The Great Depression

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  • The Great Depression
    • The Stock Market Crash
      • In the 1920s the US was the richest country in the world. This period was known as the 'Booming Twenties'.
      • The USA was loaning money to European countries to help them recover from WWI.
      • Wages had increased so Americans were able to buy new mass-produced goods.
      • People began borrowing money to buy shares in companies that were selling lots of goods.
      • However, by the end of the 1920s, companies began producing more goods than they were selling. They were no longer making as much money.
      • In 1929, the Stock Market crashed. People realised companies were no longer doing so well and rushed to sell their shares. Shares then fell in value and people and businesses lost a lot of money.
      • The Stock Market in the USA was based on Wall Street. This event became known as the Wall Street Crash. Businesses collapsed and thousands of people were ruined. The Great Depression would go on to effect more than just the US.
    • Impact on Other Countries
      • Due to the Wall Street Crash, America had to stop lending money to European countries.
      • This impacted industrial countries the most- banks failed, industries struggled and trade ground to a halt.
      • Within 3 years of the crash there were 2.5 million unemployed in Britain, and more than 30 million unemployed in industrial countries of the west.
      • Germany, which had been reliant on loans from the US to pay for the war, was badly affected.
    • Unemployed in Britain
      • Old industries such as coal, steel, and shipbuilding, were the worst affected industries.
      • These industries relied on old machinery and could not compete with other countries. Demand for their products also fell.
      • These industries were mainly based in Scotland, Wales and the North of England, so unemploymen-t in these areas was particularly high.
      • Newer industries creating things like cars and consumer goods were growing. These were mainly in the south of England so unemploymen-t was not as high.
    • British Government Response
      • The higher levels of unemploymen-t meant less people were paying taxes and more people were claiming benefits.
      • The government needed to balance the budget so they were not spending more than they were receiving.
      • By the end of 1931 the government had introduced measures that it hoped would boost the economy.
      • A 10% tax was placed on goods brought form outside the Empire to encourage British industry.
      • Income tax was increased to cover government spending.
      • The government made spending cuts. Public sector employees wages were cut by 10%
      • Unemployme-nt benefits were cut by 10% and means testing introduced.
    • 'Life on the Dole'
      • Dole payments for a family of four were not as sufficient as a men's ages.
      • Many families did not have enough money to buy enough food. Eggs and meat became a luxury. The basic diet was bread, jam and tea.
      • This led to high levels of unfit because of bad diet. Malnutrition was widespread.
      • Many children suffered from diseases such as bronchitis, tuberculosis and rickets. Death rates in children increased.
      • Many families could not afford new clothing.
    • The Means Test
      • The Means Test was a new way of deciding how much money people could claim on the dole.
      • Inspectors were sent to families homes to see how much money they had. The amount of money they received was based on the results of the means test.
      • The dole was cut if anyone in the family was working or had a pension. This included children.
      • Many families were told to spend their savings or sell possessions before they were entitled to the dole.
      • Very unpopular with the public.


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