The USA in Depression, 1929-33

Question 1

Wall Street Crash

Answer 1

1925, combined value $34 billion…$64 billion in 1929 BUT too much speculation, buying and selling of shares, so reliant on confidence of investors, so when this weakened….

• stock market leaders were selling stocks mid-1929 while Federal Reserve made it more difficult to borrow money for speculation so… more experienced investors pulled out of stock market and in Nov, shares lost around $26 billion in value, 1/3 of their worth in Sept
• Sept (peak value)… Oct (4 million trade, prices drop)… 24 Oct ( 13 mill traded, bankers buy 20 companies to calm situation)… 29 Oct (brief recovery then 16 million shares)… 13 Nov ( lowest price point)
• LIQUIDITY - recalling loans and demanding savings in cash but it had been lost so less disposable income … General Motors = $0.36 on 13 November 1929

Question 2

(Other) Causes of the Great Depression

Answer 2

Before 1929:

• Under consumption: reduced spending on consumer goods because the market was saturated - 71% Americans on low incomes of below $25000 and lacked purchasing power
• Over production: car sales had fallen by 1/3 in 1929, construction dropped by $2 billion since 1926
• Failing Banks: limited reserves, no back-ups, 1/3 banks were part of Federal Reserve System, each state had different banking regulations, before 1929 around 5,172 (20%) had failed which made customers rush to get their saving out. These failures, took away spending power from customers and cut off loans to businesses, the New York City Bank left 400,000 people without savings, roughly $286 million, and faith in banks was lost
• European Problems: loans to Europe from USA… has to be recalled leading to exports dropping, high tariffs also on America goods in Europe, Germany tried to become self sufficient and Britain set up a trading agreement within its own empire, also European banks failed meaning $1,105 bill withdrawn in Europe and international tarde’s value fallen in 3 years to $12 bill from $36 bill in 1929

Question 3

Great Depression’s Impact on Agriculture

Answer 3

• 1930-31; severe droughts across the Great Plains affecting 17 mill Americans in East, following soil erosion due to over-use. Dust storms (dustbowl) in 1932 made huge amounts of land unusable, increasing impact of Great Depression because of rising unemployment. April 1933: 179 small dust storms, 38 of which were severe black blizzards - top layer of soil blown off, no land to grow on!
• Oklahoma, Arkansas and other Great Plain state farmers moved West, 1930-35 around 1 million migrated, Okies in California picked fruits and harvested crops for starvation wages / sheltered in tents
• Goods prices continue to drop around 60% lower than 1929 level, from $6 billion in 1929 overall farmers income to $2 billion in 1932 - unpaid mortgages = 1/3 farmers lost their land
• Led to Protest and migration: 2 million from rural to urban but cities were turned into unpleasant homes for the unemployed

Question 4

Impact of GD on Industry

Answer 4

• Exports decreased by 39%, 1929-32
• Car Manufacturers sold 3.5 mill fewer cars in 1933 than 1929
• National Business Profit of $9,628 mill into Losses of $3,017 in 1932
• 70,000 factories were forced to: Manufacturing wages fell by almost 50%, steel workers’ hours cut as production dropped 38%, Ford made half of his workforce redundant in Detroit

Question 5

Impact on Banks

Answer 5

• Out of 25,000 banks in USA, 9,000 closed 1930-33
• These held 9 million American’s savings, losing about $2.5 billion due to their closure

Question 6

Impact of GD on People’s Lives

Answer 6

• 1929, 3.2% potential workforce was unemployed…rising to 24.9% by 1933
• Some steel making or car manufacturing areas went up to 50%, and up to 1/3 people had to work part time so lower incomes
• Decline in living standards: 1932, 20000 children did not have enough food in NYC
• Families had to rely on relief but there was no national benefits or unemployed help. Instead: extended family, soup kitchens funded by private charities or local governments
• Average couple married 2 years later than in 1920s, birth rate below replacement rate, suicide rate increased by 14%, 100000 applied for jobs in USSR
• Disadvantaged workers: 40,000 joined the black shirts to protest against black workers, 1/2 black women lost jobs, Mexican Americans lost jobs to white people, 500000 workers left to Mexico, 25% women lost jobs in domestic service but 25% more women were able to find work outside home, Americans couldn’t retire and only 11 states had pension schemes with just 15% industrial workers having a private plan

Question 7

Hoovervilles

Answer 7

• Those who couldn’t pay mortgage lost houses: 1931, NYC government had to find accommodation for 20,000 children, in California they had 100,000 homeless looking for work
• Over 1 mill travelled around looking for work - in NYC, Washington DC and St Louis there were big shanty towns called ‘Hoovervilles’
• In Seattle, Jesse Jackson declared himself mayor of nine acres of land - governments at first burnt down settlements but, realising there was no where else to go, these Hoovervilles where acknowledged in 1932: multi racial groups of mainly men, without income helped only by donations

Question 8

Bonus Marches

Answer 8

• 1924, Congress had passed a law giving WW1 veterans a bonus up to $625 each to make up for lost wages in 1945
• 20,00 called Bonus Marchers marched into Washington DC in 1932 demanding early bonuses, camping across the river from the Capitol
• Hoover was against this: Congress rejected the bonus bill on 17 June 1932, but made $10, 000 available to help them pay for journey home - many took up the offer, but 5,000 stayed
• Hoover set a deadline for them to leave… when they didn’t, 28 July 1932 the police tried to empty some occupied buildings but got attacked, tried again and two veterans were killed
• Hoover then set in army, under General Douglas MacArthur, burnt tents and tear gassed marchers: Bonus Marchers left, 100 injured and one child killed - Hoover’s reputation ruined!

Question 9

Hoover’s Actions (to deal with the Great Depression)

Answer 9

• Beliefs: Volunteerism (government can’t force public to do anything, only encourage ands bring together) & Self-Reliance (individuals should be able to look after themselves, not depend on charity or government), i.e. laissez-faire
• Banks: 1931 National Credit Corporation ($500 mill from businesses, but NCC investors didn’t spent much due to fear over losing it)
• Farms: 1929 Agricultural Marketing Act (Federal Farm Board bought up crops, but could not stop price fall)
• Industries: 1929 National Business Survey Conferences (400 business executives made promises about wages later broken),
• Unemployment: Public Works (doubled spending, creating jobs, but still low $210 mill vs normal $2 bill)
• While his measures took the first steps towards recovery, the USA needed more support and intervention so in 1932, a Democratic President, Franklin Delano Roosevelt promised a ‘New Deal”