Wall Street Crash - Causes Flashcards
UNEVEN DISTRIBUTION OF WEALTH:
What was the income distribution across America (1929)?
North East: $921
Far West: $881
South East: $412
UNEVEN DISTRIBUTION OF WEALTH:
What groups did not experience prosperity?
Farmers Black Americans Sharecroppers Italian Immigrants Women
UNEVEN DISTRIBUTION OF WEALTH:
Was employment stable?
No - employment could be unstable
STABILITY OF EMPLOYMENT:
What did benefits and welfare look like?
There were very few benefits for unemployed families
STABILITY OF EMPLOYMENT:
How much power did labour unions have?
Labour Unions had very little influence, and many workers were not allowed to join them anyway. Union membership fell during the 1920s leaving workers without any legal protection and very few rights
INSTABILITY OF GET-RICH-QUICK SCHEMES:
Who was Charles Ponzi?
A former vegetable seller that conned thousands of people out of their money by promising a 50% return on their investment within 90 days. Took advantage of people’s greed.
INSTABILITY OF GET-RICH-QUICK SCHEMES:
What did many Americans spend their credit on?
Investing in speculative ventures which lost a lot of their money.
LAND SPECULATION:
What was the Florida land boom?
1) In the early 1900s Florida was relatively underdeveloped, but the climate made it appealing for the middle classes… led to the land boom
2) People began to invest in unseen and unbuilt developments (with the hope to then sell properties on at a profit). Often purchased on credit.
LAND SPECULATION:
What was the population in Florida in 1920 and 1925?
1920 - 968,000
1925 - 1.2 million
LAND SPECULATION:
What led to the Florida land boom coming to an end?
1) Demand began to trail off 1926 - there were scandals of made up property developments
2) 1926 Hurricane left 150,000 homeless
3) Hundreds were bankrupted leaving the land boom collapse and hundreds of unfinished properties
STOCK MARKET SPECULATION:
What was the bull market?
Easy credit meant people could buy stocks and shares “on the margin” (only paying part of the price) - this demand to buy shares was the bull market
STOCK MARKET SPECULATION:
What was stock market speculation?
Increasingly people bought stocks and shares not to invest in a company but on speculation - when stock prices rose people would quickly sell making a quick profit
WEAKNESS OF THE BANKING SYSTEM:
Who did the banking system prioritize?
They did not act in the best interest of the nation but in their own self-interest
WEAKNESS OF THE BANKING SYSTEM:
Did banks have government monitoring?
no - banks had to regulate themselves with no government monitoring
CYCLE OF INTERNATIONAL DEBT:
What did the 1922 Fordney McCumber Tariff do?
Made the international debt worse as it increased the price of American goods meaning that America could not trade with Europe
