unit 5 controversy coming of the slump and depression

HideShow resource information
  • Created by: Emmy sale
  • Created on: 10-06-15 19:08
Preview of unit 5 controversy coming of the slump and depression

First 374 words of the document:

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?
The international dimension 193139
The response of Hoover and Federal Government too little or too much?
How and why the USA moved from slump into depression and the
reasons why it lasted so long.
How and why have historians' interpretations of the causes of the
depression differed?
Key Events
1929 October Great crash in share values
3.2% unemployed
1930 June HawleySmoot Tariff damages international trade
NovDec Major Banking Crisis, 8.7% unemployed
1931 Summer International banking crisis develops
September Great Britain leaves Gold Standard
October= 522 US banks collapse and 15.9% unemployed
1932 January Reconstruction Finance Corporation established Big
increase in taxes to cut large Federal deficit
November Roosevelt defeats Hoover in Presidential election
23.6% unemployed
1933 Roosevelt takes over from Hoover 24.9% unemployed.
Nature of the crash and Depression and differing interpretations
o The economic crisis of 192933 is the subject of massive controversy
because of its initial causes and it longevity.
o For most Americans experienced related unfortunate development=
rising unemployment and banks collapsing.
o Unemployed= went from 1.5 million to over 12 millions between 1929
and 1932.
o 19291932 20% of banks collapsed bringing ruin to those unlucky
enough to have their savings invested therein.
o Unemployment did not return to the 1929 level until 1943.
o Complex interplay of factors:
o Simply a healthy correction to an overheated economy. Overheated
because production had simply outstripped demand as technology
produced a flood a goods. Demands of the market simply could not
keep up with the amount of goods being produced.
o Stock market fall of 1929 was also a healthy correction to a share
market, which had risen well beyond sensible values the assets and
income of companies simply did not warrant such high prices.
o US economy, notably agriculture, were over manned and
economically rotten= an economic shakeout was inevitable and

Other pages in this set

Page 2

Preview of page 2

Here's a taster:

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 policy= somewhat got it wrong. To some the Hoover
administration of 192933 did too little too late. To others, he did too
much, undermining business confidence, stopping wages falling and
pursuing a tight money policy at the wrong time.…read more

Page 3

Preview of page 3

Here's a taster:

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
o 20s= period of overproduction as European agriculture recovered. Put
smaller farmers under intense pressure. Costs of production could not
compete with large operators who were able to afford in technology.…read more

Page 4

Preview of page 4

Here's a taster:

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 also stress the uneven share in the prosperity of
wages and profits. Wages= did not rise fast enough, to enable workers to
be adequate consumers of the plethora of goods produced.…read more

Page 5

Preview of page 5

Here's a taster:

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 were there two weeks before, where
stocks dipped by 20%. Wednesday 23rd =turning point, slippage in stock
market turned into avalanche.…read more

Page 6

Preview of page 6

Here's a taster:

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.
o During the great stock market boom 192729, the federal reserve=
primarily concerned with defending the restored international Gold
Standard and this meant protecting the pound sterling by keeping
interests rates low in the US to avoid attracting too much gold from
London.…read more

Page 7

Preview of page 7

Here's a taster:

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 inflexible
conviction that voluntarism would be enough to revive the situation.…read more

Page 8

Preview of page 8

Here's a taster:

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 saved.
o Hoover= opposed to direct federal aid to individuals, but exceptional
droughts put this to the test.
o Crisis in Arkansas= crops withered and livestock died from starvation
confronted authorities with social and economic problem.…read more

Page 9

Preview of page 9

Here's a taster:

International dimension
o Responses of the federal government.…read more


No comments have yet been made

Similar History resources:

See all History resources »See all resources »