USA depression Flashcards
1
Q
Causes Wall Street Crash
A
- Many Americans enjoyed ‘ playing the market’
- Value of shares rises when a company is doing well howeveer the growth in share value occured from - people buying and selling increasing demand - confidence in economy beleiving prices would keep rising - bull pool encouraged inexperienced investors to speculate, artifically raising prices
- Stock exchange relied more on confidence than successful businesses
- When confidence weakened, the whole system began to collapse
- First sign of trouble when in mid 1929 new spread that stock market leaders begun to sell their shares - recognised the market was not aligned with the realities of the economy
- Federal reserve begun making it more difficult to borrow for speculation
- Fearing worse was to come, most experienced investors pulled out
- Crash began when mroe followed their example and panic replaced confidence
2
Q
Consequences of Wall Street Crash
A
- Affected investors as share values ocntinued to ddrop
- Shares lost 26b dollars in value
- Brokers who had suffered demanded immediate repayment of loans
- Investors had to take money from their savings to pay back what they owned
- Customers demanded cash from banks, had to ask companies and people with loans to repay them immediately so that they could have liquidity
- With little spare moeny, banks stopped lending
- Customers lost their savings and businesses lsot an important source of credit
3
Q
Wall Street Crash and the Great Depression
A
- Many lsot savings and had to cope with wage cuts
- Reduction in consumer spending meaning newer industries struggled to find buyers
- Supply of credit cut off and businesses had to change their approach, invested less, cut down production, and got rid of workers
4
Q
Other causes of Great Depression
A
- Under consumption
- Over production in indutry
- Falling income of farmers
- Failing banks
- Problems in Europe
5
Q
Impact of Great Depression on banking
A
- Americans withdrew all their savings meaning banks had to close down because they could not get sufficient money quickly enough
- Loss of $2.5 billion
6
Q
Impact of Great Depression on agriculture
A
- Prices for goods already low
- Prices continued to fall from continued over production
- Impossible to continue to pay off mortgages and other debts
- Led to protests
- Migration - turned cities into unpleasant places with large numbers of unemployed people
- Enviornmental crisis caused major problem spread acorss area became known as dustbowl
- Drougt in 1930
- Dust storms in 1932
- Many from Oklahoma, Arkansa, and other states migrated west
7
Q
Impact of Great Depression on industry
A
- Exports decreased
- Reduction in demand led to companies cutting prices to sell goods - reduced profits
- Cut wages
- Reduced production and working houses: Workers had hours cut
- Got rid of workers
8
Q
Impact of Great Depression on People’s Lives
Unemployment
A
- Millions lost jobs
- Underemployment was a problem - one third of people had to work part time which meant those with jobs had to cope with lower incomes
- Decline in living standards
- Strugglign to fund themselves nad had to rely on relief
- No support available
- Birth rate fell below replacement rate
9
Q
Impact of Great Depression on People’s Lives
Disadvantaged groups
A
Black people:
- More likely to lose job
- Half of black women in the workforce lost their jobs
- Faced racist threats
Immigrant workers:
- Lost their jobs to white people
- Left or deported
Women:
- Lost their jobs
- Some benefits: 25% more women able to find work outside the family home due to lower income
Elderly:
- Could not retire
- Few benefits
10
Q
Impact of Great Depression on People’s Lives
Homelessness and Hoovervilles
A
- Those who could not pay rent or keep up with mortgages lost their homes
- Many relied on charities or local government
- POpular option was to move from one place to another
- Governments of places where homeless migrated to could not provide relief
- Hobos kept on moving to find work
Hoovervilles:
- Homeless tried to stay in or near their home towns
- JOined together to create a shanty town on empty land, biuidling accomodation with scrap materials
- Called their towns ‘Hoovervilles’ because the blamed President Hoover
11
Q
Bonus Marchers
A
- Congress passed a law in 1924 giving veterans a bonus of up to 625 dollars to make up for hte wages they lsot while fighting
- Most would wait until 1945 to recieve
- When the depression struck, veterans felt they needed the moeny right away
- 20,000 people marched to DC in 1932
- Hoover against the idea because he was trying to further support and fund for other methods to tackle depression
- Congress made 100,000 dollars available to help the marchers pay for their journey home
- 5000 veterans stayed behind while many took the offer
- Polcie tried to empty some buidlings but were attacked
- Hoover sent in army to clear the camp
- Veterans fled and chased by troops who burnt tents and teargassed marchers
- Hoover’s reputation destroyed
12
Q
Hoover’s actions
A
- Set up the National Credit Corporation(1931): $500 million raised by businesses to help failing banks
- Investors were afraid to lose their money and spend very little of it
- Established the Reconstruction Finance Corporation (1932): $2 billion was provided by the government to rescue banks and other key organisations
- Criticised for using government money to help banks rather than people
- Agricultural Marketing Act(1929): Set up the Federal Farm Board to buy up crops from farmers
- Farm Board built up huge amounts of extra goods and could not stop the fall in prices
- Hawley Smoot Tariff (1930): Raised import duties on foreign food by 40% to force AMericans to buy domestically
- Led other nations to do the same, reducing international trade
- Federal Farm Loan Act: $125 million given to the Federal Land Banks to provide farm mortgages
- Provided mortgages but did not help farmers repay them
- National Business SUrvey Conference (1929): Hoover arranged a meeting of 400 business executives. They made promises about production, expansion and wages
- Promises made in 1929 by major employers were broken as the Depression worsened
- Moratorium on First World War debts (1931): USA would stop collecting debts for 18 months to give Europe time to recover
- Did not help enough to prevent the collapse of the international economy
- Reconstruction Finance Corporation (1932): Made money available for banks to loan to industries
- Most of the money loaned went to the largest banks and companies
- President’s Emergency Committeee for Employment (1930-31): Organised and encouraged donations for relief. Later replaced by President’s Orgnisation for Unemployment Relief
- ECE and POUR could not raise enormous sums needed to help the large numbers of unemployed
- Public works: Government doubled its spending on federal government projects over 3 years, creating jobs.
- Federal spending on public works very low.
- Reconstruction Finance Corporation (1932): Allowed the government to loan 300 million dollars to states for relief
- States had to meet tough requirements in order to borrow the money. Only $30 million loaned by the end of 1932
- Hoover took the first steps toward recovery
- A huge economic crisis could not be solved overnight and needed more government support and intervention than the USA had ever seen before
- The country voted in a Democrat president, Roosevelt who promised them a new deal
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13
Q
Aims of the New Deal
A
- Recovery
- Relief
- Reform
To achieve these:
- Gain support using ‘fireside chats’ to share his message directly
- Utilise his majority in Congress to turn New Deal policies into law
- Restore economic activity by using government moeny voted for by Congress to create jobs
- Expand the federal government by settign up new agencies to organise recovery and handle relief
14
Q
First Hundred Days
Tackling banking crisis
A
- Asked Congress to pass the **Emergency Banking Act **which closed all banks for 4 days
- Federal checks carried out and only financially sound banks were allowed to reopen
- Talked aout banks in his fireside chat asking Americans to deposit their savings again to restore confidence
- Immediate crisis over
- Passed law to insure bank deposists up to 2500 dollars and restricting how they could use money
- Restored confidence
15
Q
First Hundred Days
New laws and alphabet agencies
q
A
- **Agricultural Adjustment Act set ** up the Agricultural Adjustment Administration to help farmers
- National Industry Recovery Act established the National Recovery Administration which wrote rules for industries to follow
- Federal Emergency Relief Administration provided relief payments
- Economy Act reduced government running costs by 25%
- The Beer and Wind Revenue Act was the first steps towards the end of Prohibition which the governemnt taxed alcohol
16
Q
First Hundred Days
Solving agricultural crisis
A
- **AAA **aimed to raise the price
- Offered subsidies to farmers who limited proudction
- If a farmer kept an acre of land empty, he recieved around $11
- Less wheat and cotton harvested while demand remained causing the price to rise
- Still too many farm products from previous harvests
- Commodity Credit Corporation which paid farmers to keep extra goods
- If prices rose above the amount the corporation paid, the farmer could buy it back at the orginal price and sell it at a new higher price
- Farm Credit Administration helped improve mortgage arrangements, helping farmers stay on their land
