Long term causes of the Great Depression

Question 1

what were the non-repub causes of the GD

Answer 1

International Economic Problems, Failures of the Agrarian industry, Overproduction and Underconsumption

Question 2

what were the repub causes of the GD

Answer 2

Unresponsive government, Wealth and wealth distribution, Weak corporate and banking structure, Tariffs + block on international trade, Overstimulated stock market,

Question 3

Wecter quote on the GD

Answer 3

“The nation was ill not from a single malady but from a mixed infection”

Question 4

what was wrong w the international debt structure (non-repub)

Answer 4

USA unable to sell its surplus products to other countries (particularly Europe)
European countries could not afford American goods as;
Owed USA huge amounts of money in war loans & put high tariffs on imported goods

Financial burden of loans created economic instability
All European states (except Britain) placed tariffs on imported goods = cutting demand (especially for US goods)
= US economy couldn’t expand its foreign markets

Question 5

‘In economic terms, society was digging its own grave’

Answer 5

Cashman

Question 6

‘American prosperity in the 1920s stood on brittle glass’

Answer 6

cashman

Question 7

what happened to the agrarian industry after WW1

Answer 7

After WW1 there was a surplus of agricultural products on the world market. A decreased European population, overproduction and the mechanisation of agriculture led to a drop in agricultural prices.

Question 8

why was the farming sector already in a terrible condition before GD

Answer 8

already in a depressed state prior to 1929 as it never recovered from post-war recession

Question 9

Prices for primary products fell continually in the farming sector. what is the % & when.
what happened to farmers’ incomes as a result

Answer 9

75% between 1920 & 1932
farm incomes dropped dramatically from $15 billion to $5 billion. = unable to make repayments on loans and participate in the consumer economy.

Question 10

what was the 1924 McNary-Haugen Act & why did it fail to assist the agricultural sector

Answer 10

An attempt to deal w surplus production

was vetoed by Coolidge = Republican economic policies thus contributed to the decline in the agricultural sector

Question 11

how did prohibition contribute to the problems in the agrarian industry

Answer 11

Prohibition reduced the demand for grain,and technological advancements enabled farmers to produce more but made prices fall

Question 12

3 Factors that influenced overproduction

Answer 12

1. Car industry influenced mass production → paved the way
2. mass advertising
3. “Easy credit”

Question 13

what is a prominent example of car brand that influenced mass production

Answer 13

Henry Ford’s use of mass-production & assembly line copied in other industries

Question 14

how much did General Motors produce a day by 1925

Answer 14

more than 9,000 Ford Model T’s a day

Question 15

why did mass advertising contribute to overproduction & easy credit

Answer 15

Helped growth of entertainment & encouraged consumer spending thru persuasive advertising techniques that pushed a creation of needs incentive to the public

mass advertising persuaded this consumerist mentality & ‘buy now, pay later’ purchasing

Question 16

what is the famous saying for easy credit policy

Answer 16

“Buy now, pay later”

Question 17

how did easy credit impact overproduction & how much $ of goods were bought w credit

Answer 17

“Buy now, pay later” helped stimulate industrial production. By 1929, over $7 billion worth of goods were bought with credit

Question 18

?% bought cars on credit

?% bought radios on credit

Answer 18

60% bought cars on credit, 80% on radios

Question 19

what was the main issue w overproduction

Answer 19

While there was mass production there was no mass consumption to meet this, = imbalance of supply demand

Question 20

what does Joshua Freeman say ab underconsumption

Answer 20

underconsumption was the major cause of the great depression

Question 21

what is impact of greater credit availability/easy credit (judgement)

Answer 21

Greater credit availability makes the economy more sensitive to any shocks - meant that the widespread use of easy credit, + the brewing economic instabilities, were imminently leading to economic disaster.

Question 22

why was ‘Unparalleled prosperity’ a problem

Answer 22

The deep-seated underlying issues of the American economy were concealed by this superficial prosperity.

Question 23

what is the overall impact of repub policies on the causes of GD

Answer 23

Republican economic policy allowed for the development of vast holding companies. This inverted pyramidal structure was immensely unbalanced and aided in an overall collapse.

Question 24

how did repbub beliefs & an unresponsive gov contribute to GD

Answer 24

One of the key factors that influenced all the other factors in the 1920s was the lack of national economic planning or any other substantial form of government oversight in the economy. The Republican administration’s embracing of the laissez-faire philosophy meant presidents didn’t plan, or attempt to regulate, banking stocks, bonds or other aspects of the economy that became unstable.
From this they also failed to identify the growing problems in stock market investing, agriculture, International finance & overproduction

Question 25

how was ‘unparalleled prosperity’ false

Answer 25

In spite of the general ‘prosperity’ in the 1920s, wealth was not shared equally.

Question 26

in 1920s businesses benefited from Treasury Secretary Mellon’s low tax policies. what is the % of maldistribution of wealth

Answer 26

bottom 40% of population received only 12.5% of the nation’s wealth (top 3% owned 33%)

Question 27

how did government policies aid the rich in becoming richer

Answer 27

The government did little to address the growing uneven distribution of wealth & implement policies that helped big business eg Treasury Secretary Mellon’s low tax policies.
Tax cuts for the wealthy in the 1920s helped them retain even more income.
Government hostile to trade unions

Question 28

as most of the profits were going to the wealthy owners of business, how did this impact workers?

Answer 28

workers wages could not keep up with the level of consumption needed to avoid a depression.
were unable to enjoy higher wages or afford the very goods they were producing.

Question 29

When was Black Thursday

Answer 29

October 1929

Question 30

how many shares changed hands on Black Thurs & how much did shares fall in value

Answer 30

12.8 million shares changed hands, by the end of the day share values had fallen by $4 billion

Question 31

what was the problem w the banking system & public

Answer 31

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 loans

Question 32

US had largest banking system failure on record. how many banks closed between 1921-30

Answer 32

505 banks

Question 33

what was the issue with the banking system that caused a collapse

Answer 33

The US had a banking system made up of hundreds of small, state-banks, which meant if one bank collapsed, it could lead to a ‘run’ on other banks. This accounted for the banking collapse

Question 34

what was the problem w international trade (exacerbated by Republican PROTECTIONISM - tariffs)

Answer 34

European countries could not afford American goods as;
US put high tariffs on imported goods → increased the amount of domestic products sold

As a result of protectionist tariffs, trade between nations began to slow down

Question 35

what contributed to speculation

Answer 35

The limited regulation & poor policies that governed the stock market contributed to exacerbating speculation. This was accentuated by easy credit policies on the Federal Reserve Board & tax cuts which further encouraged speculation as more money was available for speculators

Question 36

when did speculation begin to increase & why

Answer 36

From the middle of the 1920s speculation began to increase
People were no longer investing in companies bc they thought it was strong → simply investing in it in the hope that the price of shares would rise

Question 37

what mentality fostered reckless speculation

Answer 37

‘Get rich quick’

Question 38

what happened in 1929 in relation to speculation

Answer 38

1929: some experts worried ab the weaknesses in the economy & high share prices = rushed to sell their own shares = complete collapse of prices & thousands of investors lost millions of dollars

Question 39

what led to the Wall Street Crash 1929

Answer 39

over speculation

Question 40

impact of WSC on investors

Answer 40

Many investors lost money & were unable to repay their loans → had a knock on effect on banks & confidence in the economy which already had critical problems

Question 41

the wall street crash was not a cause of the GD but rather a “…” (McCoy)

Answer 41

“a dramatic symptom” of deeper national & International causes of the GD

Question 42

what does Kennedy say ab the stock market crash

Answer 42

there’s a lack of clear empirical evidence to establish Wall Street crash as a cause of the GD, rather it was a catalyst for the already brewing instabilities in the US economy