Studied by 5 people
overproduction in industry
overproduction in agriculture
fall in trade
falling demand for consumer goods
by late 1920s US market is saturated by unsold consumer goods
the supply of goods outstripped the demand
manufacturers did not cut back on production and continued to flood the market
by mid 1920s new farming techniques meant overproduction of farming goods
recovery of European markets meant that US farmers were exporting less
US market did not soak up this excess produce so prices were cut
many farmers put out of business
late 1920s, US struggling to sell goods to Europe
Fordney Mc-Cumber Tariff of 1922 increased custom duties on foreign exports to encourage Americans to buy American goods; tariffs caused foreign countries to tax US goods more highly in response
European countries cannot pay back US loans and debts to US banks
wealth in US society was unevenly distributed
poor people could not buy consumer goods
the people who could afford to buy cars, for example, had already purchased these goods and had no need for them, but 60% of Americans were not part of that minority
this meant that the supply was far greater than the demand
companies ignored this and continued to overproduce
companies could not sell their leftovers to Europe as Europe was struggling to pay back US loans and high tariffs on foreign goods
foreign governments did the same for American goods, causing them to lose their foreign market
rise of stock market speculation
loss of confidence
Wall St. Crash
banks had allowed many customers to borrow money on the premise that it would be invested into the stock market âon the marginâ
inexperienced ordinary people saw a chance to get rich quick by putting their money into the stock market, waiting for profits to rise, and selling at a higher price
problem with this is that the price of shares will not continue to rise exponentially and as such, a crash was inevitable
value of shares continued to rise even though consumer demand was falling causing US business to be horrendously overvalued
Those who had bought stocks on margin not only lost the value of their investment, they also owed money to the people who loaned them money for their stock purchases
as people failed to pay their loans due to the crash, banks began to call in other loans for repayment to prevent the banks from bankruptcy
little government help from Hoover who believed that prosperity was âjust around the corner
by autumn of 1929, those who understood economics well and were able to see flaws in the financial system became nervous enough to start selling shares
this started a virtual epidemic in terms of loss of confidence and cause people to sell shares in masses
October 29th 1929, the US stock market, the entire economy tanked, causing millions of people to lose billions of dollars within the hour
October 24th (Black Thursday) : 13 million shares sold
October 29th (Black Tuesday) : 16 million shares sold
The economy had boomed during the 1920s
Many consumer items had sold well in the 1920s
Share prices kept rising throughout the 1920s
Speculators had made huge profits
Investors did not realise the economy was slowing down
An attitude of âyou couldnât loseâ on the stock market.
banks
unemployment
5000 banks closed in the first 3 years of the great depression
customers unable to withdraw money as banks shut down
other banks forced to close as customers withdrew all savings
just like the consumers, businesses whoâs loans needed repayment were unable to pay, this created a vicious cycle
companies close â unemployment rises â companies cannot repay banks â companies close â unemployment rises â people have less income â people spend less
massive loss of confidence
unemployment in 1930: 4.3 m, 9% of workforce
unemployment in 1932: 12m, 24% of workforce
No support system for the unemployed
big cities
rural communities
hoovervilles
the rich
farmers
as unemployment rose, many people couldnât make payments to keep their homes,
this created so called âhoovervillesâ which were shanty towns on the edges of big cities where the homeless lived
massive unemployment lead to a huge rise in the number of people travelling to find work across the country, risking their lives by hitching on long-distance trains
in 1932, about 2m hobos left their lives behind to travel in search of work
USA had no welfare system (providing basic economic security for its citizens), this worsened the effects of the depression
in 1930, a rally of the unemployed turned into a riot as police charged the crowd
workers in employment were sick of the starvation level wages they were paid
this led to strikes and bitter clashes
shanty towns on the outskirts of big cities
residents searched for scrap metal and cardboard to reinforce their homes
some would resort to begging in the town
they were dependent on soup kitchens and scavenging rubbish dumps for scraps of food
they waited for the charity organisations to bring food and clothing
suffered less on average than ordinary people
the wealthy had lots of wealth stored in assets such as property and gold which were relatively unaffected by the depression
wealthy opportunists went as far as buying recently foreclosed homes of those who lost everything in the crash
the demand for produce was lower than ever and prices of crops fell further
in oregon, farmers killed thousands of sheep because the price that they would buy them at the market was less than it would cost to transport them there
wheat and fruit was allowed to rot
resistance in rural areas against authorities
caused massive migration of agricultural workers to urban areas
black and immigrant farm labourers were hit hardest
many young and elderly died of malnutrition and starvation;
impact of Depression made worse by Dust Bowl in Midwest and Southern states
by 1930s a lot of land was overfarmed and infertile
a series of hot summers and no rain turned the soil into dust
the wind created sand storms which smothered everything in sight
over 20 million hectares of land became desert, thousands of farms were ruined
migrants from Oklahoma
coming to California looking for work
people who were made poor by the Dust Bowl
They worked on large farms in California and lived in shanty towns
25k veterans demanded war pensions marched in Washington 1932
peaceful protest, yet Hoover regarded it as a threat to the government, and a potential communist uprising
Hoover asked the army to clear the bonus marchers
the army burned the camp and used machine guns, tanks and tear gas
2 veterans killed, 1 thousand injured, 1 child killed
made Hoover appear unsympathetic and indifferent to the suffering in the Depression
Herbert Hoover pioneered a policy of ârugged individualismâ, which was the belief that the might of the US general public could work their way out of economic hardship independently, without government intervention
laissez faire: the government wouldnât interfere with the economy
lack of government money for schemes and Farm Board so they remained ineffective on the whole
voluntarism: relied on charities and state governments (which had a lack of funds) to provide relief for the hungry and homeless
this made Hoover look uncaring, making him a pretty unpopular and unlikely candidate for the November 1932 election
Hoover did realise federal government needed to act when the Depression worsened
government schemes provided nearly $500million for building programmes to create jobs
e.g Hoover Dam
Reconstruction Finance Corporation in 1932 provided loans amounting to $1.5billion to businesses to help them recover
The farm board: brought surplus farm produce to keep the prices up, although this was ineffective
Note 
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