The Economy Flashcards
Why did the Wall Street crash happened?
In the 20s people believed that the economic boom would go on for ever. They spent money they didn’t have borrowed more than they could pay back and bought lots of stocks and shares.
But there was a problem. The factories were making too many goods poorly paid workers couldn’t afford to buy them and the companies were in trouble. To save money they sacked people which meant even fewer people could afford the product. It was a vicious circle and in 1929it collapsed
What what is a bank run?
When everybody goes to the bank to try to withdraw their money at the same time. The physical money is not actually in the bank as it has been invested elsewhere. Consequently people are trying to withdraw money which is not actually available.
What were the consequences of the Wall Street crash?
Millions of people lost their jobs and savings over night even rich businessmen lost everything, many people lost their homes and were forced to live in Hoovervilles. People begged for food and money and were forced to rely on charity. Farmers were very badly hit because they had to cope with the effects of the dust bowl as well. Many of them had to leave the forms and go to find work as fruit pickers in states like California.Family life affected – falling marriages, bus route. Suicide is increased, schools closed. There were approximately 2 million hobos by 1933.
By 1930 to approximately 25% of the population has no income
In 1932 March on Washington what were the unemployed war veterans demanding?
They were demanding early payment of bonuses which had been scheduled to be paid in 1945.. They set up a huge Hooverville outside the White House,Hoover ordered troops to drive them out and burn down the shantytowns
What were Hoovervilles?
Shanty towns
What were Hoover blankets?
Layers of newspapers
What were Hoover flags?
Men’s trouser pockets turned inside out to show they had no money
What were Hoover wagons?
Because with horses tied to them because they could not afford petrol.
What was the agricultural depression.
Countryside ruined, from is bankrupt and evicted from properties. Soil infertility, dust bowl, thousands of farmers migrated across the USA.
How did hoover attend to deal with the depression?
Initially did very little, carried on laissez-faire and rugged individualism policies.
When this didn’t work he did start to make some changes. He met business leaders and asked them not to cut production or wages.
He increased import duties on foreign goods (Hawley- Smoot tariff act 1930)
Lent money to farmers
Cut taxes
Set up a relief agencies took to coordinate relief efforts
Got approval from Congress for new construction and repair to Roads and dams ($1.8 billion)
Persuaded state and local government to expand public works programs
Who won the 1932 presidential election?
Franklin D Roosevelt
How did Roosevelt force his changes through?
He called for emergency presidential powers similar to those used in the war situation. He was criticised for this, but served for terms of office and was extremely popular.
What were the aims of the new deal?
Relief, recovery and reform
What did Rooseveldt do to encourage people to feel confident again?
Fireside chats on the radio. In his first speech as president he said “the only thing we have to fear is fear itself.” If he could encourage Americans to feel confident again the economy would improve. If people were optimistic about the future they would take on more workers, spend more money, and get the economy going
Why did Rooseveldt temporarily close the banks in March 1933?
He was worried that more banks would collapse if people continue to take out their savings.
