Mnemonic Learning XThe USA in Depression<br />What caused the depression in America?<br />
CRACK<br />C - Crash<br />R - Reserve<br />A - Annoyed by Tariff<br />C - Cycle of Depression<br />K - Kick to the poor<br />
C - Crash<br />The Wall Street crash of 1929 caused share prices to massively drop – not a massive problem in itself.<br />However the banks had loaned people money to buy shares and now they could not get their money back.<br />This meant that many banks went bankrupt, and half of US businesses was damaged, so the whole US economy suffered.<br />R - Reserve<br /><ul><li>US Federal Reserve – the American ‘Bank of England.
In 1931 the Reserve raised interest rates – which led to a reduction in the money supply. </li></li></ul><li>A – Annoyed by Tariffs<br />In 1930 the government passed the Smoot-Hawley Tariff – an even heavier tariff law. <br />Sixty countries passed retaliatory tariffs in response. This damaged US industry, especially agriculture.<br />C – Cycle of Depression<br /><ul><li>As more banks and companies failed, and people were put out of work, they had less to spend, and so more companies went bankrupt and made their workers unemployed etc.
Once the Depression had taken hold, it simply spiralled down worse and worse.</li></li></ul><li>K – Kick to the poor<br />There were some extremely rich people, and huge numbers of extremely poor people (40% of the population were living in poverty). <br />It wasn’t that there was too little money, but it wasn’t in the hands of the people who would spend it. Consequently, Americans produced too much and bought too little, and prices plummeted.<br />REMEMBER –<br />CRACK<br />What caused the Depression in the USA!<br />