the great depression

Question 1

what were the long term causes of the wall street crash in october 1929

Answer 1

• UNDERLYING PROBLEMS IN INDUSTRY-during the 1920s many small farmers lost their business+ struggled to get jobs after, so a huge no. of ppl couldn’t buy consumer goods. building industry started failing in 1926. coal, textiles and iron were also in trouble- workers in these industries didn’t have money for consumer goods so demand fell
• REPUBLICAN POLICIES/OVERPRODUCTION- too many goods made, not enough people to buy them, struggle to sell goods led to a fall in share prices. smoot-hawley tariff created a trade war + americans couldn’t sell abroad bc europe had increased tariffs. laissez faire kept wages low so workers couldn’t afford goods
• POOR INCOME DISTRIBUTION- top 5% of the country owned 33% of the wealth. majority of americans still earned less than $2000 per year- couldn’t afford consumer goods. workers, immigrants and blacks had very low wages

Question 2

what were the short term causes of the wall street crash in october 1929

Answer 2

-OVER CONFIDENCE-share values were rising and people thought they’d keep going up. in oct 1929 shares cost more than they were worth. when companies started losing money people panicked and sold their shares for cheap, causing them to lose all their money
-SPECULATION ON THE STOCK MARKET-banks lent too much money to people so they could buy shares- $9 billion in 1929 alone. in 1929 20 million people were gambling on shares + buying on margin increased which meant people payed 10% and banks lent 90% which was repaid from share profits. people borrowed from the bank in order to buy shares. women owned over 50% of shares in the pennsylvania railroad- ‘the petticoat line’
this meant when share prices fell people couldn’t pay the bank back and lost everything

Question 3

what were the events that led up to the wall st. crash

Answer 3

5 SEPT-‘Babson break’: roger babson (economic forecaster) says ‘sooner or later a crash is coming and it may be terrific’
21 OCT- lots of trading + selling. the ‘ticker’ which tells people changes in prices falls behind by 1 1/2 hours. some people were bankrupted and didn’t even realise
24 OCT- busiest trading yet, massive falls in prices. banks intervene to buy stock + confidence returns. prices stabilise.
29 OCT- massive fall, people sell for anything they can get

Question 4

how were farmers affected by the great depression

Answer 4

• farmers hit hardest out of everyone- unable to pay their morgages but when sheriffs came to seize the land they were met by farmers armed w pitchforks
• 1/20 farmers evicted, and so many left Oklahoma that migrants were called ‘okies’
• lots of land that had been overfarmed in the 1920s turned into dustbowls
• farmers forced to kill livestock because the price for caring for + transporting them was more than the price the animals were worth
• fields were full of crops + yards of coal but nobody could transport the goods
• farm income fell again from $13 billion to $5 billion

Question 5

how were workers and the unemployed affected by the great depression?

Answer 5

• industrial and farm production fell by 40%, and wages fell by 60%
• 12,000 people made unemployed every day
• in 1932 unemployment levels in toledo were at 80% and in cleveland they were 50%
• hoovervilles and hooverblankets (shanty towns and newspapers the homeless slept under) showed the public attitude to hoover, who was blamed for the depression
• 1931 238 people admitted to hospital due to malnutrition/starvation. 45 of this 238 died

Question 6

how were shareholders affected by the great depression?

Answer 6

• rich lost the most as they had invested the most- rockefeller lost $160 million + winston churchill lost $500,000
• investors were unable to pay back loans to the bank and went bankrupt
• banks also went bankrupt as they had lost peoples money buying shares
• hoover promised ‘prosperity is just around the corner’ + cut taxes to stimulate buying
• confidence in banks and government destroyed

Question 7

how were business men affected by the great depression?

Answer 7

-during the 1920s businessmen had taken out massive loans to expand their businesses, which they were left unable to pay back and went bankrupt
-in DEC 1930 BANK OF USA IN NY FAILED WITH 400,000 INVESTORS
-$1 billion withdrawn and kept at home bc people didn’t trust banks anymore- people kept money instead of spending it
-100,000 companies went bankrupt + US international trade fell from $10 billion to $3 billion
-businessmen tried polishing shoes or selling apples but suicide was the only way out for many.
23,000 people committed suicide in the first year of the depression