USA in depth study - Wall street crash and Consequences

History 2024

How did failing industries lead to the WSC?

Declining traditional industries like coal, textiles, and especially farming had been struggling since 1926. As profits fell, construction dropped by 40% between 1928 and 1933. This led to job losses, which meant people had less money to spend, causing demand for goods to fall. That meant lower profits, which triggered even more layoffs and unemployment — a vicious cycle.

How did overproduction lead to the WSC?

Factories and farms overproduced more than people could buy. As supply exceeded demand, prices and profits dropped. Businesses then laid off workers, which worsened unemployment and reduced demand even more.

How did speculation of stock market lead to the WSC?

Over 20 million Americans speculated in stocks, often using borrowed money. They bought shares on credit hoping prices would keep rising. But prices were artificially inflated. When confidence dropped, people couldn’t repay loans, and both investors and banks lost huge amounts.

How did panic cause the the Crash?

When stock prices began to fall, experienced investors started selling. This caused a wave of panic. Ordinary people followed, flooding the market with shares and sending prices crashing. Many lost everything overnight.

How were banks involved in the WSC?

Banks had loaned money to speculators. When stocks collapsed, loans weren’t repaid. Between 1930 and 1933, around 9,000 banks failed, including over 4,000 in 1933 alone. People lost trust in banks and withdrew savings, worsening the crisis.

How much money was withdrawn in total?

$1 billion dollars

How many stocks were dumped on Black Tuesday?

Over 16 millions shares and stocks were traded.

How much money was spent on advertising in an attempt to sell?

In 1929, companies spent $3 billion on magazine advertising to encourage consumption. But wages weren’t rising, so people couldn’t afford new products. Demand continued to fall.

How much did profits and wages fall between 1928 and 1933?

• Profits fell by 40%

• Wages fell by 60%

How much was total farm income

$5 billion

How much did the American international trade drop?

Went from $10 billion to $3 billion from 1929 to 1932

What is a bull and bear market?

A bull market is where stocks and shares rise over a period of time whilst a bear market is when stocks fall over a period of time.

How many people were admitted to the hospital from starvation and when?

In 1931, 238 people were admitted to the hospital from starvation/malnutrition

How many farmers lost their farms?

A fifth of farmers lost their farms in 1932

How many companies went out of business?

In 1932, 20,000 companies went out of business

How did rural Americans suffer during the Depression?

Farmers had already been struggling. During the Depression, falling prices meant many couldn’t repay mortgages and lost their land. Many packed up and travelled to find work. Black farmers were often hit hardest, losing their land first.

What was hunger like in rural areas?

Children died from starvation and malnutrition. Even though food like wheat and fruit was available, farmers couldn’t afford to take it to market, so it rotted.

What was the Dust Bowl?

Over-farming and drought turned topsoil into dust. Strong winds whipped it into massive dust storms, destroying farms across the Great Plains. Farming became impossible, forcing many families to migrate west to California.

How did some farmers react when their houses were seized?

Some organized themselves to resist banks seizing their homes by grouping up with pitch forks and nooses to scare sheriffs off. Others barricaded the highways.

How did urban Americans suffer during the Depression?

With no welfare system, unemployed people had to scavenge or beg. In New York alone, 45 people died from malnutrition. Formerly booming cities became centres of desperation.

What were ‘Hoovervilles’?

With 13 million unemployed, many were forced into shanty towns made of scrap materials. These were sarcastically named "Hoovervilles" after President Hoover, who was blamed for inaction. One in St Louis housed over 1,000 people.

What were Hobos?

Hoe-boys, aka Hobos were men travelling around usually illegally on freight trains. Between 1 and 2 million men travelled desperately looking for work.

What was the phrase used to insult president Hoover?

“In Hoover we trusted, but now we are busted”

Did any industries profit during the Depression?

Some modern industries like film, radio, and aircraft thrived due to global demand. People who kept their jobs benefitted from lower prices and increased buying power.

What did Herbert Hoover believe in?

Rugged individualism, where it was not the government’s job to interfere with business. He was regarded as the ‘do nothing’ president

What did Herbert Hoover do to help the economy?

• Tax cuts worth $130 million — had little impact

• Hawley-Smoot Tariff (1930) raised tariffs to protect US industries but backfired. World trade dropped by 66% between 1929–1934, and US farmers couldn't export their goods.

What was the Hoover dam?

The Hoover dam was set up on the Colorado river, creating thousands of jobs but it was not enough to tackle the huge unemployment crisis over America.

What did Hoover do that failed as it wasn’t set in law?

He tried to encourage businesses to not cut wages or dismiss workers, but it failed as this was optional and not set in law.

How did Hoover try to help banks?

He set up the Reconstruction Finance Corporation, providing $2 billion in loans for failing banks and businesses, but it was not enough money to stop bank closures.

How did Hoover try to help farmers?

He tried to use the Federal Farm Board which used $500,000 to buy extra grain and cotton to stabilise prices, but food prices continued to drop due to overproduction and tariff wars against other countries.

What happened to the Bonus Marchers?

In June 1932, 40,000 protesters (incl. 17,000 WWI veterans) peacefully marched for early war bonus payments. After violence broke out, Hoover ordered in General MacArthur, who ignored instructions and used infantry, cavalry, and tanks to clear the camps. It caused national outrage and damaged Hoover’s reputation before the election.

How was Roosevelt different from Herbert?

Franklin D Roosevelt was a Democrat candidate, who believed in an “active government” to improve the lives of American citizens. W

What did Roosevelt promise?

He promised a New Deal, focusing on the 3 Rs: Recovery (of the financial system), Relief (for the unemployed and those in poverty) and Reform (of the financial system)

What experience did Roosevelt have previously

He was the Governor of New York, and his plans on spending public money to get people back to work had already been started there by persuading the state legislature to spend $20 million on helping the unemployed and introduced old age pensions.

What were the key traits of Roosevelt?

He was not afraid to ask for help, was optimistic and kept his message simple, radiated warmth and inspiring confidence.

What did Roosevelt do before the election?

He went on a train tour of the USA, attacking the attitude of Hoover and the Republicans. He made a 20,800km campaign trip, making 16 major speeches and 60 from the back of his train, promising a “New Deal”

How much did Roosevelt win by?

He won by 7 million votes