June 2014 2-04: How far were Republican policies during the 1920s responsible for the Wall Street Crash? [24 marks]

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Created on: 16-02-16 15:34


	How far were Republican policies during the 1920s responsible for the Wall Street Crash? [24 marks]
	Advantages Laissez faire policy - successive Republicans failed to regulate the financial system. There were, for example, no effective controls on credit or practices in the stock market that pushed the value of shares up in order to attract speculators. Republican trade policies promoted protectionism - taxes and tariffs on imported goods. Ultimately this weakened US industries because they were unable to sell their goods abroad in the face of import restrictions. This began to lead to overproduction which served to damage the value of companies. Republican laissez faire policies enabled mass speculation on the stock market to continue. This, in turn, pushed the price of shares up artificially.	Disadvantages Advertising encouraged buying but the money spent was often borrowed. Therefore the economic foundations of the US economy were fragile because they were based on excessive borrowing. Speculation became almost a national commitment. It was possible for speculators to buy ‘on the margin’. It was, for example, possible for someone to buy $1000 of shares with $100, borrow the rest, sell at a profit and then pay back the original loan and any interest. This buying ‘on the margin’ was another factor of uncontrolled borrowing and credit. When the financial collapse began attempts were made by some of the big finance houses and banks to revive confidence through share buying. These attempts failed and nothing could stop the momentum of the collapse. Production methods such as the assembly line, created cheap products but the demand eventually slowed. Banks used their customers’ money to speculate on the stock market. This, initially, inflated the value of shares to unrealistic levels.
	Evaluation It was the lack of government intervention over a sustained period that led to the crash. Equally, they may argue that there were systemic faults in the US economy and by 1929 it was too late to address these effectively. Nothing the government could have done would have redressed these inherent weaknesses.

How far were Republican policies during the 1920s responsible for the Wall Street Crash? [24 marks]

Advantages

Laissez faire policy - successive Republicans failed to regulate the financial system. There were, for example, no effective controls on credit or practices in the stock market that pushed the value of shares up in order to attract speculators.
Republican trade policies promoted protectionism - taxes and tariffs on imported goods. Ultimately this weakened US industries because they were unable to sell their goods abroad in the face of import restrictions. This began to lead to overproduction which served to damage the value of companies.
Republican laissez faire policies enabled mass speculation on the stock market to continue. This, in turn, pushed the price of shares up artificially.

Disadvantages

Advertising encouraged buying but the money spent was often borrowed. Therefore the economic foundations of the US economy were fragile because they were based on excessive borrowing.
Speculation became almost a national commitment. It was possible for speculators to buy ‘on the margin’. It was, for example, possible for someone to buy $1000 of shares with $100, borrow the rest, sell at a profit and then pay back the original loan and any interest. This buying ‘on the margin’ was another factor of uncontrolled borrowing and credit.
When the financial collapse began attempts were made by some of the big finance houses and banks to revive confidence through share buying. These attempts failed and nothing could stop the momentum of the collapse.
Production methods such as the assembly line, created cheap products but the demand eventually slowed.
Banks used their customers’ money to speculate on the stock market. This, initially, inflated the value of shares to unrealistic levels.

Evaluation

It was the lack of government intervention over a sustained period that led to the crash. Equally, they may argue that there were systemic faults in the US economy and by 1929 it was too late to address these effectively. Nothing the government could have done would have redressed these inherent weaknesses.

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June 2014 2-04: How far were Republican policies during the 1920s responsible for the Wall Street Crash? [24 marks]

How far were Republican policies during the 1920s responsible for the Wall Street Crash? [24 marks]

Advantages

Disadvantages

Evaluation

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