WHY DID THE DEPRESSION LAST SO LONG

Question 1

PRESIDENT HOOVER

Answer 1

1. too set on laissez faire policy which meant he took a while to actually put into place any policies to help the depression
2. only gave the federal farm board 500million- Keynsians criticised this saying it wasn’t enough to help farmers significantly
3. AAA- couldn’t keep up with buying surpluses- farmers produced more thinking it would be bought by the government
4. voluntarism scheme relied on good will of businessmen to not decrease workforces. didn’t work.
5. tickle down effect failed as rich people weren’t spending either
6. Hawley Smoot raised import tariffs further

Question 2

FOREIGN CRISIS

Answer 2

1. devaluing the dollar also drove down value of European currency
2. hoover issued a moratorium on war debt- this wasn’t enough. exports still plummeted
3. Austrian bank failed
4. during the boom, europe lost investment to america so couldn’t afford to spend

Question 3

LACK OF CONFIDENCE

Answer 3

1. following banking crisis and wall street crash, consumers and businesses lacked confidence so didn’t spend
2. businesses didn’t invest- foreign or internal
3. government didn’t have the money to invest- also to set on laissez faire policy

Question 4

NATURE OF ECONOMIC BUSINESS

Answer 4

1. as economists state, after a boom follows a recession and a depression. this is a long term effect and therefore it lasted a long time as this is the worst place an economy can be in- takes time for improvement
2. the banks messed up so large that the effects were so prolonged- comparable to northern rock messing up and contributing to 2008 recession. 600 bank failures would have much larger implications