THE CONSEQUENCES OF CRASH 1929 AND INCOMING OF THE GREAT DEPRESSION

Question 1

What was the impact of the 1929 stock market crash on the U.S. banking system between 1930 and 1932?

Answer 1

The 1929 stock market crash led to the failure of 773 banks in the United States between 1930 and 1932. Investors and brokers, unable to pay their debts, caused a chain reaction that resulted in widespread bank closures

Question 2

How did the devaluation of stocks affect loans and investments during the early 1930s?

Answer 2

The devaluation of stocks made loans secured by these stocks worthless, leading to a wave of defaults. This, in turn, caused a sharp decline in investments and credit availability

Question 3

What was the Gross National Income (GNI) of the U.S. in 1929, and how did it change by 1932?

Answer 3

The Gross National Income (GNI) of the U.S. was $87 billion in 1929, but by 1932, it had plummeted to $39 billion, reflecting the severe economic downturn caused by the Great Depression

Question 4

How did the investment rate in the U.S. change from 1929 to 1932 as a percentage of the Gross National Product (GNP)?

Answer 4

The investment rate in the U.S. fell dramatically from 15% of the GNP in 1929 to just 1.5% by 1932, highlighting the steep decline in economic activity during the Great Depression

Question 5

What was the unemployment rate in the U.S. in 1929 compared to 1932?

Answer 5

In 1929, the unemployment rate in the U.S. was 3% (about 1.5 million people), but by 1932, it had soared to nearly 25% (approximately 15 million people), reflecting the devastating social impact of the Great Depression

Question 6

What were “Hoovervilles,” and why did they emerge during the Great Depression?

Answer 6

“Hoovervilles” were shantytowns named after President Hoover, where homeless people lived during the Great Depression. They emerged as a result of widespread unemployment and the inability of many Americans to pay their mortgages or rents

Question 7

What environmental disaster compounded the effects of the Great Depression in the Southern Plains during the early 1930s?

Answer 7

The Dust Bowl, a severe drought coupled with poor agricultural practices, brought high winds and dust storms to the Southern Plains, further devastating crops and livestock, and prompting a mass migration of farmers to cities in search of work

Question 8

How did the Dust Bowl influence migration patterns in the United States during the 1930s?

Answer 8

The Dust Bowl forced many farmers to leave their land and migrate to cities, particularly in states like California, as they sought work and better living conditions, a movement famously depicted in John Steinbeck’s novel The Grapes of Wrath.

Question 9

How did the Hawley-Smoot Tariff of 1930 impact international trade and the global economy?

Answer 9

The Hawley-Smoot Tariff of 1930 raised U.S. import taxes, triggering retaliatory tariffs from other countries. This led to a significant decline in international trade, worsening the global economic situation and deepening the Great Depression

Question 10

Which European countries were first affected by the U.S. economic downturn, and why?

Answer 10

Germany and Austria were the first European countries affected by the U.S. economic downturn due to their reliance on American investments. The withdrawal of U.S. capital led to the collapse of banks and a severe economic crisis in these countries by 1931

Question 11

What was the effect of the widespread bank failures on public confidence in the U.S. banking system during the early 1930s?

Answer 11

The widespread bank failures severely undermined public confidence in the U.S. banking system, leading to bank runs where panicked depositors withdrew their savings, further destabilizing the financial system

Question 12

How did the Federal Reserve’s monetary policy contribute to the deepening of the Great Depression?

Answer 12

The Federal Reserve’s decision to maintain high interest rates in the early 1930s, despite the economic downturn, restricted the money supply and exacerbated deflation, worsening the economic contraction.

Question 13

How did the Great Depression affect industrial production in the United States between 1929 and 1933?

Answer 13

Industrial production in the United States fell by nearly 50% between 1929 and 1933, as factories closed or operated at reduced capacity due to declining demand and investment.

Question 14

What role did declining consumer confidence play in the worsening of the Great Depression?

Answer 14

Declining consumer confidence led to reduced spending, which further depressed economic activity. As people lost their jobs and income, they cut back on purchases, creating a vicious cycle of falling demand and increasing unemployment.

Question 15

How did the Great Depression impact the standard of living for the average American family?

Answer 15

The Great Depression drastically reduced the standard of living for many American families. With widespread unemployment, families struggled to afford basic necessities such as food, clothing, and shelter, leading to increased poverty and homelessness.

Question 16

What were the “breadlines,” and what did they signify during the Great Depression?

Answer 16

“Breadlines” were queues of people waiting to receive free food provided by charities or government agencies. They became a common sight during the Great Depression, symbolizing the widespread hunger and desperation of the time.

Question 17

What was the impact of the Dust Bowl on agricultural production in the affected regions?

Answer 17

The Dust Bowl drastically reduced agricultural production in the affected regions, as the land became barren and unsuitable for farming. Crops failed, and livestock died, leading to significant economic losses for farmers.

Question 18

How did the mass migration of farmers from the Dust Bowl regions affect urban areas in the United States?

Answer 18

The mass migration of farmers from the Dust Bowl regions to urban areas, particularly in the West, increased competition for jobs and put additional strain on already overwhelmed social services, exacerbating urban poverty and unemployment

Question 19

How did the economic policies of the U.S. during the Great Depression, such as the Hawley-Smoot Tariff, contribute to global economic instability?

Answer 19

The U.S. economic policies, particularly protectionist measures like the Hawley-Smoot Tariff, contributed to global economic instability by reducing international trade, leading to retaliatory tariffs, and deepening the economic downturn worldwide

Question 20

What was the significance of the 1931 banking crisis in Europe, and how did it relate to the U.S. economic downturn?

Answer 20

The 1931 banking crisis in Europe was significant because it highlighted the interconnectedness of the global economy. The crisis was directly related to the U.S. economic downturn, as American banks withdrew funds from Europe, leading to bank failures and economic collapse in countries like Germany and Austria

Question 21

What measures did President Hoover initially take to address the economic crisis, and why were they largely ineffective?

Answer 21

President Hoover initially took measures such as urging businesses to maintain wages and jobs and providing limited government loans to banks. However, these measures were largely ineffective because they did not address the underlying economic problems, and Hoover’s reluctance to provide direct aid to individuals exacerbated the crisis.