Great Depression & New Deal

Question 1

The despair of the depression

Answer 1

• Human hardships that occurred in the 1930s, millions unemployed and don’t have homes
• People begin to starve
• Many had to migrate across the US and experienced a lot of hardship
• Agricultural crisis, Dust bowl happens, severe drought and forces tens of thousands of families to abandon their farms in the 20s. Many come from Oklahoma and go to California and areas where they are doing better in the depression.

Question 2

Causes for the Great Depression

Answer 2

• 1) Speculation that pushes the economy into the depression
• 2) Banking collapse
• 3) Inequality

Question 3

1929 Wall Street Crash

Answer 3

• Tuesday 39th October 1929, over 60 million shares that are traded on the NY stock exchange that has a loss of 9 billion dollars. Huge crash at the stock market and is a huge blow. Often pinpointed as the start of the Great Depression, however the stock market was already in decline by this point. Investors are already losing their confidence.
• Analysts pick up on this at the time, loss of business confidence in the economy but other thing is that there is a huge stock market bubble. Speculating money that they often don’t have, and investors had been pushing up prices on the NY stock exchange by 40% in 1927 and further 35% by 1928, a bubble that is not born out in the real economy, share prices are artificial. Speculative bubble that is finally bursting.
• Shouldn’t affect most Americans as they didn’t have the money to spend in the stock market, in 1929 only 3 million people had shares
• However, has effect on the confidence of consumers, the 1920s is a consumer economy and investors are also scared. Consumption and investment fall after the crash

Question 4

Bank Failures

Answer 4

• National bank of Kentucky fails and by November 1939, 256 banks that fail with 180 million deposits in dollars gone. December 352 failures with over 370 million deposits in dollars.
• 11th December 1930, Bank of United States loses over 200 million of deposits which is the largest commercial banking failure in history at that time.
• Economist Milton Freemen banking failures caused a severe contraction in the money supply, hits the economy when it is most vulnerable. 1930-33, the money contracts by over a 1/3.
• Consumption and investment needs money to help this flow which causes the great depression
• The banking sector is poorly regulated and unstable
• Banks collapse like a row of dominoes

Question 5

inequality & Unemployment

Answer 5

• Economic shocks that hits an economy built on a lot of inequality -> uneven distribution of purchasing power.
• Wages of ordinary workers are not rising in the 1930s, not rising as much as cooperate profits, manufacturers make more money than workers in the 1920s.
• Problem in consumer economy, due to people not having the wages to be able to have goods
• Sale of manufacture goods are already stagnating, people are not buying enough for it to be sustainable, producers lay off their workforce, unemployment goes up, unemployment means less purchasing.
• People not buying as much -> means less production -> which means more unemployment. Vicious cycle America get caught in.
• 1933, more than 100,000 businesses that have collapsed, they cannot sustain these shocks to the economy.
• The businesses that still survive cut back investment and get rid a lot of staff. Existing staff have to work with lower wages and longer hours.
• European economies are affected by this global depression, but America suffers almost the most in terms of deprivation and unemployment
• Private charities trying to deal with unemployed people and poverty, but can’t keep up with the amount of people, there are huge lines of people looking for homes and food.

Question 6

Material Relief

Answer 6

• Soup Kitchens
• These scenes of queues of homeless people becomes common in the 30s
• The depression cuts across class lines, affecting even the middle class and not just the working class
• The gov is not doing much about it, they are stretched

Question 7

Shanty towns- ‘Hoovervilles’

Answer 7

• Homeless people and are living in these slums that become known as Hooverilles, after the US president
• Tents, cabins, make do shelters, for the unemployed, waiting for charity of any kind of job to come about
• Very low birth rate, marriage rate and high suicide rate
• Lots of homelessness due to losing job and not being able to pay rent

Question 8

President Herbert Hoover

Answer 8

• Republican who succeeds Coolidge
• Had the reputation of a great humanitarian, he was in charge of food relieve after WWI, was not someone who didn’t care about people suffering .
• He spent millions on food aid after world war one, to places like Germany and Belgium
• He comes with humanitarian credentials so everyone thought he would be able to deal with the issues with the people from the Depression.
• Quaker, religious person
  Why does he not deal very well with the issues of the Depression?
• When he comes into office March 1929, was not expecting what happens months later. Expresses optimism of sustained economic growth, and claims that poverty will leave the nation. IRONIC
• Hoover didn’t understand the main cause of the Great depression, he thought it was just a bad recession, that it is part of the normal business cycle, and if the go intervenes that it will just make it worse and stop it self-regulating. THIS IS WRONG
• Doesn’t believe in intervention and instead pursues a policy called voluntarism, persuading businesses to do certain things and the great depression will just be taken care of, and the gov shouldn’t be providing material relief and recovery, he doesn’t believe that it’s a central issue but more of a local state issue.
• He thinks that if you stabilise wages, you can stabilise consumption through power, stabilise prices and profit margins and calm everything down
• Unemployment should be taken care of by state government and charities etc, but voluntarism idea does not work and businesses are not keen to maintain wage levels, and if they do that they will have to lay off more workers
• Local gov should take care of the unemployed doesn’t work due to the sheer size of people unemployed
• Hoover starts to change his mind slowly, 1932 he sets up a new federal government initiative called the reconstruction finance cooperation, this injects some money into the banking sector, congress allocated 500 million dollars emergency loans to banks and other businesses. Comes too late though etc
• Big shift in ideological terms, the idea that the federal gov could do something like that is fairly new.
• Hoover in some ways with RAC paves away for the New Deal, but a bit more radical
• Hoover is the first modern president when it comes to the relationship between government and the people.
• He was wedded to the idea that you had to balance the federal budget, can’t provide loans or credit, many of his programmes were severely underfunded, and hoover didn’t invest the right infrastructure into these programmes

Question 9

Hoover PR disaster - the Bonus Army

Answer 9

• He fails to communicate to the American people
• Group of unemployed war veterans congregate in Washington DC in spring and summer 1932, they wanted to lobby congress for an early payment for war service payment that they would get in 1945, asking just to give it to us now when we can really use it. Congress is not accepting, and the senate refuse to pay and so the veterans take over buildings around the centres of power in Washington which then comes with a heavy-handed police response, evicting the veterans, 2 people shot dead. These veterans sacrificed their life for the country and are then treated like this, PR disaster, looks like they have turned on the people who fought for the country in WWI. Damages Hoover’s reputation, and loses the 1932 election.

Question 10

President Franklin D. Roosevelt

Answer 10

• Takes office March 1933, succeeds Hoover, finally gets the democratic party back into the white house
• Economic crisis has grown even worse
• Roosevelt came from a prominent family, and was not from the lower classes, was born rich but he was much better at talking to normal Americans
• Sets a new tone, he announces that he pledges himself to a New Deal for the American people, note of optimism, and eventually transforms the Americans faith in the gov providing for the people
• The New Deal is about the relationship between the government and the people
• Conventionally divided in to two phases, 1932-5 and 1935-8 and era of WWII which is also part of the New Deal
• First phase of ND, associated with relief and recovery and second one is reform

Question 11

The Hundred Days

Answer 11

• Frenzy of reform after Roosevelt comes in, he initiates a series of sweeping reforms to combat the great depression, short term measures to answer the worst issues of the Great Depression
• Sale of alcohol is no longer illegal, making him look more in touch with the people compared to Hoover
• Emergency banking act allows the reopening of banks once they can prove their resource are sound and have enough capital to operate. This injects confidence into the investors who deposit funds again into banks. Conservative measure, functioning banking kept the economy going.
• Are some stringent reforms, a lot more oversight on the banking sector, debate on banking regulation on the ND, ND a lot more radical

Question 12

Alphabet Agencies

Answer 12

• Roosevelt introduced this as well.
• Funny sounded Agencies, Acronyms created between 1933-35, the CCC Civilian Conservation Corp
• Agencies provide publicly funded jobs and relief to the American People, legislation that protects the rights of American people especially National Recovery Act where employers don’t have to cut wages etc
• Hoover had agonized about but couldn’t implement like Roosevelt did

Question 13

Second New Deal 1935

Answer 13

• First deal brought in new measures and agencies, but didn’t mitigate the impact of the depression, still huge levels of unemployment. June 1934, 11 million men and women out of work. Increased labour militance, strikes, ugly clashes between unions and police, time of stark political controversy some thinking the ND wasn’t radical enough and there are conflicts over the direction of the country
• New deal tries to reform the American system, not just economy but society and introduce a greater measure of planning
• Progress administration, WPA etc are introduced in the second part, large construction projects, building schools, bridges etc. Trying to employ millions. 8 million working under WPA by 1943, big projects to employ millions.
• Jobs in short run, create investment and infrastructure that will benefit the country long term
• Social security act of 1935, the US does not have a wealthier state or system welfare provision is non-existent. For the first time, have a national old age and unemployment compensation system. Try to keep a lid on strikes but also get people employed. (WAGNA act), helps the economy and gives workers more rights and stabilising the country
• Roosevelt re-elected in 1936, Americans criticize him for being too radical and dictatorial.

Question 14

Assessing the New Deal

Answer 14

How historians assessed it:

• Debate on whether it was too radical or not enough
• Changed the relationship between the people and government
• Some historians, William Leuchtenburg and Carl Degler, thought the ND was a radical departure from the past, ‘Third American Revolution’. Most assessments are positive.
• Historians who criticize the ND by making sure capitalism could continue in the US, which is what the Roosevelt wanted.
• Historians on the left didn’t think it was radical enough.
• One thing it was meant to do was to restore the American economy it didn’t manage and the US stays in recession throughout the 1930s, things get a little bit better and the economy is not restored. On the eve on the WWII, 9 million people are still unemployed, and WWII manages to end the Great Depression, and full employment starts to come about again.
• Workers who were not allowed to join the pension programmes, were like domestic workers etc who worked really hard physically, so ND has holes in it where many people don’t benefit from the deal as they should.
• Racial discrimination, ND is a federal programme and introduces segregation in some of its programmes in the North.
• Critics didn’t just come from the left but also from the right
• Despite people being excluded from certain benefits of the ND programmes, 46 million people all got some sort of benefit out of it.
• The ND redefines the presidency, becomes more important in politics
• Unions become strong

Question 15

A new form of political communication: FDR’s fireside chats

Answer 15

• Roosevelt restore the confidence of the Americans in the government
• Good communicator, used new technologies such as radio
• Easy going style, conveys in clear language of why and how he is going to do it
• Roosevelt forges a new electoral condition, which combines industrial workers, farmers, Jews and Catholics and AA. AA abandon republican party and go over to the Democrats due to Roosevelt being a good communicator.
• However, its only WWII that ends the Great Depression.