1. On October 29, 1929, there was a massive crash of the US stock market known as the Wall Street Crash. 2. The crash was caused by underlying weaknesses in the US economy in the 1920s including overproduction, unequal wealth distribution, and uncontrolled speculation. 3. The crash led to the Great Depression by destroying confidence in the banking system and wiping out individual savings, which then caused widespread unemployment and hardship.

1. 1. What happened in Wall Street in Oct 29 th . 1929 2. WHY DID THE WALL STREET CRASH HAPPEN ? – BECAUSE OF WEAKNESSES IN THE 1920’s ECONOMY (a) Market Saturation and Tariff Barriers (b) Unequal distribution of income (c) Blind faith in the Bull Market driving up stock prices (d) Lack of government regulation meant Banks were able to speculate speculating with deposits 3. WHY DID THE GREAT DEPRESSION AFTER 1929 HAPPEN ? The roots of the Depression lay in the 1920’s (a) Farming was already Depressed in the 1920’s – Why? (b) Workers in older industries were poor – Why? (b) Market saturation meant Unemployment was rising after 1928 as profits started to fall The Depression was caused by the Wall Street Crash (a) It destroyed the Banking system – so business (b) It wiped out savings and confidence The Depression was caused by the policies of President Hoover (a) Rugged individualism / self help (b) Smoot Hawley Tariff (c) Failure of the RFC The ONE potential essay questions that could be asked in Paper 1 on the Crash and Depression Why did the Great Depression happen ? Case A – Weaknesses in the 1920’s economy Case B –The impact of the Wall Street Crash Case C – The policies of President Hoover THE GREAT CRASH and THE GREAT DEPRESSION What you need to know on this topic

3. DID THE CRASH HELP CAUSE THE GREAT DEPRESSION? Millions of shareholders were ruined. They had borrowed money to buy their stock “on margin” hoping to pay the loan back when prices rose. Now they had to find the money to pay off their creditor – banks / credit companies - so had to sell what they had – cars or houses at knock down prices to anyone able to buy!! – not many As the small shareholders went to their banks to get money from their savings to pay off their creditors – they found the banks shut – BANKRUPT – BUST – why? YES - Shareholders were ruined YES - It destroyed the Banking system Many Banks had speculated with depositors money too in the Stock Market and lost it because of the Crash. Too many were did not have enough funds behind them – The Federal Reserve had not bothered to make sure of this in the laissez faire 1920’s

4. AND THIS BANKING COLLAPSE CAUSED MASS UNEMPLOYMENT…. # Thousands of Banks collapsed because of the Great Crash. # People had no money to deposit in banks – and those who did have money held on to it – putting it into a bank was risky! # Banks ran out of money – many of them had played the market! # So businesses could not get loans / financial services to keep going during the Depression – thousands of bankruptcies resulted

6. FARMERS COULD NOT SELL FOOD – PEOPLE HAD NO MONEY TO BUY Between 1929-1932 almost ½ million farmers lost their land # The Bank failures across the country meant thousands of farmers LOST the SAVINGS they had. # Their INCOME COLLAPSED for lack of demand for food. #Many farmers had RUN up DEBTS in the 1920’s – the few banks in existence in rural areas called these loans in – bankrupting the farmer BUT MANY FARMERS FACED OTHER PROBLEMS NOT TO DO WITH THE CRASH BUT IN THE COUNTRYSIDE AS WELL

11. DID THE ACTIONS OF PRESIDENT HOOVER CAUSE THE GREAT DEPRESSION? YES and NO – The Reconstruction Finance Corporation ( RFC ) Hoover set up helped a bit # Hoover was attacked by some laissez faire Republicans for setting up the RFC because it smelled too much like state intervention in private business ( as this cartoon suggests ) # The RFC gave LOANS to the banks mainly to help them keep open which was good. It was as far as Hoover was prepared to go in terms of state intervention BUT THE PROBLEM WITH THE RFC WAS ….. # People saw these as handouts to business while millions of ordinary people were suffering – it seemed that rugged individualism did not apply to business. # The loans given were small and did little to really help YES – Hoover’s attitude to the Bonus Marchers showed how out of touch he was with people 3,000 unemployed and poor World War 1 veterans marched on Washington to ask for an early payment of bonuses due to be paid to them in 1945. Troops and police were used by Hoover to clear their Hooverville just outside Washington – the excuse used that they were communists out to bring down the government. A shameful episode but it made people hate Hoover

12. Many Americans hated Hoover, and the bitterness directed towards him showed how they wanted a scapegoat “ We were heroes in 1917 said one veteran bitterly, but we’re bums now” – A Bonus Marcher "I see nothing in the present situation that is either menacing or warrants pessimism... I have every confidence that there will be a revival of activity in the spring, and that during this coming year the country will make steady progress.“ – Andrew Mellon, U.S. Treasury Secretary December 31, 1929 "I am convinced that through these measures we have reestablished confidence.“ Hoover, December 1929 “ Why don’t they make him quit, He’s not doing himself or the party any good. It’s turning into a farce. He is tired physically and mentally” - A Republican Senator about Hoover in the 1932 election. “ Give me a lift or I’ll vote for Hoover” – A sign held by a hitcher during the 1932 election