HISTORY
THE WORLD BETWEEN THE WARS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Economy as a whole was doing very well; higher wages meant people had more money to spend on new products.
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Mass production of items made them cheaper, so they were available to more people to purchase.
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Many new inventions made life easier (cars, telephones, electronics), so people would go into debt by purchasing them on credit.
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Banks had lent out so much money that they couldn’t pay people back when the stock market crashed, wiping out the banks (more in the US than in Canada).
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Detailed explanation-1: -When a bank failed the depositors were simply left without a penny. The life savings of millions of Americans were wiped out by the bank failures.
Detailed explanation-2: -Many banks failed due to their dwindling cash reserves. This was in part due to the Federal Reserve lowering the limits of cash reserves that banks were traditionally required to hold in their vaults, as well as the fact that many banks invested in the stock market themselves.
Detailed explanation-3: -After the crash during the first 10 months of 1930, 744 banks failed – 10 times as many. In all, 9, 000 banks failed during the decade of the 30s. It’s estimated that 4, 000 banks failed during the one year of 1933 alone. By 1933, depositors saw $140 billion disappear through bank failures.
Detailed explanation-4: -Many banks fail, many because they have made loans to stock market speculators that are never repaid. As the Depression eases into a national emergency, reaching its height between 1932 and 1933, the U.S. government establishes several agencies as a means for discharging new and emergency functions.
Detailed explanation-5: -Answer: “ Bankruptcy of farmers” showed that the “economy” was weaker than the “stock market” indicated during the “1920s".