5.2: USA 1930s: Depression and New Deal Flashcards
-Causes of the crash in 1929
speculation, overproduction, Hoover
causes of the crash: speculation
Only interested in short-term profit, not long-term investment
1929: US bank lent $9 billion to speculators
System relied on confidence, but investors believed they could see weaknesses
Some started selling shares, causing panic & people sold shares for any price possible
In four trading days, market lost nearly half its value: Wall Street Crash
Black Tuesday: 29th October 1929
causes of the crash: overproduction
Lack of demand for long term products like cars, tvs, radios… people only needed one
May rural areas couldn’t afford these good anyways
Protective Tariffs made it impossible to sell goods overseas
causes of the crash: Hoover
Believed in Laissez Faire but cut taxed to encourage people to buy more goods
Mid 1931, production was rising again but the crash had destroyed confidence
1929-1931: approx. 4300 banks failed, causing mistrust and withdrawals of savings
Hoover refused to even accept there was a problem
Prosperity ‘just around the corner’, ‘in hoover we trusted and now we are busted’
Tried to persuade business leaders not to cut wages- leads to lower spending and demand
Set up Reconstruction Finance Company which propped up banks
Put money into public work programmes like Hoover Dam on Colorado River-these failed
1932: Revenue Act- largest peacetime tax rise in US ever, doubled rate of tax for richest 1%
-effects of the crash
countryside, towns, attitudes to poverty
effects of the crash: countryside
People were hit hard despite not experiencing benefits of the boom
Farm income fell and thousands couldn’t pay mortgages and went bankrupt
Total farm income slipped to just $5 billion
Some farmers resisted and scared off any Sheriffs with pitchforks
Many were forced to leave homes and become migrants, AAs often were worse off
Over farming and drought (southern &Midwest 1930s), turned topsoil to dust
Winds created dust storms and large areas turned into ‘dustbowls’
Many faced hunger and malnutrition
effects of the crash: towns
Unemployment rose rapidly: Toledo, 80% were unemployed
Forced to sell homes and thousands were taken in by family but rest were on streets
1932: approx. 2 million men travelled by railway/wagons seeking jobs7
Thousands of children were found living in these wagons or tents next to tracks
Every town had a ‘Hooverville’
Rubbish tips were crowded, parks were full at night
1931: 238 were admitted into NY hospital due to malnutrition, 45 died
effects of the crash: attitudes to poverty
10 years ago, articles about poverty would have been ‘sob stories’ but this changed
Dorothea Lange (photographer), Wood Guthrie (musician) showed poverty in a new light
More sympathy and anger towards the system that threated the poor unfairly
Many started to question Laissez Faire and rugged individualism
-the 1932 presidential election
why Hoover lost, why FDR won
1932 election: Hoover
Refused to accept there was a major economic crisis
Blamed for the Wall Street Crash as he didn’t do enough to elevate the impact
Bonus Marchers June 1932 with thousands of servicemen who fought in WW1
Peacefully marched to Washington & sang patriotic songs but Hoover refused to meet them
28th July, police and troops killed two with guns and tear gas
Did some things to help Wall Street but blocked $2 million relief bill!
Republicans had been in power since 1920: time for a change
Did little to help farmer who made up much of the electorate
1932 election: FDR
Embarked on countrywide tour with idea of the ‘New Deal’
Made 16 major speeches and another 60 from back of his train for 20,800km
Warm and confident person, not afraid to ask for advice, believed in ‘active’ government
Democratic party had Charles Michaelson to produce campaign mocking Hoover
‘Smile your way to prosperity’
Believed in using public money to create jobs and restart economy
Won by 7 million votes-worst defeat Republicans had suffered
-the New Deal 1933
intro, emergency banking act and securities exchange commission, FERA, CCC, AAA, PWA, NRA, TVA, impact
ND 1933: intro
to tackle the urgent needs of the poor
The first 100 days of presidency, FRD worked with ‘brains trust’ to make the new deal
Sent 15 proposals to Congress and all were adopted
Every Sunday, broadcast fireside chats to around 60 million listeners (new idea at the time)
ND 1933: Emergency banking act and securities exchange commission
Aimed to tackle bank closure
All banks closed for 4 days then 5000 trustworthy ones reopened with support
Effective
FERA
Federal Emergency Relief Administration
Aimed to tackle urgent needs of the poor
$500 million spent on soup kitchens, blankets, and employment schemes & nursery schools
Very effective
CCC
Civilian Conservation Corps
Aimed to tackle problem of unemployed young men
Men could sign on for 6 months then renew if they still had not found work
Most worked on environmental projects
Very effective and most men sent back money to families: 2.5 million were helped
AAA
Agricultural Adjustment Administration
Aimed to help farmers
Reduced farm production to gradually raise prices and modernised farms
Used methods to conserve & protect soil, extreme cases helped farmers with mortgages
Extremely effective, although modernising put more labourers out of work
PWA
Public Works Administration
Aimed to build more infrastructure
Used government money to build schools, roads, dams, bridges, and airports
These would be vital for after USA’s recovery
Very effective and created lots of jobs
NRA
National Recovery Administration
Aimed to improve conditions in industry and child labour
Outlawed child labour and set out fair wages and sensible levels of production
Stimulated economy by giving workers money to spend without overproducing
Was voluntary and joining firms used the blue eagle as a symbol of presidential approval
Over 2 million employers joined the scheme: very effective
TVA
Tennessee Valley Authority
Lack of dams on river, flooding, droughts, eroding soil, poverty, dust bowl around river
Cut across the powers of the local state governments and dams transformed the region
Brought water to dried out land and provided electricity for undeveloped areas
In short term, dams created many jobs for an area hit by depression so very effective
ND 1933: impacts
Measure introduced during the hundred days were very effective
Restored confidence in government and boosted morale
-Second New Deal 1935
intro, Revenue Act, undistributed profits act, Wagner act, social security act, WPA, resettlement administration, farm security administration
SND 1935: intro
aimed to transform American society
SND 1935: revenue act
Increased taxes on wealthiest Americans- 79% on people over $5 million
Warning to wealthy Americans using legal and illegal methods to avoid paying tax
SND 1935: undistributed profits act
Put tax on businesses in 1936
SND 1935: Wagner act
Forced employers to allow trade unions, allowing negotiation for pay and conditions
Made it illegal to sack workers for being in a union
SND 1935: social security act
Provided state pensions for widows and elderly
State and federal governments worked together to help sick and disabled
Set up scheme for unemployment insurance
Employed made small contributions each week and unemployed would receive a little
SND 1935: WPA
Work Progress Administration
Extended role of the original WPA to help the arts (painters, photographers…)
SND 1935: resettlement administration
Helped small hold farmers re-settle to better quality land and farming
Moved over 500,000 families to better-quality land and housing
SND 1935: farm security administration
Replaced RA in 1937
Gave loans to small holders to help buy their land
Built camps to provide decent living conditions and jobs for migrant workers
-reactions to the new deal
too much, not enough, supreme court
reactions to nd: too much
Too complicated and the government was doing the market’s job
TVA created unfair competition for private companies
FDR blamed for being like a dictator
High taxes discouraged people from working hard and gave money to those who don’t
Government was much too complex now as opposed to before
The New Deal had cracks: FDR poured money in, but loads was wasted through ‘leaks’
reactions to nd: not enough
Despite measure, many remained poor
Huey Long: governor of Louisiana (1928) then senator (1932)-came to power questionably
Helped poor, built roads, schools, hospitals, through taxing big corporations
Clashed with KKK and employed AAs on same terms as whites
Supported New Deal at first but after 1934 criticised for being too complicated
Set up ‘Share our Wealth’ where personal fortunes were $3 million MAX
Government taxes were shared among everyone and pensions for all over 60
Very aggressive: lots of friends and enemies-assassinated 1935
Dr Franci Townsend founded ‘Townsend Clubs’ for pensions of $200 monthly for over 60s
Father Coughlin attacked FRD on radio and set up National Union for Social Justice
reactions to nd: supreme court
FDR won 1936 election but faced opposition from the SC (republican dominated)
Schecter Poultry Corporation went against NRA: sold chicken unfit for consumption
Exploited their workers and threatened government inspectors
Court ruled that government had no right to prosecute them
NRA was ‘unconstitutional’ and undermined too much of the power of the local states
FDR was angry at them denying democracy by discarding laws he’d been elected to enforce
He asked for power to appoint 6 more SC judges who would be more sympathetic
Americans felt he was attacking the system of government and were alarmed by his actions
Some compared him to a dictator
FDR eventually backed down and plan was rejected
SC were still shaken by his actions and were less obstructive going forward
They approved of 2nd New Deal measures from 1937 onwards
the New Deal 1936 onwards
FDR became more cautious and early 1937 prosperity was returning, he cut ND’s budget
Unemployment increased and the cut damaged his reputation
1938, Republicans did well in elections, but FDR still won
USA no longer as united behind his New Deal as in 1933 but had other wars on their minds
-did the new deal work?
a new society?, industrial workers, AAs, unemployment and the economy, women, native americans
did the dn work: a new society?
Restored faith in government
Huge social and economic programme: set tone for future policies to help people
Handled billions of dollars of public money but no corruption scandals!
Secretary of interior, Harold Ickes, tapped phones of employees to ensure no corruption
He employed AAs, campaigned against anti-Semitism, supported cause of Native Americans
Divided USA: FDR often accused of being communist, undermining American values
Undermined local government
did the nd work: industrial workers
DRA and 2nd New Deal strengthened the position of labour unions
FDR’s government mainly supported unions: made larger corporations negotiate with them
Some unions combined as Committee for Industrial Organisation (CIO) 1935
Union of Automobile Workes seen by the 2 anti-union companies: General Motors, Ford
Big business remained immensely powerful despite being challenged
Many strikes were broken with brutal violence
Companies like Ford and Chrysler employed thugs or controlled local police
did the nd work: AAs
200,000 gained benefits from CCC and other agencies
Some agencies discriminated against them, however
Racial segregation in the CCC, mortgages not given to black families in white areas
Blacks less likely to be given jobs and when they were they were not very good ones
Domestic workers not included in the Social Security Act
FDR failed to put through any laws against lunching of AAs: feared opposition from South
did the nd work: unemployment and the economy
Created millions of jobs
Stabilised banking system
Cut number of business failures
Improved standard of living in deprived parts
Provided USA with schools, roads, and power stations
Never solved underlying economic problems
Confidence remained low and Americans only invested 75% of what they had before
FDR cut New Deal budget and country went back into recession
Still 6 million unemployed in 1941
Only USA’s entry in WW2 brought end to unemployment
did the nd work: women
Women achieved more prominent positions lie Eleanor Roosevelt
Mary Macleod Bethune, AA, headed the National Youth Administration
Fraces Perkins was secretary of labour: removed 59 corrupt officials and was key for 2nd ND
Most programmes aimed to help male manual workers rather than women
Only 8000 women involved in CCC
Local governments avoided paying out social security to women by making special terms
Frances Perkins was attacked in press as Jew and Soviet spy, ignore by her colleagues
did the nd work: native americans
Indian Reorganisation Act 1934 provided money to help them buy and improve land
Indian Reservation Act 1934 helped preserve and practise traditions, laws, cultures
They remained a poor and excluded section of society
