US DEPRESSION (1929-33)

• what was the Wall Street Crash?

  biggest stock market collapse
• what happened in the Wall Street Crash?

  September 1929 - the average share prices on the New York Stock Exchange reach their peak

  Early October 1929 - ~4 million shares are traded each day and prices begin to fall

  24 October 1929 - ~13 million shares are traded and prices fall rapidly. In the afternoon, a team of leading bankers buy shares in around 20 companies and calm the situation

  29 October 1929 - after a brief recovery, 16 million shares are traded, the highest number so far

  13 November 1929 - share prices hit their lowest point
• what is the 24th October 1929 also known as?

  Black Thursday
• what is the 29th October 1929 also known as?

  Black Tuesday
• how did overproduction cause the Wall Street Crash?

  led to the rise of unemployment and a fall in profits because consumer spending started to decline in 1927. with the fall in sales so did the production.
• how did declining foreign trade cause the Wall Street Crash?

  the US had high trade tariffs which caused foreign governments to put their own tariffs on US exports. This caused American consumers to stop buying products and buisnesses could not sell abroad. This decreased profits and shares further
• how did excessive speculation cause the Wall Street Crash?

  many people bought shares for a quick profit after seeing the rise in profits. shares were even brought 'on the margin' and the rush to invest in stocks encouraged share prices to rise more. this speculation led to the growth of an 'economic bubble'. this excessive borrowing to buy shares posed as a huge risk when the stock market prices suddenly crashed
• what does it mean to buy shares 'on the margin'?

  borrowing money from a brokerage (bank) to purchase shares and later pay that loan when they made the profit
• what does an 'economic bubble' mean?

  Market speculation leading to over-valued stocks and not their real wealth
• how much money was borrowed during the Wall Street Crash in 1929?


  $8.5 billlion dollars
• how did farming recession cause the Wall Street Crash?

  overproduction of crops due to mechanisation led to the decline of their prices. food prices dropped further in summer 1929 due to foreign competition, which made farming stocks face a sudden decline
• How did the Wall Street Crash effect buisnesses?

  thousands left bankrupt, forcing buinsess closures which led to rising unemployment
• How did the Wall Street Crash effect production?

  demand for consumer goods fell as people were unemployed and couldn't afford them. Led to a further drop in profits and cut-backs in industry with more unemployment
• How did the Wall Street Crash effect farmers?

  farmers struggled with low food prices and had to borrow money from backs to survive. During the Crash, banks had recalled these loans and thousands of farmers had to sell their land
• How did the Wall Street Crash effect the USA?

  led to a prolonged economic Great Depression which did not fully recover until WW2 (1939-45)
• what were Hoover's beliefs during the Great Depression?

  volunteerism, self-reliance, 'rugged individualism'
• what does volunteerism mean by Hoover's beliefs?

  businesses should be persuaded to deal with the crisis rather than using government intervention
• what does self-reliance mean by Hoover's belief?


  Hoover believed people should be responsible for their own welfare and the government should not give people hand outs. This belief came from his own background as Hoover was a self-made millionare
• what does 'rugged individulism' mean by Hoover's beliefs?


  the power of individuals by the belief they can become richer by their own efforts and desire to improve their lives rather than the government intervening
• what does laissez-faire mean?

  the belief that government should not interfere with the country's economy and buisnesses
• what actions and policies did Hoover do during the Great Depression?

  banks - set up the National Credit Corporation (1931)

  farms - Hawley-Smoot Tariff (1930), Federal Farm Loan Act (1929)

  industries - set up the Reconstruction Finance Corporation (1932)

  unemployment - Public works
• what was the aim and effect of the National Credit Corporation?

  Aim: $500 million raised by buisnesses to help failing banks Effect: NCC's investors were scared to lose their money so spent very little of it
• what was the aim and effect of the Hawley-Smoot Tariff?

  Aim: force Americans to buy their own goods by raising imported duties on foreign food by 40% Effect: higher tariffs led other nations to do the same, reducing international trade
• what was the aim and effect of the Federal Farm Loan Act?

  Aim: $125 million gived to Federal Land Banks (FLB) to provide farm mortgages Effect: FLB could only provide farmers with mortgages but not help repay them
• what was the aim and effect of the Reconstruction Finance Corporation?

  Aim: made money available for banks to loan to industries Effect: most of the money loaned by the RFC went to the largest banks and companies
• what was the aim and effect of Public work?

  Aim: reduce unemployment through federal govenment projects e.g Grand Coulee Dam (Washington) Effect: federal spending on public works was very low - it was $210 million in 1930 but states spent ~$2 billion/year
• what were the impacts of Hoover's policies?

  reasons for failure - Hoover failed to solve the economic crisis as his policies were 'too little' and 'too late'.

  protests - (Bonus Marchers) in Summer 1932, +20,000 unemployed WW1 Veterans marched on Washington demanding the early payment of their veterans' bonus, farmers fought agaisnt eviction, the unemployed demanded food from stores and crime soared

  drop in popularity - Hoover was heavily critised publically by his political beliefs which made him seem uncaring and cruel to many. It was clear he was heading for electoral defeat in 1932
• How did the Wall Street Crash cause the Great Depression?

  triggered a much wider collapse in the banking and finance system, serving as a catalyst of the economic decline already existed since 1927
• How did Banking Collapse cause the Great Depression?

  bankers lent money too liberally to speculators and after the Crash, they were unable to call in their debts from bankrupt brokers. This resulted in bank closures and the loss of savings of millions of Americans
• How did Buisness Collapse cause the Great Depression?

  many buisnesses went bankrupt after the declining demands and had to fire staff or introduce short-time contracts. This led to the rise of unemployment and declining consumer spending
• How did the Worldwide Impact cause the Great Depression?

  US banks lent money to foreign countries, especially Germany under the 1924 Dawes Plan. After the Crash, the US recalled these loans and let Germany unabe to repay reparations to France and Britain, who in turn struggled to pay war debts back to the USA
• How did the fall of demand cause the Great Depression?

  consumer demands for good began to fall and high tariffs were preventing US exports even though there was an overproduction. As demands dropped so did profits and buisnesses had to cut back on staff.
• How much was the rise of unemployment from 1926-8?

  from 1.8% to 4.2%
• What were the economical impacts GPD had on the Great Depression?

  fell from +$100 billion to $59 billion, so the US economy had almost halved in size. Growth rate declined to over -14% by 1932. Worldwide GNP fell by at least 15% by 1932
• What were the economical impacts Production had on the Great Depression?

  industrial production declined by 46%, Foreign trades declined by 70%, Consumer goods manufactures suffereed the worst
• What were the economical impacts unemployment had on the Great Depression?

  rose from 3.2% (1929) to 24.9% (1933), 13 million people were unemployed by 1933, African-Americans suffered the most with unemployment (x4-6 higher), women were fired before men
• What were the economical impacts bankruptcy had on the Great Depression?

  +5000 banks had closed, +20,000 buisnesses went bankrupt by 1933, thousands of farms went bankrupt
• What were the economical impacts wages had on the Great Depression?

  average weekly wages fell from $25 (1929) to $17 (1932), farm prices fell by 60% between 1929-32, farm wages decreased from $2.40/day (1926) to $1.15/day (1933)
• What were the economical impacts banking systems had on the Great Depression?

  thousands of banks closed which made many people lose confidence in the system, many switched to cash transaactions, surviving banks were unwilling to loan money
• What were the impacts the Great Depression had on the homeless?

  In 1932 alone 250,000 people lost their homes, Shanty towns were built on the edges of towns called 'Hoovervilles' as they blamed Hoover for the crisis, some people got themselves arrested in order to sleep in cells, thousands had to sell their property and possessions to avoid destitution