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History - 1918-41 USA > The Great Depression > Flashcards

The Great Depression Flashcards

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1
Q

Why did shares value increase so much in 1929

A
  1. Many people were buying and selling
  2. Americans had great confidence in their economy
  3. A bull pool encouraged inexperienced investors to speculate, artificially increasing prices
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2
Q

What is a bull pool

A

A group of traders that set out to artificially increase the price of a share by buying and selling it to each other repeatedly over a short period of time to sell that share to less experienced traders at a profit

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3
Q

What was speculation

A

Buying shares on the expectation that the price would rise in the short term

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4
Q

What was the first sign that the market might crash in 1929

A

Stock market leaders began to sell their shares in mid 1929

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5
Q

Why did stock market leaders sell in mid 1929

A

They realised that the stock market was not aligned with the realities of the US economy

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6
Q

Why did the Wall Street crash happen

A

The confidence in the economy was replaced by panic, as people began to copy the famous investors in selling. By late October, everyone was desperately trying to sell, so prices dropped off a cliff.

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7
Q

When did people begin to buy shares again during the crash

A

By mid November, the prices were incredibly low, so some buyers were attracted back into the market

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8
Q

When did share prices reach their peak

A

September 1929

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9
Q

When was Black Thursday and what was it

A

24th October 1929 - 13 million shares were traded as prices fell rapidly. A team of leading bankers bought lots of shares in around 20 companies to calm people

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10
Q

When was black Tuesday and what happened

A

29th October 1929 - the economy recovered briefly, but on this day 16 million shares were traded, the highest number yet

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11
Q

When did share prices begin to fall

A

Early October 1929

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12
Q

When did share prices hit their lowest in 1929

A

13th November

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13
Q

What was a share of Radio Corp. worth on:
1. 3rd March 1928
2. 3rd September 1929
3. 13th November 1929

A
  1. $0.94
  2. $5.05
  3. $0.28
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14
Q

How much had shares lost value by November 1929

A

$26 billion

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15
Q

What is liquidity

A

The amount that an organisation holds in cash or that can easily be converted to cash

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16
Q

Which type of investor lost out the most

A

Those who bought on the margin - the brokers had no money themselves so demanded the payments back immediately, which either meant that people had to take out savings or they had to sell their possessions

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17
Q

Why did banks struggle during the Wall Street Crash

A

The people needed to take out cash from their savings, but the banks had invested lots of money into the stock market and loaned it to others.

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18
Q

What happened to a person’s money if their bank closed down

A

It was lost, with no compensation

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19
Q

What happened as wages fell

A

There was a reduction of consumer spending so newer industries struggled

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20
Q

Why was credit not available from banks

A

Banks needed cash to give the people their savings, so could not afford to loan cash

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21
Q

How did the approach of businesses change after the crash

A

They invested less, cut down production and began to offload workers

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22
Q

What effect did the lower production rates and the increase in unemployment have on the economy

A

It began to struggle

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23
Q

What is underconsumption and how did it contribute to the depression

A

Americans reduced consumer spending, because they did not have enough purchasing power (the amount of goods people can afford with their income). Once the market was saturated (no more potential customers), workers who produced the goods lost their jobs, further weakening their purchasing power

24
Q

How did over-production in industry affect the depression

A

Industries such as cars and construction were still producing goods to sell, but there were fewer people to buy, so prices fell.

25
Q

Why did the income of farmers further fall during the depression

A

There were severe droughts across the Great Plains of USA and there were frequent dust storms, so the area was unusable for agriculture

26
Q

Why did the banks fail during the depression

A
  1. Most banks had limited reserves of money
  2. Only 1/3 of banks were part of the Federal Reserve System, so the government could not support many.
27
Q

What percent of US banks failed by 1933

A

20%

28
Q

What is a ‘run’ in context of banking

A

When customers rush to take their money out of a bank because they have lost confidence in it

29
Q

How did WW1 influence the depression

A

USA had loaned money to Europe but they could not pay it back so kept taking loans from USA to pay back the previous ones, so it relied on a continuous flow of money from USA, which eventually failed. The collapses of European economies led to less purchasing of American goods, which further harmed the American economy.

30
Q

How did European countries cut themselves off from America in the early 1930s (1)

A
  1. High tariffs were placed on American goods
  2. Germany tried to become self-sufficient (needing no outside help)
  3. Britain set up a trading agreement within its own empire
31
Q

How much did international trade decrease from 1929-1932

A

$24 billion

32
Q

What rose during the Great Depression (4)

A
  1. Unemployment
  2. Homelessness
  3. Bank failures
  4. Business closures
33
Q

What fell during the Great Depression (4)

A
  1. Industrial production
  2. Prices
  3. International trade
  4. Investment
34
Q

How many banks closed in the USA from 1930-33

A

9,000

35
Q

How many Americans lost their savings as banks failed

A

9 million

36
Q

What were the incomes of farms in 1929 and 1932

A

1929 - $6b
1932 - $2b

37
Q

Why did 1/3 of American farmers lose their land

A

They could not pay their mortgages and other debts

38
Q

How many people were affected by the dust bowl

A

17 million

39
Q

What is the negative cycle of economic depression

A
  1. Demand for goods drops
  2. Company profits fall
  3. Workers laid off
  4. Less money to buy goods
  5. Demand for goods drop
40
Q

What was unemployment levels in 1933

A

25%

41
Q

What were the effects of unemployment

A
  1. Living conditions worsened
  2. Not enough food
  3. No gas/water/electricity
42
Q

How much did the suicide rate increase from 1929 to 1931

A

14%

43
Q

How did the depression effect blacks

A

They were the first to lose their jobs and they faced racist threats

44
Q

How did the depression affect immigrant workers

A

They lost their jobs to white people and many left USA or were deported

45
Q

How did the depression affect women

A

They lost their jobs, but towards the end of the depression some women were able to get jobs due to low family income

46
Q

How did the depression affect the elderly

A

They couldn’t afford to retire - only 11 states had pension schemes

47
Q

What were Hoovervilles

A

Shanty towns constructed on the outskirts of cities by residents who lost their homes. They had no running water, electricity or heating, as well as no permanent shelter. Named after president hoover because they blamed him for the problems

48
Q

Who were the bonus marchers and what did they want

A

WW1 veterans - they were to receive a bonus of up to $625 for their service but they were due it in 1945. They needed it during the depression though so they demanded it by marching to Washington DC in 1932.

49
Q

What happened to the bonus marchers

A

Hoover said no - but they were given $100,000 to help them get home. Most accepted but 5k did not. The army tear-gassed them away.

50
Q

What was the result of the bonus marchers on the reputation of Hoover

A

It was destroyed - he refused to give them their bonuses and then he sent the police and army to teargas them, injuring 100 and killing 1

51
Q

What was the public opinion of Hoover during the depression

A

They hated him

52
Q

Was it fair to say that hoover did nothing to help the depression

A

No

53
Q

What is laissez-faire

A

The belief that the government should not interfere in a country’s economy

54
Q

What limited Hoover’s ability to fight the depression

A

He only encouraged groups to act, he didn’t force them, due to his political beliefs of laissez-faire

55
Q

How did Hoover help the people during the depression

A
  1. He doubled the spending on public works, to build projects like the grand coulee dam
  2. He introduced the Reconstruction Finance Corporation in 1932 to loan $300m to states to provide relief
56
Q

How did hoover help the banking system

A
  1. He set up the NCC, which raised $500m for failing banks
  2. He established the RFC (refinancing corporation) which provided $2b to rescue banks

However, these measures came too late as many banks had already failed

History - 1918-41 USA (5 decks)

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