USA

Long term causes:

WEAKNESSES IN THE US ECONOMY

• Overproduction in agriculture  = driving prices down
• Overproduction of consumer goods = driving prices down
• Inequality= rice were very rich & poor were very poor
• Foreign competition= reducing demand for American goods
• The boom of the 1920s was largely based on an increased sale of consumer goods

Short term causes:

RELATED TO SHARES

• Speculation: many ppl bought & sold shares to make quick profits instead of keeping their $ invested for some time
• Companies forced by shareholders to pay out profits to shareholders rather than reinvesting them
• Americans borrowed $ on credit to buy their shares

The American people's share dealings depended on confidence that share prices would continue to rise

Sept 1929: Prices of shares started to come down slowly at first

Banks

• 1929: 600 Banks failed
• 1930: Another 1000+ banks failed
• Around 11,000 banks stopped trading between 1929-1933

Eg: Bank of US: failed (1930) > had 400,000 depositors 

As banks started failing, people stopped trusting them & withdrew their savings 

People

• Many were bankrupt - could not pay back the loans for the shares they bought
• Some lost their homes because they could not pay their mortgages 
• Some who had savings lost their $ when banks collapsed 
• Farms suffered as banks tried to get back their loans
• Workers faced reduced hours + wages/ unemployment > by 1933 14 million unemployed
• Between 1929-1933 industrial & farm production fell by 40% & average wages by 60%

Americans kept their $ instead of buying goods/shares & confidence of people was shattered

• Most Americans blamed president Hoover for the crash, partly bc of his govt's inaction in tackling the problem
• Hoover insisted that prosperity was "just around the corner"

Hoover tries to help

• Set up Reconstruction Finance Corporation (RFC) 
  • Lent $ to banks, industries & agriculture 

• Tried to restarted the economy in 1930 + 1931 by tax cuts

• Tried to persuade business leaders not to cut wages

• Tried to protect US industries by introducing tariffs 
  • However this strangled international trade & made the depression worse

• Blocked the Garner-Wagner relief bill 
  • Would have allowed Congress to provide $2.1 Billion to create jobs

• Was reluctant to change the basic Republican policies

• Believed in 'Rugged Individualism'
  • Believed that social security was not the responsibility of the govt. 
  • Showed little sympathy for poor, starving Americans living in shanty towns called 'Hoovervilles'

1. Isolation - USA not to get involved in foreign wars/disputes 

2. Tariffs - Placed on foreign goods> made them expensive in the USA

3. Low taxes - Helped businesses to grow and gave workers money to spend

4. Laissez- Faire : The belief that govt's should interfere as little as possible in the everyday lives of the people