Wall Street Crash Flashcards
How did over production cause the crash?
Too many goods produced, by 1929 everyone who could afford the goods had them and so demand dramatically reduced
How did Uneven Distribution of Wealth cause the crash?
1929: 33% of US wealth owned by just 5% of the population,
60% lived below the poverty line,
Goods which caused the boom could not be afforded
How did Speculation cause the crash?
The numbers of investors grew rapidly in the 1920s, high demand for shares meant prices rose but this didn’t reflect their actual wealth,
This was eventually realised and share prices were seen as far too high and panic set in with people selling their shares
How did lack of an export market cause the crash?
Over production would not have been an issue could the goods have been sold overseas, but following high US tariffs, other countries didn’t want to buy from America and so very little could be exported
How much would $100 invested in typical shares be worth before the crash?
$325
How could so many people afford to be investors in the stock market?
They only paid 10% while the bank paid 90%, this was known as buying on the margin
On what day were most shares sold and the market crashes?
Tuesday 29th of October 1929
How many shares were sold and how much money was lost on the 29th of October?
Over 16 million shares were sold and thousands of investors were bankrupt as $16 billion was lost
How many banks closed following the crash?
Over 3000
How many cars sold in 1932 compared to before the crash?
In 1929 before the crash 4.5 million were sold but in 1932 only 1 million were sold
By 1932 how much of the population was unemployed?
25% of the working population were unemployed
How did Hoover initially react?
He believed that in the same way the boom was caused the crash would be fixed by the government staying out of businesses and the economy would return itself to normal
What did Hoover do once he’d realised the scale of the problem?
He pleaded with businesses not to sack workers,
He set up the RFC to make loans to businesses and he encouraged states and cities to launch public works programs
How did Hoovers actions affect the situation?
They did not help, it was simply not big enough measures,
Some things were made worse as the Hawley Smoot tariff made other countries retaliate and so exporting was even harder
What was named after Hoover following his failure to sort out the crisis?
Hoovervilles were shanty towns for the poor,
Hoover blankets were newspapers used for warmth,
Hoover flags were the empty out turned pockets of those with nothing
