The Great Depression Flashcards
What is a depression?
Serious economic disasters marked by: 1) high unemployment 2) declining prices 3) lower production 4) lower sales 5) bank failures
What made the great depression a GREAT depression?
lasted longer, caused more failures and unemployment, and affected more people
What were the 6 causes of the Great Depression?
1) The Wall Street Crash 2) Stock Boom! 3) Wealth 4) Black Thursday 5) Black Tuesday 6) Bottom fell out!
Describe this cause of the Great Depression:Stock Boom!
Ever rising prices of stocks is the basis of the wealth of the 1920s; there was an 18 month stretch where everyday the stock prices went higher (March 1928 to September 1929); Dow Jones Industrial Average at all time high
Describe this cause of the Great Depression:Wealth
An average investor who bought $1000 worth of stock at Hoover’s election would double his money in less than a year
Describe this cause of the Great Depression:Black Thursday
October 24, 1929Unprecedented volume of selling; stock prices plunge; groups of bankers bought millions of dollars of stock to stabilize economy
When was Black Tuesday?
October 29, 1929
Describe this cause of the Great Depression:Bottom fell out!
Selling frenzy had resumed on Monday (October 28, 1929); panicked investors ordered brokers to sell but there were no buyers; by 1932, stocks were worth 1/9 of previous value
What were the 7 causes of the Stock Market Crash?
1) Uneven distribution of wealth 2) Stock market speculation 3) Excessive use of credit 4) Overproduction of consumer goods 5) Weak farm economy 6) Gov’t policies 7) Global economic policies
Describe this cause of the Stock Market Crash:Uneven distribution of wealth
Wages rose little in comparison to productivity and corporate profits; top 5% of richest Americans owned 33% of the income
Describe this cause of the Stock Market Crash:Stock market speculation
Get rich by “playing the market”; people are buying on margin; put down 1% and borrowed the rest; investors depended on the stock increasing so they could repay the loan
Describe this cause of the Stock Market Crash:Excessive use of credit
People believed economic prosperity was permanent; led to installment buying; stimulated consumer desire for new appliances and cars
Describe this cause of the Stock Market Crash:Overproduction of consumer goods
There was a volume of goods that workers with stagnant wages could not purchase
Describe this cause of the Stock Market Crash:Weak farm economy
Prosperity of the 1920s didn’t reach farmers who suffered from overproduction; high debt and lower prices since the end of WWI; in 1930s, severe weather and long drought added to farmers difficulties
Describe this cause of the Stock Market Crash:Gov’t policies
1920s: the gov’t had complete faith in business and did little to regulate Congress; high tariffs were passed to protect US businesses, but this hurt farmers and international trade; years of neglect and bad practices were hard to correct
