The Great Depression

What notion about the Great Depression have most historians rejected?

The idea that the stock market crash of 1929 caused the Great Depression

Historians believe the stock market crash served as what?

A warning sign to the Great DepressionWha

What illusion did the stock market crash puncture?

The illusion of infinite prosperity

How did Americans react in the wake of the crash?

They stopped buying many of the consumer products that served as the backbone of the economy

How much did spending on durable good drop by in 1930?

20%

Where did the Lynds return to?

Munice Indiana

What did the Lynds find upon their return to Munice?

The total volume of business conducted by grocery store had fallen

How much did the total volume of business conducted by grocery stores fall by?

50%

The retail sector as a whole contracted by how much?

39%

What did historian Eric Rauchway observe?

“In a time of economic crisis even a short pause in the purchasing could slow or even stop the nations assembly lines”

Who was most at risk of the drying of consumer spending?

Big auto manufactureres in Detroit

How much were Fords total sales cut by?

Half

What years did Fords sales get cut in half?

1930-1931

What was Fords annual loss?

37 million

How did overproduction affect companies?

They were a costly backlog of unsold good that steadily accumulated in warehouses

After the spending of the Coolidge years more American families that ever before owned what?

Cars, radios, and other consumer goods

What allowed a surplus of American families to own consumer goods?

The spending spree of the Coolidge years

Many consumer goods were bought with what?

Credit

What did credit allow people to do?

Spend far beyond their means

In 1929 how did the market become glutted?

Supply outstripped demand and sales flattened

How did Factories react to the flattening of sales?

Reduce their hours and begin wholesale layoffs

What was the consequence of layoffs and reduction in hours

Unemployment spiked

How many General Motors employees got laid off?

100,000

How many people worked at General Motors in total?

260,000 employees

From what years did General Motors lay off employees?

1929-1931

The General Motors layoffs swelled unemployment in which city?

Detroit

In 1930 how many businesses failed?

26,555

How many workers were estimated to have lost their jobs?

4 million

Prices nosedived in what sectors?

Agricultural and extractive sectors

The fall in prices of agricultural and extractive sectors affected who?

Farmers, miners and lumbermen

Before the Great Depression, crop prices were already low from what?

The postwar slump

Who spend millions to try and help farmers?

Hoovers Federal Farm Board

What did the price of cotton fall from?

16.8 cents per pound to 9.5 cents per pound

What was the price of cotton in 1929?

16.5 cents per pound

What was the price of cotton in 1930?

9.5 cents

What was the price of cotton in 1931?

5.7 cents

How did the strength of Americas industrial economy paper?

Over the dismal state of its stagnant agricultural economy

Why did many who were unemployed get dealt with psychological damage?

Individuals, especially men were conditioned to equate their worth based on their ability to provide for their families

Shame bred by widespread social stigma added to what?

The financial stress of being out of work

Rising unemployment acted like what?

Fuel on the flames of a destructive cycle

What was the consequences of large unemployment rates?

Workers had no income, spent less money and repaid debts slowly or not at all

How did the lack of income further perpetuate the cycle?

Less spending and debts repaid further weakened the consumer economy and led to more business closures and layoffs that drove unemployment numbers higher

What was the estimated unemployment rate in 1930

9%

By 1931 what did the unemployment rate increase to?

16%

By 1932 what did the percent of unemployment reach?

24%

Unemployed workers couldn’t afford what?

Monthly mortgage rates

Due to unemployed workers being unable to pay mortgage rates, what skyrocketed?

defaults

How many Americans lost their homes in 1930?

150,000

How many bank foreclosures were recorded in 1926?

68,000

Foreclosures were heavily concentrated to where?

Rural farming communities

How many foreclosures were there in per day in 1933?

1,000

By the end of 1933 how many American mortgages were in default?

Half of all Americans

How did unemployment affect tax revenue?

Less tax revenue for local and state governments

The overwhelming demand for relief forced hundreds of governments to default on what?

Debt payments

What happened to banks that issued municipal bonds and loans?

They were further imperiled?

What happened to New deposits and loan payments?

They virtually dried up

How were banks affected?

They were dangerously undercapitalized and overleveraged

What does overcapitalized and overleveraged mean?

No longer having enough money in their vaults. Nor enough positive assets in their wider portfolio to cover their obligations to creditors

The economic crisis threatened what?

Solvency of banks faced with biking a liquidity crunch

Banks jeopardized what?

The hard earned savings of millions of ordinary depositors

In 1929 how many banks failed?

659

How much money in deposits did the 659 banks hold?

$250 million worth

How many bank failures were there in 1930?

The number of bank failures more than doubled to 1,352

In 1931 how much worth in deposits was wiped?

$852 million

In 1931 how many banks shut down?

2,294

In 1931 how much in deposits were lost to banks shutting down?

$1.7 billion in deposits

What was the affect of the collapses?

Americans lost confidence in their own banks and rushed to withdraw their savings