History - Wall street crash and Consequences

History 2024

How did failing industries lead to the WSC?

Decline in traditional trades since 1926 such as coal, textiles and especially farming. This led to a 40% decrease in construction projects between 1928 and 1933, leading to higher unemployment levels, meaning that there was less disposable income and therefore consumption of goods. Less consumption = less profits from companies = more layoffs, which further contributed to the number of unemployment.

How did overproduction lead to the WSC?

Overproduction led to a lower demand, lowering prices and profits which resulted in people losing their jobs, further increasing the number of unemployment.

How did speculation of stock market lead to the WSC?

Over 20 million Americans gambled their money on stocks, investing riskily. By borrowing money from banks and buying stocks with it, they hoped to gain a profit and pay off the debt. This was risky and unsustainable, as it created artificial prices that were not the real value of companies, meaning that if stocks lowered in prices, banks would suffer too as normal Americans would not be able to pay off the debt.

How did a panic cause the WSC

After signs of weaknesses in the economy started appearing, investors began to sell mass amounts of stocks which caused the market to plummet. This created a domino effect where other less experienced investors soon followed and tried to get rid of their own shares, leading to many bankruptcies.

How were banks involved in the WSC?

Over 4000 banks closed in 1933, and a total of 9000 throughout the 30’s. This led to a distrust in banks, and people started to withdraw their money and keep only physical currency. This meant that banks would not be able to return money/make money off of interest from loaners, causing more bankruptcies.

How much money was withdrawn in total?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, American companies spent $3 billion on magazine advertising in hopes of more people spending money. However, wages were not rising and products weren’t getting cheaper so demand further fell.

When and how many percentage of industrial and farm industries fall?

Between 1928 and 1933, profits fell by 40% and wages 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 people in the countryside suffer from the depression?

Agricultural areas were hit the hardest due to already decreasing profits in the 1920’s. Many farmers were unable to pay their mortgages, and most had to pack their belongings and live on the road, finding work where they could. Black neighbours lost their land and farms first.

How was hunger like in the countryside during the Great Depression?

Children fell ill and died from malnutrition and starvation, despite there being wheat and fruit and animals being left to rot as the farmers could not afford to take them to the market.W

What was the dustbowl?

Over-farming and drought caused the topsoil to turn into dust, and when whipped up by the wind it created an area known as the dustbowl. This damaged the ecology and agriculture of prairies during the 1930’s, leaving everything covered in dust. This caused farming to be virtually impossible, and many farmers were forced to move 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 people in towns suffer from the Great Depression?

As America had no Welfare State (where government helps) many unemployed Americans were left to search through rubbish dumps or beg. Many people suffered from starvation, and 45 people died in New York (once booming) due to malnutrition.

What were ‘Hoovervilles’?

As numbers of unemployed rose to 13 million, many people lived in primitive conditions close to famine. In St Louis, more than 1,000 people lived in shacks made from scrap metal and boxes. Homeless people went to live in shanty towns called Hoovervilles (as an insult to Hoover).

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”

How did some industries profit during the Great Depression?

New industries such as films, electronics and airplanes continued to expand and pay high wages due to global demands. Many people who managed to keep their jobs were better off as prices were lower now.

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

How did Herbert Hoover try to help the economy?

Hoover introduced tax cuts which reduced the amount of tax by around $130 million, but it did little to restore confidence and consumer spending. He also introduced the Hawley-Smoot act in 1930 which introduced further tariffs, but only strangled the American economy more as farmers were unable to sell their products and world trade decreased by 66% between 1929 and 1934

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 and what were they?

In June 1932, 40,000 protestors (including 17,000 WWI veterans) protested peacefully, demanding for their war bonuses be paid early. Hoover sent police to deal with the demonstrations at first, but two people were injured by gunfire in the fight that followed. He then ordered General Douglas MacArthur who believed that the demonstration was organized by communist agitators. He ignored Hoover’s instructions to be respectful and sent in infantry, cavalry and 6 tanks to clear the camp. This was disastrous for Hoover, as the presedential election was coming up.

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