America - Depression And The New Deal

Question 1

Timeline overview

Answer 1

1929 Oct - great crash in share values
1930 June - Hawley-Smoot Tariff damages international trade
1930 Now-Dec - major banking crisis, 8.7% unemployed
1931 summer - international banking crisis develops
1931 sep - Great Britain leaves gold standard
1931 oct - 522 US banks collapse, 15.9% unemployed
1932 jan - Reconstruction Finance Corporation established, big increase in taxes to cut larger Dederal deficit
1932 nov - Roosevelt defeats Hoover in presidential election, 23.6% unemployed
1933 march - Roosevelt tasked over from Hoover, 24.9% unemployed

Question 2

Impact of depression

Answer 2

Only small portion affected directly by Wall Street Crash
- majority hadn’t invested
However, Oct-Dec 1939, number unemployed rose from 500,000-4 million
By time FDR became president (1933) number of unemployed risen to 15 million
- these figures don’t include part time or short term contracts (under-employed)
Wall Street Crash shattered public confidence + plunged US into deep economic crisis

For most, Great Depression meant rising unemployment and banks collapsing
1929-1932 unemployment rose 1.5 million to 12 million and 20% of banks collapsed, ruining those who had saving invested in them
Real wages fell 16%, construction fell 76%, investment decreased by 98% (29-31)

When Depression struck US, rising unemployment caused huge problems
1929, USA didn’t have old age pensions or system unemployment welfare
Helping unemployed responsibility of state governments and only a few of these has unemployed welfare systems
Some groups hit more than others

Question 3

Workers and families

Answer 3

How were they effected?:
- had to turn to voluntary groups like churches for help
- many went to soup kitchens for food
- some sold apples on street corners
- many left home to seek work
- by 1931, state Colorado claimed children were underfed and diseases like dysentery were rife
Why did they suffer?:
- no pension system and few states had welfare systems for unemployed
- pressure of unemployment to increased divorces and 14% increase in suicide rates

Question 4

Ethnic minorities

Answer 4

How were they effected?:
- African American unemployment rates double or tripled those of white people
- they worked primarily unskilled jobs
- after crash, entry-level low-paying jobs disappeared or filled by white people who had lost their jobs
- Hispanic Americans sent back to Mexico, even if they were born in America
Why did they suffer?:
- unemployed
- thrown into absolute poverty
- Southern black people moved away from Homs in farms so they could find work
- lived in horrific conditions

Question 5

Farmers

Answer 5

How were they effected?:
- already struggling from after affects of war
- missed out on economic boom in 20s
- very low income due to overproduction and underconsumption
- depression affected many other countries so fewer markets abroad for their good - exacerbated due to tariffs
- massive debt
Why did they suffer?:
- couldn’t repay debts or mortgages
- lost their homes and farms making them jobless and homeless

Question 6

Veteran soldiers

Answer 6

How were they effected?:
- Following WW1, pension promised to all returning service men to be received in 1945
- After depression, veteran found themselves out of work
- 17,000 travelled to D.C. May 1932 to pressure Congress to pay bonus immediately
Why did they suffer?:
- felt let down after their service to country
- labelled as selfish and greedy following protest in D.C.

Question 7

Time line of the crash

Answer 7

1929 Oct - great crash in share values
1930 June - Hawley-Smoot Tariff damaged international trade
1930 Nov-Dec - major banking crisis, 8.7% unemployed
1931 summer - international banking crisis develops
1931 sep - GB leave gold standard
1931 oct - 522 US banks collapse, 15.9%
1932 jan - reconstruction finance corporation established, big increase in taxes to cut Federal deficit
1923 nov - Roosevelt defeats Hoover in presidential election, 23.6% unemployed
1933 march - Roosevelt takes over from Hoover, 24.9% unemployed

Question 8

Why was depression so serious for American society?

Answer 8

Only a small proportion of US population was affected by WSC
Not everyone had invested, in fact majority hasn’t invested
However, between October and December 1929, the numbers of unemployed in USA rose form 500,000 to over 4 million
By the time FDR became President (1933) the n umber of unemployed had risen to 15 million
These figures don’t include the under-employed
The WSC had shattered public confidence and plunged the USA into deep economic depression
Most Americans, it meant rising unemployment and banks collapsing
Between 1929-1932 unemployment leaps from 1.5 million to over 12 million
Same period - 20% of US banks collapsed bring ruin to those who had Savings invested in them
Real waged fell bu 19%
Construction fell by 78%
Investment decreased by 98% (1929-31)
Insufficient demand:
- depressed agriculture
- declining old industries
- wages even in new industries not rising fast enough to encourage greater consumption
- overseas demand discouraged by high tariffs
- government failed to increase demand by increasing spending sufficiently
Shortage of money and credit:
- banking crisis - too many small banks and as they collapsed they pulled down others (20% collapsed)
- government follows a clear money policy from 1929 i.e. keep interest rates high, adds the banking crisis and discourages consumption
- a victim of its own success: the technological revolution and mass production techniques were so successful in producing goods and services that they couldn’t be absorbed within the USA and the rest of the world hit by tariffs and war debts couldn’t afford them

Question 9

Effects of the depression on society

Answer 9

When the depression struck the USA, the massive rise in unemployment caused huge problems
In 1929, the USA didn’t have old age pensions or a system of unemployment welfare
Helping the unemployed was the responsibility of state governments
Only a few of these had unemployed welfare systems

Question 10

Workers and families

Answer 10

The main help for the poor and unemployed came from voluntary organisations
President Hoover thought that helping these people wasn’t the role of the Federal Government and he called for ‘volunteerism’
By 1930s, soup kitchens and breadlines were set up in towns to provide direct help to those affected by the Depression
Some unemployed workers began selling apples on street corners to make a few dollars
Nearly a million left home to search for work, riding of railroad freight cars
By 1931, a survey in the State of Colorado noted that all schoolchildren were insufficiently fed, leading to the spread of diseases such as dysentery, typhus and pellagra, which are associated with poor diet and living conditions
Nationally, the suicide rate roe 14% between 1929-1932
Marriages fell by 10% over same period and there was a drop in the birth rate
Family breakdowns rose dramatically as unemployed men left home to search for work in other parts of the country
The migration of unemployed workers from state to state caused friction as each state considered helping their own poor to be more important than helping new arrivals

Question 11

Ethnic minorities

Answer 11

The rapid decline in economic activity led to an increase in racial discrimination
Several employers adopted a preferential hiring system for white Americans
In California tens of thousands of Spanish speaking Hispanic workers were adversely affected by a drip in demand for agricultural products
During the Depression, almost 500,000 Mexican citizens were forced to leave US, most before 1933
To encourage Spanish speakers to ‘go home’ several states banned non-US citizens from public work programmes
Many ethnic minorities had to leave their homes to find work in other areas of the USA
The Chinese also experienced discrimination
In 1932, customers in New York boycotted Chinese laundries in an effort to drive them out of business
Black Americans were the first to be fired when companies had to downsize
Lynching of Black Americans increased during the Depression, reaching 24 deaths in 1932
Lynching still wasn’t a federal crime

Question 12

Farmers

Answer 12

Farmers across the USA were more badly hit than those workers in towns and cities
Between 1929 and 1932, farm incomes fell by 2/3
This was due to a sharp fall in demand and therefore farm prices
Farmers also suffered from the collapse of the banking sector
Most bankers took out bank loans to buy mechanised products and used their farms as security for loans
When the banks failed, they called in their loans
When the loans couldn’t be paid the banks took over the farms meaning thousands lost their livelihoods

Question 13

Bonus army

Answer 13

In 1932 some of those badly affected by the Depression took matters into their own hands
Veterans who fought in WW1 marched in Washington DC, 21,000 protesters demanded early payments of the bonuses that they were due in 1945
The army, under General Douglass MacArthur, was ordered to remove the ‘bonus marchers’
On July 28th 1932, at the “Battle of Anacostia Flats”, the army forcibly evicted the bonus marchers using tanks
This led to the loss of 2 lives
President Hoover declared the bonus marchers were a threat to democracy

Question 14

Gangsters

Answer 14

The collapse in the Us economy encouraged the development of organised crime
This decline in law and order started in the 1920s with the opposition to prohibiton
By 1930s, gangsters had developed a widespread network of illegal activities connected with alcohol, gambling and f prostitution
Famous gangsters included:
- Al Capone - worked in Chicago-and started with bottleg alcohol. He was eventually convicted for tax evasion
- Bonnie and Clyde - famous foe robbing banks and committing murders
- Machine Gun Kelly - Bank robbery
- John Dillinger - bank robbery and alcohol. He was shot by FBI in 1934

Question 15

President Hoover

Answer 15

Business man and self made millionaire
Seemed like perfect Mann for the job
Republican who believed in laissez-faire
He was elected in November 1928 and became predisent January 1929
Although he seemed like the man for the job, just months after taking power he faced the worst economic crisis in economic history
Things Herbert Hoover has said:
- “We are nearer to a final triumphs over poverty than in any land in human history”
- “rugged individualism’
- “prosperity is just around the corner”
- ‘soon in America there will be a var in every garage and a chicken in every pot” - 1928
- “the Bonus Marchers are communists, they must be met with force” - June 1932
- “we must cut taxed so people have more money to spend and raise tariffs to protects American companies from competition”

Question 16

Hoover prolonged the depression

Answer 16

Hawley-Smoot Tariff froze up international trade
Encouraged only voluntary action - he didn’t see depression has a federal government issue
He created the Federal Farm Board which actually made the problem worse and wasted $500 million on making farmers produce too much
- eventually led to the dust bowl
He commissioned the Hoover Dam but this was too little, too late
People needed a President to look to and he failed in this role
The RFC failed to encourage banks to loan more to businesses that were facing server problems - this was also too little too late - by the time it was introduced in 1932, 522 UA banks had already collapsed
His Republican policies allowed the corruption of the 20s the continue - this was particularly an issue in the stock market

Question 17

Hoover didn’t prolong the depression

Answer 17

Set up the RFC which bought up banking debts and limited the extent of the depression - this stopped further damage and brought stability to financial sector
He was first president to try and do something about issues in farming - he set up the Federal Farm Board and gave them $5000 million to try and help - it is not his fault that thye farmers continued to over-produce
He tried to help with creating jobs by investing in public works such as the Hoover Dam and passing Emergency Relief and Construction Act
He believed the problem was international so although t the Hawley-Smoot Tariff froze up trade, it is clear to see that he did try and help the problem
He actively encourages voluntary action
Governments didn’t get involved in this time period - Hoover was following normal economic policy and f actually was revolutionary in breaking this by creating RFRC and Federal Farm Board
He was a Republican and his policies are in line with that party
The US government isn’t just one man - event if Hoover wanted to help in other ways then he may have been stopped by Congress and the Supreme Court
Uk came off Gold Standard which made everything worse

Question 18

Roosevelt

Answer 18

Franklin D Roosevelt was State Governor of New York before winning democratic nomination in 1932
In his acceptance speech in Chicago he pledged himself to create a New Deal for the American people
The election in November was landslide victory
Hoover was damaged by the treatment of the bonus marchers and the shanty towns of the unemployed anime’s “Hoovervilles”
He never enjoyed campaigning, in contrast to Roosevelt
He appeared top have no specific answer to the slump any more than Hoover had, and like Hoover, he stressed the need for a balanced Federal Budget
He concentrated on hoover’s negativity
He loved the press and they loved in
He carried all but 6 states in November
Under the existing rules, he then had to wait until March to take over
The result was an interim period of drift when the banking crisis assumed new proportions of disaster
FDR had no fixed ideas for recovery, now had he any ideas as to har would work
The incoherence of thinking had been revealed by his approach to the issue of tariffs, during the campaign
Half of the Democratic Party were for high ones and half for low ones
One of the speechwriters asked for guidance on what line to take on the subject
He suggested weaving the 2 contradictory policies together
He tended to vary the message according to where and to whom he as speaking and thus was to be typical of FDR’s approach when in power
FDR was a Democrat
This meant to favoured government involvement
Unlike Hoover, he believed that the government needed to become involved in order to begin to restore the economy
“I will go down in history as either a great American President or the last American President”
When a president is elected, their first 100 days in office are very important
It is the President’s chance to show America what they can do and what to expect from their Presidency
FDR had to shoe he could so something about the Depression

Question 19

FDR’s priorities

Answer 19

Stabilise the banks
Solve the problems in agriculture
Emergency relief and job creation

Question 20

The emergency banking act

Answer 20

2 days into presidency, FDR offered a national bank holiday 6-9 March
In that time he persuaded Congress to pass the Emergency Banking Act, which it did in a record 7 hours
He sued his fireside charts to explain hat he was doing so that people wouldn’t panic
The Emergency Banking Relief Act provided for the reopening of the banks as soon as examiners had found them to be financially secure
Within 3 days, 5,000 banks has been given permission to be re-opened
Money from the RFC (set up under Hoover) was used to prevent banking collapsed
Within a week, FDR had restored faith in the US banking system

Question 21

The Glass-Steagall banking act

Answer 21

The Glass-Steagull Act said that banks were no longer allowed to be involved in investments
This was designed to remove conflicts of interest created when banks were allowed to underwrite stock
The Act separated commercial from investment banking
This was seen to be a main cause of WSC
The Federal Deposit Insurance Corporation was also established to provide a system of Federal guaranteed of banks deposits up to $5,000
This was essential in the restoration of financial confidence

Question 22

The Federal Securities Act and the Securities Exchnage Commission

Answer 22

Another perceived cause of WSC had been shared speculation
This act was set up to regulate the system of buying and selling shares
All new shares purchased had to be registered with the Federal Trade Commission
In June 1934, FDR created the Securities Exchange Commission (SEC) which regulated share transactions and stock exchange
It was ran by Joe Kennedy, father of JFK

Question 23

Emergency relief and public works

Answer 23

When FDR became president, 1/4 Americans were out of work
Soup kitchens and bread lines were run by voluntary organisations in every city
On the outskirts of every town and city, makeshift Hoovervilles housed the homeless
If Roosevelt was going to tackle the problems of the depression then this needed to be a priority
FDR thought one way of brining immediate employment to those out of work was through publicly funded work schemes
Public works were a way of kick starting the economy
They would help bring don the rate of unemployment and put some Money back into the economy which would stimulate the private sector

Question 24

Alphabet agencies

Answer 24

Civilian conservation corps (CCC) - March 1933
Federal emergency relief administration (FERA) - May 1933
Agricultural adjustment administration (AAA) - may 1933
Tennessee valley authority (TVA) - may 1933
Public works administration (PWA) - Junes 1933
National recovery administration (NRA) - June 1933
Works progress administration (WPA) - April 1935
Rural electrification administration (REA) - may 1935
National youth administration (NYA) - June 1935

Question 25

Tennessee valley authority

Answer 25

Tennessee river valley was an area notorious for flooding, poor infrastructure and a low standard of living
TVA established a network of dams to help control the flow of the river and create a hydro-electric power
1933, only 2% of this area had electricity by 1945, it was 75%
TVA was only possible due to an injection of Federal funding
There was some opposition because of the States Rights issue
Average incomes went up by 200% between 1929 and 1949
Agency helped in both job creation and agriculture

Question 26

National Recovery Administration

Answer 26

As a part of the recovery plan the NRA was to issue codes of practise for each industry
They aimed to ensure fair competition, fair wages and hours of work
Under the NRA codes, child labour was banned below Nate of 16 year
Most significant part of NRA was Section 7(a)
This allowed union the right of collective bargaining
The NRA had $3.3 billion to spend
If a company adopted NRA codes then they would recieve the Blue Eagle sign
NRA issued 557 codes of practise
Unfortunately, many were unworkable and some large companies refused to ppt
The wages were low and many didn’t see an improvement in working conditions
The NRA wasn’t leading to rapid recovery
NRA declared unconstitutional in 1935

“The end of the NRA was certainly not the only factor in the recovery that began in the summer of 1935, but it is beyond argument that the mist sustained period of economic advance under the New Deal took place in two years after the Blue Eagle was laid to rest”
- from Richard Hofstadter, The American Political Tradition, published 1962

Question 27

The Civilian conservation corps

Answer 27

This was the first agency and it was FDR’s own idea
It was supervised by the army and offered work to young men between ages of 18 and 25 for minimum 6 months and a max of 2 Years
They worked in national forests and parks and got involved in a range of projects, such as:
- reforesting denuded slopes
- cutting breaks to prevent fires
- building roads
- working in soil conservation
- talking part in soil conservation
- taking part in irrigation and flood control schemes
- they lived in on-site camps which were racially segregated. Pay was $1 a day plus lodgings and food. $25 a month was sent home

By 1935 over half a million men enrolled in over 2,000 camps
By the time CCC ended in 1942, 3 million men had taken part
The CCC built 125,000 miles of road, 46,854 bridges and planted 3 billion trees
Supporters, including future President Lyndon B Johnson, said it instilled discipline, team work and a sense of purpose

Opponents said they were temporary jobs which only lasted 6 months
This would not contribute to long term economic recovery
People also criticised the CCC as they said the jobs which were completed were not necessary and didn’t contribute to the growth of the economy
The camps were racially segregated

Question 28

The civil works administration

Answer 28

The CWA was created in November 1933 with the aim of creating jobs for thus winter period
This was to be ran by Harry Hopkins
Initial budget of $400 million but went way beyond this
Within 6 weeks it was spending more than $200 million a month
Within 2 months, work had been found for 4 million Americans, who received 40 cents per hour if unskilled and $1 if skilled
They built or improved roads, public buildings and local airports
There was the feeling that a significant proportion of the posts created were “boondoggles”
The CWA was used by many opponents of Roosevelt as evidence that his initiatives lack coherence and an overall strategy
To a large extent this argument can be sustained but it needs to be decided whether the positive outweighed the negatives or vice Versa
FDR himself was worried that its vast expenditure would become permanent and prevent real recovery, so it was wound up in March 1934

Question 29

The public works administration

Answer 29

The PWA was placed under the control of Harold’s Ickes
Unlike FERA and CWA the PWA looked at long term relief
It had a budget of $3.3 billion
Ickes aimed to create long term jobs unlike the “boondoggles” created by Harry Hopkins
The PAW was responsible for the building of 13,000 schools and 50,000 miles of road
However, Ickes is accused of spending money too slowly
Hopkins said that Ickes needed to solve unemployment as quickly as possible
Although there was tension by 1934 FERA, PWA and CWA had offered work to 30% of US workforce

Question 30

Agriculture introduction

Answer 30

Farm prices, in steadily decline since the Coolidge years, had gone from bad to worse
Eggs that normally sold for 25c a dozen were brining in 5c
Since 1930, more than 18,000 Missouri farms had been foreclosed
Abandoned houses, their widows boarded, fences falling, dotted the landscape
Sharecroppers were living in two room, dirt floor shacks, walls insulated with old newspaper
The look of the land and in the faces of farm families in this summer of 1934 was as bleak as in Anyone’s memory
It was both the worst of the Depression and the year the dust storms on the western plains began making headlines

Question 31

Agriculture

Answer 31

Very important to the US
Farm workers made up 30% of work force and the agricultural associations wee always lobbying in Washington
There were rising signs of farmer militancy in 1933 and the spring planting season was quickly approaching
FDR also had his own reason for giving agriculture a high priority
As well as a genuine interest in rural affairs< FDR had gained his first significant political support from the rural states of the South and rest
This support had won him the democratic nomination in 1932
The president believed that tackling the problems of agriculture was central to restoring the economy
A more prosperous farming community would stimulate demand and therefore industry
FDR focused on reducing agricultural production

Question 32

The agricultural adjustment administration

Answer 32

This act subsided farmers to cut production in order to increase prices and raise income
Farmers who owned their own land were paid to take land out of production in certain crops
The AAA set about stabilising process by a variety of methods:
- allotment plan whereby, to prevent agricultural surpluses, farmers would reduced the acreage under cultivation or reduce their productions. By 1935, 35 million acres had been removed from cultivation
- farmers would killing piglets and burn crops to get rid of the surplus. To manly this seemed hard to comprehend in a time of financial difficulty
By 1935, farm incomes rose to $6.9 billion
However, not all farmers benefited
There had been much criticism of the AAA both at the time and now
Critics say that the beneficiaries were large scale producers
Payments went to land owner and in the south it was the owners of the big estates who againejd
Sharecroppers and migrant farmers were suffering very badly and gained little help for the Federal Government
Sharecroppers lost their land and received no payment for doing so
Therefore, they had no source of income
FDR didn’t listen to complaints from AAA activist against the violent repression of STFU meetings (southern tenant farmers union) Jim Powell a recent critic of the New deal said about the AAA:
“The more acres are owned and kept out of production the greater the subsidies. Big farmers got rich whilst the small farmers band sharecroppers became destitute”

Question 33

The second new deal

Answer 33

Wagner Act 1935:
Passed in July 1935, this is also known as the Labour relations act
This was enacted to appease the growing trade unions
Similar to NIRA which was declared unconstitutional in May 1935
Gave collective bargaining and the National Labour Relations Board
This act excluded agricultural workers, public employees
Didn’t help black Americans, Hispanic Americans and women
Social Security Act 1935:
Before this, there was no system to look after the elderly
This act was in response to Francis Townsend
Funded by contributions from employers and employees
Pensions were to be padded out at between $10-$85 per month
Unemployment benefit was also included at a max of $18 for 16 weeks only
Excluded farm workers, domestic servants and self-employed
Revenue act 1935:
The Wealth Tax Act was passed to pay for New Deal programmes
This increased the rate of income tax from 63 to 79% on incomes over 5 million
This raised $250 million per year
Not enough people earned that much
This also increased taxes on businesses
This was done to appease Huey Long supporters (share our wealth)
People called FDR a class traitor

More aid to farmers:
Resettlement administration (1935) and the rural electrification administration (1935)
Assessment:
Second new deal helped FDR win another election and got rid of threat from radical groups
FDR also created the WPA to create more jobs in the arts
The WPA created CCC camps for women (she,she,she) and aided black Americans
Opposition:
Socialists wanted to destroy the capitalist system
They thought FDR wasn;t doing enough to help
By 1936, there had been over 2,000 strikes and in 1937, this rose to 4,470
The Roosevelt recession lasted from 1937-38
This lef to more trade union militancy
FDR ordered cuts in government spending
October 1937 a stock market crash occurred and it seemed the USA was going back to pre-FDR depression

Question 34

The second new deal

Answer 34

Wagner Act 1935:
Passed in July 1935, this is also known as the Labour relations act
This was enacted to appease the growing trade unions
Similar to NIRA which was declared unconstitutional in May 1935
Gave collective bargaining and the National Labour Relations Board
This act excluded agricultural workers, public employees
Didn’t help black Americans, Hispanic Americans and women
Social Security Act 1935:
Before this, there was no system to look after the elderly
This act was in response to Francis Townsend
Funded by contributions from employers and employees
Pensions were to be padded out at between $10-$85 per month
Unemployment benefit was also included at a max of $18 for 16 weeks only
Excluded farm workers, domestic servants and self-employed
Revenue act 1935:
The Wealth Tax Act was passed to pay for New Deal programmes
This increased the rate of income tax from 63 to 79% on incomes over 5 million
This raised $250 million per year
Not enough people earned that much
This also increased taxes on businesses
This was done to appease Huey Long supporters (share our wealth)
People called FDR a class traitor

More aid to farmers:
Resettlement administration (1935) and the rural electrification administration (1935)
Assessment:
Second new deal helped FDR win another election and got rid of threat from radical groups
FDR also created the WPA to create more jobs in the arts
The WPA created CCC camps for women (she,she,she) and aided black Americans
Opposition:
Socialists wanted to destroy the capitalist system
They thought FDR wasn;t doing enough to help
By 1936, there had been over 2,000 strikes and in 1937, this rose to 4,470
The Roosevelt recession lasted from 1937-38
This lef to more trade union militancy
FDR ordered cuts in government spending
October 1937 a stock market crash occurred and it seemed the USA was going back to pre-FDR depression