The Wall Street Crash

Question 1

When was the Wall Street crash?

Answer 1

29th October 1929.

Question 2

What triggered the Wall Street crash?

Answer 2

• Share prices had risen so investors had to sell them.
• Lower profits meant lower share price.
• Those who bought on the margin soon realized that as share prices started to fall, that the loans that had taken out to buy them were more expensive than the “profitable shares”.
• The rush to sell shares caused shareholders to panic.

Question 3

What is the importance of the Wall Street to American economy?

Answer 3

Wall Street was the place where the stock exchange was and this was where you can buy shares into companies.

Question 4

Why did people want to invest in shares?

Answer 4

Companies issued shares to make money and then investors go onto buying shares to make money too.

Question 5

What is “buying on the margin”?

Answer 5

For a small fraction of the price usually 10%, a speculator could buy shares, wait until the price rose, then sell the shares, pay off what was owed and pocked the profit.

Question 6

What is “speculation”?

Answer 6

Speculation is where you guess when the share prices have gone up and when they had, you’d then sell your shares. This was similar to gambling.

Question 7

What is a “speculator”?

Answer 7

A speculator is someone who bought shares on the stock market, waited until the prices rose, then sold their shares for a profit.

Question 8

What role did the banks place in the Wall Street?

Answer 8

Banks were only too ready to lend money for stocks to be bought “on the margin”.

Question 9

What are some causes for the depression? (hint: lackpants)

Answer 9

L - laissez-faire - the government didn’t help.
A - assembly line - making too many products that most people can’t afford.
C - credit - not everybody is paying it off until a later date.
K -
P - position of the USA - nobody abroad can help.
A -
N - new products - everybody has got what they wanted
T - tariffs - they can’t sell the new industries abroad.
S - share - losing money because everyone is investing in shares in the stock market.

Question 10

What is the “Cycle of Depression”?

Answer 10

Reduced demand for consumer goods -> reduced production for consumer goods -> increased unemployment -> less money available to spend on consumer goods -> reduced demand for consumer goods (and so on..)

Question 11

What was “Black Thursday”?

Answer 11

Black Thursday was 24th October 1929 where 13 million shares were sold.

Question 12

What happened on Tuesday 29th October 1929?

Answer 12

On Tuesday 29th October 1929, over 16 million shares were sold.

Question 13

How did the crash affect banks?

Answer 13

Nearly 9 million bank accounts closed.
In 1929, 659 banks failed.
In 1931, 2294 banks also failed.

Question 14

How did the crash affect Germany?

Answer 14

As America had given Germany a loan to help pay the high reparations, America now wanted the loan back.

Question 15

How did the crash affect unemployment?

Answer 15

In 1931 there were 8 million unemployed.

In 1933, there were 14 million unemployed.

Question 16

What were Hoovervilles?

Answer 16

Hoovervilles were like shanty towns that you’d find in third world countries. The huts people lived in were made up of tin, timber, wood and other scraps of material that people could find. People began living in Hoovervilles after they’d been evicted from their homes after they couldn’t pay mortgages. Hoovervilles were named Hoovervilles as people blamed President Hoover for the crisis.

Question 17

What affect did the crash have on homelessness.

Answer 17

Due to the crass, many people were evicted from their homes after they were unable to pay mortgages. In 1933, 1/4 of a million Americans lost their homes.

Question 18

How did the crash affect farmers?

Answer 18

In 1932, 1/20 farmers were evicted for failure to make mortgage repayments.
1930 - dust bowls began to hit farmers farms.
1930 - there began to be droughts, very similar to desert land.
Many farmers drifted to California to work on fruit farms.

Question 19

What did charities do to help Americans after the crash?

Answer 19

Many Americans queued for free meals such as soup. One of the most famous group of people who helped the unemployed workers was the salvation army.

Question 20

What was the Bonus Army?

Answer 20

After WW1, the veterans were promised by President Herbert Hoover that they were to have a pension. Due to the panic of the Wall Street Crash, veterans then protested to have the pension early. President Hoover wasn’t happy about this and used the police and then the army to use tanks and tear gas which resulted in the burning of tents and it killed 2 veterans as well as injuring nearly 1000. But still, Hoover still never gave them the pension