5.2: USA 1930s: Depression and New Deal

Question 1

-Causes of the crash in 1929

Answer 1

speculation, overproduction, Hoover

Question 2

causes of the crash: speculation

Answer 2

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

Question 3

causes of the crash: overproduction

Answer 3

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

Question 4

causes of the crash: Hoover

Answer 4

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%

Question 5

-effects of the crash

Answer 5

countryside, towns, attitudes to poverty

Question 6

effects of the crash: countryside

Answer 6

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

Question 7

effects of the crash: towns

Answer 7

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

Question 8

effects of the crash: attitudes to poverty

Answer 8

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

Question 9

-the 1932 presidential election

Answer 9

why Hoover lost, why FDR won

Question 10

1932 election: Hoover

Answer 10

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

Question 11

1932 election: FDR

Answer 11

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

Question 12

-the New Deal 1933

Answer 12

intro, emergency banking act and securities exchange commission, FERA, CCC, AAA, PWA, NRA, TVA, impact

Question 13

ND 1933: intro

Answer 13

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)

Question 14

ND 1933: Emergency banking act and securities exchange commission

Answer 14

Aimed to tackle bank closure

All banks closed for 4 days then 5000 trustworthy ones reopened with support

Effective

Question 15

FERA

Answer 15

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

Question 16

CCC

Answer 16

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

Question 17

AAA

Answer 17

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

Question 18

PWA

Answer 18

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

Question 19

NRA

Answer 19

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

Question 20

TVA

Answer 20

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

Question 21

ND 1933: impacts

Answer 21

Measure introduced during the hundred days were very effective

Restored confidence in government and boosted morale

Question 22

-Second New Deal 1935

Answer 22

intro, Revenue Act, undistributed profits act, Wagner act, social security act, WPA, resettlement administration, farm security administration

Question 23

SND 1935: intro

Answer 23

aimed to transform American society

Question 24

SND 1935: revenue act

Answer 24

Increased taxes on wealthiest Americans- 79% on people over $5 million

Warning to wealthy Americans using legal and illegal methods to avoid paying tax

Question 25

SND 1935: undistributed profits act

Answer 25

Put tax on businesses in 1936

Question 26

SND 1935: Wagner act

Answer 26

Forced employers to allow trade unions, allowing negotiation for pay and conditions

Made it illegal to sack workers for being in a union

Question 27

SND 1935: social security act

Answer 27

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

Question 28

SND 1935: WPA

Answer 28

Work Progress Administration

Extended role of the original WPA to help the arts (painters, photographers…)

Question 29

SND 1935: resettlement administration

Answer 29

Helped small hold farmers re-settle to better quality land and farming

Moved over 500,000 families to better-quality land and housing

Question 30

SND 1935: farm security administration

Answer 30

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

Question 31

-reactions to the new deal

Answer 31

too much, not enough, supreme court

Question 32

reactions to nd: too much

Answer 32

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’

Question 33

reactions to nd: not enough

Answer 33

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

Question 34

reactions to nd: supreme court

Answer 34

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

Question 35

the New Deal 1936 onwards

Answer 35

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

Question 36

-did the new deal work?

Answer 36

a new society?, industrial workers, AAs, unemployment and the economy, women, native americans

Question 37

did the dn work: a new society?

Answer 37

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

Question 38

did the nd work: industrial workers

Answer 38

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

Question 39

did the nd work: AAs

Answer 39

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

Question 40

did the nd work: unemployment and the economy

Answer 40

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

Question 41

did the nd work: women

Answer 41

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

Question 42

did the nd work: native americans

Answer 42

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