The Depression Flashcards
Causes of the depression
Wall street crash-
economic effect of the depression impact on unemployment
no figures of unemplyoment because federal govt. didn’t record, however unemployment was high, a source suggests that unemployment rose to 25.2% in 1929 of labour force. Another source suggest that 1/3 of workers were unemployed.
uneven distribution of unemployment
unemployment wasn’t spread equally across the US. NYC had 1million unemployed, Ohio had 50% unemployed.
unemployment for African-Americans
Amount of African-Americans unemployment was 4-6 time higher than white, and lower paired job traditionally given to blacks, like waitress and lift-men where now given to whites.
unemployment for Women
working class women did badly. unskilled jobs were likely to be laid off before men and domestic jobs- families could no longer afford a maid. Wives had to work to keep family going but then they were accused of being responsible for male unemployment. 1930 over 75% of US school refused to employ married women.
Effects on individual industries
areas the depression hit later local military, state universities. Temporary oil boom in Texas which lead to a collapse of prices in the industry. GNP went from $203.6billion in 1929 to $144.2billion in 1932. General price leaves fell 25%.
Problems with credit and banking
10,000 bank closures in 1929-1933. Many small banks over lent and them when the depression came. For example banks began taking farms over, which were mainly bankrupt and unsaleable.
Due to this many wanted their money back- ‘run to the bank’ which meant banks had to close down.
Life for the unemployed, suicide rates
No federal unemployment benefits. Unemployment was seen as your own fault - creating the psychological effects to the US bad,many pretended to work. Marriages and birth rates fell massively from 1929-1932. Suicide rates increased 14% 10,000 in 1929 to 17.4 in 1932.
Extent of relief and pensions
relief varied as it was provided by the state, local authorities or charity. Most came from charity. Before 1932 no state had a system to recognise unemployment insurance and only 11 states operated any kind of pension scheme for only 1000 people. Many older people just had to keep working and live off their savings.
The stigma of revising relieve was meant to keep people from asking. Example: 10 states took away the right to vote for those applying for relief and some churches banned those on relief.
‘Fotune’ magazine showed only 25% of those entitled for relief actually got it.
Hoboes
Someone who wonders around the US in search for work.
Many unemployed became Hoboes. 1932 estimate 1-2 million of them. Given a hard time, thrown off trains, borders were guarded and Georgia they were arrested and put into chain gangs.
The strain on resources/refile
relief bodies running out of funds. States revised less in Texas as unemployment rose. For example in Chicago , schools shut for 10 months. Charities could only help 6% of the finds needed. ‘Fontana” magazine estimates in 1932 28% of the total population received no income, this estimate did not include 11million farmers.
Rural poverty
US department of agriculture said 58 farms in every 1000changed hands in 1929. by 1936 this had Rosen to 76.6 with 41.7 by forces.
Poverty in the midst of plenty
people went hungry in one of the richest food producing country. food prices were too low to be profitable. For example meat prices were not good enough to transport animals markets.
In Chicago women searched rubbish tips for edible.
Total relief funds worked out for around $2.40 per adult and $1.50 per child per week.
The role of President Hoover
tried to help the depression and gave generously to charity, cut his own salary by 20% to help provided reviews for his recovery measures. Deposition was during all but the first 7 months of his Presidency. In public he seemed optimistic, leading to argument he had lost touch. example he told press that unemployment was falling- many jobless didn’t like this. Lost credibility. where hoboes lived were called ‘Hoovervilles.’
Problems with Hoover
wouldn’t abandon his beliefs of self-help and voluntary co-operation. (though he involved to govt. in the economy more than previous presidents.) But wouldn’t accept direct goverment relief. He said the economy had to right itself.
was prpered to do something but not enough.
Agriculture (henry the ) hoover
before wall street crash, hoover called meeting at congress to sort out the agricultural problem- was prepared to help farmer help themselves.
agriculture marketing act
1929 - made a 9person federal farm boardwiht $500million funds to making famers marketing co-oppratives. ( so-oprative would buy farmers food to sell.) But had no power to order reduction in prediction. Surpluses in US and europe fall and co-oprative price go up and in just summer 1931 co-oprtives ended up paying over double to price per bushel as the rest of the world.
waist of tax payer money and farmer should have been encouraged to produce less not more.
Tariffs
Hawley-Smooth tariff - 1930.
was highest in american history. Leading to few American good being exported and Europe abandoned free trade.
Repudiation of the war debts and international problems
Hoover blamed the depression on Europe. After wall street crash the american credits dried out and the Hawlet-Smooth act made things worse. Years 1929-1930 international trade fell by $500million and the following year by $1.2billion, leading to european counties Repudiating their war debt. Germany almost had to refuse to pay back loans.
postposed debt collection
1931 postend debt collection for 18 months, if other countries would do the same.
18 months later (FDR was now becoming president.) Hoover advised FRD to keep postponing to debt but he didn’t. Instead signing the Jonson act.
Johnson act
making it illegal to sell in the US for counties who refused to pay back to debts.
Promotion of voluntarism
However wanted everyone to act as if there was no depression, called a meeting that said no one should cut there workforce or wages. encouraged state leaders to starts new projects of public work as well as keep the old ones.
Failure of the voluntarism
Depression got worse so had to lay off workers, wages for those left working fell.
Depression was too bad for voluntarism.
Unemployment relief
Hoover set up President’s Emergency committeee for unemployment to help agencies to organises their efforts. But hoover would not give federle refile as it would ‘destroy self-help and people would rely on govt. help.
In the end congress gave $47million- still only a LOAN.
Federal home loans bank act
1932 - save mortgages by making credits easier. Federal loan banks set up to provided mortgages, however the maximum loans was 50% of the value of the property= ineffective.
Reconstruction Finance Corporation (RFC)
Jan 1932, would lead up to $2billion to rescue banks, insurance companies,railroads and construction companies. Was known as insurance measure.
loans 90% to small/medium banks and 70% to banks in towns with population less than 5000.
Was criticised for leading too much to certain banks - out of $61million, $41million were given to only 3 banks. Govt argued, biggest firms were biggest employers.
criticism got so much Hoover gave in creating the Emergency Relief and construction act in 1931.
RFC
Reconstuction Finance Corporation 1932
Emergency Relief and construction act
1932 authorising the RFC to lead up to $1.5 billion to states to finance public works. However the state had to declare banksrupty and the works that would happen had to eventually be payed back.
War veterans and the ‘Bonus Army’
Was said in 1925 that all veterans would get paided in full in 1945 but when depression hit they wanted it sooner, march in Washington and 20,000 camped in the capital. They didn’t win the vote, Hoover feeling sorry for them offered to pay for there transport home but many didn’t leave. Hoover was scared of violence or a revolution, white house was guarded and chained up.
To get them to move tanks were used and tear gas to disperse them Camp was destroyed and some injured.
Why the depression lasted so long
- Foreign economic crises
- American business
Foreign economic crises
Hoover always blamed Foreign economic problems. Lake of purchasing power that stiffened trade. However Americans tariffs had restricted international trade. (Hawley-Smoot tariff 1930). American was cristised for not devaluing its currency and therefore making goods ever more expensive for foreigners.
The nature of American business
growth in the American economy came after the civil war. US went through a massive industrialisation. US worked so often individuals or small groups would decide wages and prices (no compassion.)
Over production even when demand was growing. Population was considering less than the economy was producing.
The extent of the Depression
All of America was effected by the depression:
- Employment opportunities - old industries loses competitive edge to new industrialised rivals with modern production methods. Over production and underconsumption, industry were pretty bad = unemployment.
- Geogrphical extent - both rule and urban. Farmers had been poor throughout the depression and therefore their purchasing powers were poor and visa versa.
Inadequate government intervaention
Radical economists says it was causes by too many overproduction and too few being able to afford.
Great inequality in wealth - 8% of families earned 42% of national wealth while 60% earnt only 23% of the wealth.
Was said government should get involved when the balance between ability to buy and leavle of earning. This would involve increasing tax of the rich = more money for public work.
However this did not happen.
Monetary policy
The theory argued that a decline in the amount of money on circulation often comes before a depression, Failure to increase this will prolong the depression as people have less money to spend.
Amount of money in circulation fell by 33% between 1929-1933.
Monrtart argued that more money need to be in circulation in order for economic growth.
Herbert Hoover view on the depression
Though the Depression was caused by European countries, and effects caused by the war lead to countries to continue to distrust each other.
GLobal business
Global business went from $36 billion in 1929 to $12billion in 1932.
