it offered “far too little far too late”. (Clements)

Question 23

what does clements say ab Home Loan Bank Act

Answer 23

Clements argues it was “largely ineffective” & failed because it was insufficient to deal with the severity of the situation

Question 24

what was Hoover’s main mistake in dealing w the crisis

Answer 24

Hoover did not respond to the Crash immediately as he did not understand the severity of the situation. He said the crash represented only a “technical break” in the stock market. This could have potentially stunted positive reactions and actions to the crash by increasing ignorance to the situation

Question 25

what was Hawley-Smoot Act 1930 & why ineffective

Answer 25

raised imports duties by ⅓ → meant that foreign countries could not sell profitably in the US thus could not earn enough to repay war debts to US bankers. the value of international trade fell by $500million = led to European countries repudiating their war debts reduced the levels of international trade & triggered retaliations from other countries

Question 26

why did the Agricultural Marketing Act of 1929 fail

Answer 26

Despite efforts to create a Grain Stabilization Corporation to stabilise grain prices, this was destroyed by the world collapse in grain prices

Question 27

Why had the Federal Farm Board failed by 1932

Answer 27

It was paying farmers artificially high prices & this couldn’t continue in the long term Treated agriculture as a domestic issue & failed to take account of foreign considerations

Question 28

what does Michael Parrish say ab the Hawley Smoot tariff

Answer 28

It "compounded economic misery”

Question 29

why were Hoover's policies "not far reaching enough" (clements)

Answer 29

due to belief that the system would ‘right itself’ w limited gov intervention Due to belief in self-reliance & American individualism, he did not accept what many argued was necessary: direct government relief → helped to prolong the GD & hindered America’s recovery

Question 30

what is Hoover quote that validates his ineffective belief of American indvidualism/isolationism

Answer 30

“Economic wounds must be healed by the actions of the producers and consumers themselves”

Question 31

what does Clements say about Hoover's policy of voluntatism

Answer 31

“The problems were simply too great for voluntarism to work”

Question 32

what was impact of the failure of agricultrual policy

Answer 32

many farmers went bankrupt and lost their farms | Failure to aid farming helped to perpetuate the depression in agriculture

Question 33

was was public reaction to Hoover's lack of reaction

Answer 33

society and their opinion of him changed. By the 1932 election he was one of the most unpopular of presidents In the eyes of society and historians at this time, he was ineffective.