3. USA, 1918-1968
5 essays to learn BUT only
1 to write in the exam
General Introduction:
During the 1920s there was a prolonged boom in the
American economy: Industrial production doubled, the
economy grew rapidly and fortunes were made
Life had never seemed better for the majority of the
American people
However on Thursday, 24th October 1929 share prices on
the New York Stock Exchange on Wall Street fell faster
and lower than before
By the end of the day, $4 billion had been wiped off the
value of shares
The crisis continued until ‘Black Tuesday’ 29th October
when share prices fell by a further $14 billion
WHY???
Issue 3
An Evaluation Of The Reasons For The Economic
Crisis 1929-33:
Factor 1: Republican Governments
Policies
Factor 2: Overproduction &
Under-consumption
Factor 3: Weaknesses Of The
Banking System
Factor 4: International Economic
Problems
Factor 5: Wall Street Crash
AIMS OF
ESSAY:
To Be Able To
Discuss the
factors which
contributed to
the economic
(financial) crisis
in American
between 1929 &
1933
PAST EXAM QUESTIONS
• How far can the Wall Street Crash of 1929 be
blamed for the economic crisis of 1929–1933 in
America? (FACTOR 5 – old higher 2015)
• To what extent was the saturation of the US
market to blame for the economic crisis of
1929–1933? (FACTOR 2 - 2014)
• “The weakness of the US banking system was
the main reason for causing the Great
Depression of the 1930s.” How accurate is this
statement? (FACTOR 3 - 2011)
How Bad Was This Crisis?
Unemployment Rose From 3.2% In 1929
To 25.2% By 1933. This Meant That
Nearly 13 Million Were Out Of Work.
20,000 companies went bankrupt
Marchers south
on Broadway:
typical scene
reflecting large
population of
unemployed in
desperate need
of work and
looking for jobs.
(Circa 1935)
Other sources say ONE THIRD of
the workforce was unemployed
"Runs on Banks": people milling about
outside of bank. (Circa 1933)
Banks could not meet depositors’
demands for their money
Old people were deprived of their
pensions and robbed of their savings
10,000 banks closed between
1929 and 1933
Long line of people waiting to be fed
in the absence of substantial
government relief programs during
1932, free food was distributed with
private funds in some urban centres
to large numbers of the unemployed
Unemployed men eating in
Volunteers of America
Soup Kitchen in
Washington, D.C. (Circa
June 1936)
Homelessness
Arkansas squatter for three
years in California near
Bakefield, California. (Circa
1935)
Many Americans defaulted on
mortgages and so their homes were
repossessed.
An enduring image of the Great
Depression:
Destitute pea pickers in
California. Mother of seven
children. (Circa February 1936)
During the Great
Depression, people went
hungry in one of the
richest food producing
countries in the world.
Ill health due to
inadequate healthcare,
poor diet and malnutrition
became common.
Suicide rate rose and
families broke up under
the pressure of trying to
survive.
Families on the road with
all their possessions
packed into their trucks,
migrating and looking for
work. (Circa 1935)
1. REPUBLICAN
ECONOMIC POLICIES……
This didn’t help poor
This led to a saturated market
HIGH TARIFFS
Had a detrimental effect on
trade.
Countries retaliated by not
buying US goods
FORDNEY MCCUMBER ACT
All countries apart from GB
placed tariffs on imported
from the US
Govt failed to regulate
banking practice
Only 1/3 of all banks were
under the jurisdiction of the
Federal Reserve Board
TAX REDUCTIONS
They couldn’t afford to buy
goods
DEREGULATION
DEREGULATION
Govt deregulation meant both the EUROPE IN DEBT
banks and stock exchange were They used tariffs
insufficiently regulated.
on imported good to
This had negative effects and led raise funds
many to invest in speculative
business ventures
LOW LEVELS OF CAPITAL
GAINS TAX
This encouraged unprecedented
speculation as many wealthy
Americans had disposable income.
Lack of regulation led to a
system made up of 100s of
small state banks
No one was checking levels
of lending!
Banks were lending to those
investing in dodgy ventures
eg the Florida Land Boom
and the Bull Market (stock
exchange)
4.
International
Problems
3. Weaknesses of Banking
System
2. Under consumption
Speculation in
and Overproduction Stocks and Shares