Why was the depression so deep & last so long
The Depresseion & why it lasted so long
- Created by: Dracupine
- Created on: 15-05-13 08:06
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- Why was the depression so deep & last so long
- Nature of American business
- aldistribution of wealth
- Didn't take over other countries & should have to lesson depression
- Over production (especially farmers)
- "The capacity to produce out ran the capacity to consume" Joshua Freeman
- 1/3 of banks part of Federal Reserve Board & therefore used 'On the marjin' an unhealthy practice
- Extent of the Depression
- 1929- alone 659 banks failed
- $200mill of deposits lost
- GNP down
- 1929- $103 billion
- 1933- $55 billion
- Unemployment
- 1929- 3%
- 1933- 25%
- Everyone suffered
- North, East, West & South
- As whole of US suffered = lo Depression
- Agricultural cities...
- New & old businesses
- 1929- alone 659 banks failed
- Monetarist Theory
- reserve banks limited the amount of $ in cirulation
- People had less to spend & tried to save, meaning less bought= less in circulation
- Federal Gov. did nothing to regulate run away bill markets through Federal Reserve Banks
- As Federal Reserve Banks lacked regulatory powers such as control of credit. Do Not Use 3 Powers Enough
- Moral Relationship
- Raising interest rates
- Sale of Gov. securities
- As Federal Reserve Banks lacked regulatory powers such as control of credit. Do Not Use 3 Powers Enough
- Insufficient Gov. Intervention
- Should have increased tax on rich to equal income= increase revenue to increase employment
- Did freeze wages for a while & gave food stamps to 14,000 unemployed
- (Rugged Individualism) Volantary ism
- Effort instead of Gov. hoped to work. BUT Depression too severe. Businesses needed to dock wages & employees
- Hoover should have lowered taxes
- Keynes
- 'Deficit Financing'
- Introduced work schemes
- Keynes
- David. H. Kennedy
- Argued US should have abandoned Gold & lent $ to US (Hoover should have)
- Only 13 banks were under jurisdiction of the Federal Reserve Banks
- Foreign Economic Crisis
- WW1 & Treaty of Versailles resulted in severe problems for Europe
- hoover believe this to be the prime cause
- England abandoned Gold. Bad for US
- US did not devalue dollar & should have
- Many countries raised tariff thus reducing US external trade
- Much of Europe loaned dollar off of US stock market. Collapse meant US wanted $ back worsening situation effecting US & Europe.
- Hoover
- The Veterans bonus march Hoover's greatest blunder
- Anacostia flats destroyed as 3,000/15 thousand refused to leave
- Worked long hours & docked 20% off pay fr US, but not enough
- Lack of purchasing power strifled economy & led to Depression
- Believed that Europe's having no purchasing powers was reason for US Depression
- The Veterans bonus march Hoover's greatest blunder
- Nature of American business
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