the causes and consequences of the Wall Street crash

• Shares

  A percentage of ownership in a company or a financial asset. Investors who hold shares in any company are known as shareholders.
• Buying shares on the margin

  1. Borrowing money from banks to fund the share purchase

  2. Loan repaid when shares are later sold

  3. Banks lend up to 90% of the share price
• Speculators

  Bought shares and sold them within a few weeks to pocket an easy gain
• Panic selling of shares in the market led to a "crash", which marked the beginning of the Great Depression


  October 1929
• Timeline of the crash

  1. 18th October - prices began falling

  2. 19th October - 3.5 million shares sold. Prices fall

  3. 21st Oct - over 6 million shares change hands

  4. 24th Oct- Black Thursday - 13 million shares sold. No buyers

  5. 26th October - President Hoover, the fundamental business of the country is on a spend and secure basis

  6. 29th Oct - 16 million shares sold. No buyers

  7. Prices on the stock market collapsed
• Roosevelt won the election of 1932 by a landslide victory
• Hoover's weaknesses

  • He was elected just as the 1920s boom was beginning to end, so his presidency was associated with banks and business closures, a failing economy, and rising unemployment
  • His early reaction to the depression was misplaced. He thought it was a normal business downturn
  • The actions he took when he realized that the economy was in serious trouble were considered too late and too little
  • Against the federal govt giving welfare support to the unemployed as it undermines American values of self-help and rugged individualism
  • It made him seem unsympathetic and indifferent to humans
  • In the 1932 campaign, he couldn't project himself as a man of vision ready to experiment with new ideas. Came across as grim-faced and conservative
• Hoover's actions to combat depression

  • 1930 – taxes cut by $30 million for more purchasing power in the economy
  • Hawley-Smoot Act (1930) – tariffs introduced to protect American goods
  • Money to finance building programs to create more jobs. Hoover Dam on Colorado River
  • Employers make voluntary agreements with employees to maintain wages
  • Reconstruction Finance Corporation (1932) – provide loans to businesses facing hard times, up to $1500 million
  • Federal Farm Board – buys surplus produce to stabilize prices
• Roosevelt's strengths

  • He was a Democrat; hence, he had no responsibility for the policies that led up to the Great Depression
  • 1928 – he became Governor of New York State and organized schemes to help the elderly and unemployed. It gave him a reputation for understanding the plight of the poor
  • He had an upbeat personality and appeared warm, charming, and optimistic on the campaign trail
  • He was admired for the way he fought against the polio he contracted in 1921
  • The electorate was infected by his confidence and determination to fight against the odds
• The "Bonus Army" Protest - 25000 army veterans were promised a war service bonus in 1945, but following the economic issue, they wanted it brought forward to 1932. They began a peaceful protest opposite the White House after Congress refused to pass the Bonus Bill. Hoover took this as a threat and asked the army to clear the site. The camp was destroyed with tanks, machine guns, and tear gas. Two veterans were killed, and thousands were injured.