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Unit 5: Controversy: the coming of the
Slump and the depression, 192933
The structural weakness in the US economy of the 1920s
The reasons for the stock market Crash of 1929 and its impact Did it
cause the depression?
The Banking Crisis Why were so many US banks vulnerable?

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smallscale tenant farmers and sharecroppers of the old south were
facing economic oblivion.
o Serious banking crisis= there were too many small banks. Those tied
into the depressed rural economy were particularly vulnerable.
o US policy of protection by raising tariffs, intensified in 1930, hit
international trade.
o US government…

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o Farmers did not benefit from the 20s boom, but did benefit from the
demand for agricultural produce during the First World War.
o During the 20s, investment in new equipment= left many farmers with high
levels of debt. Debt level= $3.2 million in 1910, rose to $8.4 billion in…

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o Increased consumer demand had not been universal in the 20s end of
the decade= 16 million families lived below the line which had been
calculated as `sufficient to supply only basic necessities'
o Most historians agree that the depressed agricultural sector was a factor
in the slump, but they…

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o The collapse= required a trigger and was provided by the collapse of the
financial empire built by Clarence Hatry.
o Many British investors liquidated their stock holdings. A pattern of selling
began to emerge and the immediate dip did not cause general alarm.
o Big Bull Market= warning signs…

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were slow to react to the speculative mania of 1928 and 1929, by curbing
money supply 1930 onwards.
o Controversy surrounding their role in the speculative mania of 192729=
some critics point this failure as a contribution to the crash, due to their
actions to control the frenzied buying ineffective.…

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The Role of Herbert Hoover
o Seen as a tragic political figure criticised by both left and right for his
handling of the economic crisis.
o He lacked political experience and many commentators identified
personal weaknesses in him.
o He had a stubborn belief in his own correctness and an…

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o President tried to tackle banking crisis by establishing National Credit
Corporation in October 1931. Capital fund of $500million was
o Outcome of measure= fell short of expectations. Revenue available was
controlled by a group of ultraconservative bankers who only spent 10
million dollars of the available fund. Banks=not…

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o International dimension
o Responses of the federal government.
o Most historians agree= on the weakness of the banking system but the
role of both the Great crash of October 1929 and of the responses of
Hoover presidency has attracted much debate and differing interpretations


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