USA depression Flashcards
(41 cards)
1
Q
Causes Wall Street Crash
A
- Many Americans enjoyed ‘ playing the market’
- Value of shares rises when a company is doing well howeveer the growth in share value occured from - people buying and selling increasing demand - confidence in economy beleiving prices would keep rising - bull pool encouraged inexperienced investors to speculate, artifically raising prices
- Stock exchange relied more on confidence than successful businesses
- When confidence weakened, the whole system began to collapse
- First sign of trouble when in mid 1929 new spread that stock market leaders begun to sell their shares - recognised the market was not aligned with the realities of the economy
- Federal reserve begun making it more difficult to borrow for speculation
- Fearing worse was to come, most experienced investors pulled out
- Crash began when mroe followed their example and panic replaced confidence
2
Q
Consequences of Wall Street Crash
A
- Affected investors as share values ocntinued to ddrop
- Shares lost 26b dollars in value
- Brokers who had suffered demanded immediate repayment of loans
- Investors had to take money from their savings to pay back what they owned
- Customers demanded cash from banks, had to ask companies and people with loans to repay them immediately so that they could have liquidity
- With little spare moeny, banks stopped lending
- Customers lost their savings and businesses lsot an important source of credit
3
Q
Wall Street Crash and the Great Depression
A
- Many lsot savings and had to cope with wage cuts
- Reduction in consumer spending meaning newer industries struggled to find buyers
- Supply of credit cut off and businesses had to change their approach, invested less, cut down production, and got rid of workers
4
Q
Other causes of Great Depression
A
- Under consumption
- Over production in indutry
- Falling income of farmers
- Failing banks
- Problems in Europe
5
Q
Impact of Great Depression on banking
A
- Americans withdrew all their savings meaning banks had to close down because they could not get sufficient money quickly enough
- Loss of $2.5 billion
6
Q
Impact of Great Depression on agriculture
A
- Prices for goods already low
- Prices continued to fall from continued over production
- Impossible to continue to pay off mortgages and other debts
- Led to protests
- Migration - turned cities into unpleasant places with large numbers of unemployed people
- Enviornmental crisis caused major problem spread acorss area became known as dustbowl
- Drougt in 1930
- Dust storms in 1932
- Many from Oklahoma, Arkansa, and other states migrated west
7
Q
Impact of Great Depression on industry
A
- Exports decreased
- Reduction in demand led to companies cutting prices to sell goods - reduced profits
- Cut wages
- Reduced production and working houses: Workers had hours cut
- Got rid of workers
8
Q
Impact of Great Depression on People’s Lives
Unemployment
A
- Millions lost jobs
- Underemployment was a problem - one third of people had to work part time which meant those with jobs had to cope with lower incomes
- Decline in living standards
- Strugglign to fund themselves nad had to rely on relief
- No support available
- Birth rate fell below replacement rate
9
Q
Impact of Great Depression on People’s Lives
Disadvantaged groups
A
Black people:
- More likely to lose job
- Half of black women in the workforce lost their jobs
- Faced racist threats
Immigrant workers:
- Lost their jobs to white people
- Left or deported
Women:
- Lost their jobs
- Some benefits: 25% more women able to find work outside the family home due to lower income
Elderly:
- Could not retire
- Few benefits
10
Q
Impact of Great Depression on People’s Lives
Homelessness and Hoovervilles
A
- Those who could not pay rent or keep up with mortgages lost their homes
- Many relied on charities or local government
- POpular option was to move from one place to another
- Governments of places where homeless migrated to could not provide relief
- Hobos kept on moving to find work
Hoovervilles:
- Homeless tried to stay in or near their home towns
- JOined together to create a shanty town on empty land, biuidling accomodation with scrap materials
- Called their towns ‘Hoovervilles’ because the blamed President Hoover
11
Q
Bonus Marchers
A
- Congress passed a law in 1924 giving veterans a bonus of up to 625 dollars to make up for hte wages they lsot while fighting
- Most would wait until 1945 to recieve
- When the depression struck, veterans felt they needed the moeny right away
- 20,000 people marched to DC in 1932
- Hoover against the idea because he was trying to further support and fund for other methods to tackle depression
- Congress made 100,000 dollars available to help the marchers pay for their journey home
- 5000 veterans stayed behind while many took the offer
- Polcie tried to empty some buidlings but were attacked
- Hoover sent in army to clear the camp
- Veterans fled and chased by troops who burnt tents and teargassed marchers
- Hoover’s reputation destroyed
12
Q
Hoover’s actions
A
- Set up the National Credit Corporation(1931): $500 million raised by businesses to help failing banks
- Investors were afraid to lose their money and spend very little of it
- Established the Reconstruction Finance Corporation (1932): $2 billion was provided by the government to rescue banks and other key organisations
- Criticised for using government money to help banks rather than people
- Agricultural Marketing Act(1929): Set up the Federal Farm Board to buy up crops from farmers
- Farm Board built up huge amounts of extra goods and could not stop the fall in prices
- Hawley Smoot Tariff (1930): Raised import duties on foreign food by 40% to force AMericans to buy domestically
- Led other nations to do the same, reducing international trade
- Federal Farm Loan Act: $125 million given to the Federal Land Banks to provide farm mortgages
- Provided mortgages but did not help farmers repay them
- National Business SUrvey Conference (1929): Hoover arranged a meeting of 400 business executives. They made promises about production, expansion and wages
- Promises made in 1929 by major employers were broken as the Depression worsened
- Moratorium on First World War debts (1931): USA would stop collecting debts for 18 months to give Europe time to recover
- Did not help enough to prevent the collapse of the international economy
- Reconstruction Finance Corporation (1932): Made money available for banks to loan to industries
- Most of the money loaned went to the largest banks and companies
- President’s Emergency Committeee for Employment (1930-31): Organised and encouraged donations for relief. Later replaced by President’s Orgnisation for Unemployment Relief
- ECE and POUR could not raise enormous sums needed to help the large numbers of unemployed
- Public works: Government doubled its spending on federal government projects over 3 years, creating jobs.
- Federal spending on public works very low.
- Reconstruction Finance Corporation (1932): Allowed the government to loan 300 million dollars to states for relief
- States had to meet tough requirements in order to borrow the money. Only $30 million loaned by the end of 1932
- Hoover took the first steps toward recovery
- A huge economic crisis could not be solved overnight and needed more government support and intervention than the USA had ever seen before
- The country voted in a Democrat president, Roosevelt who promised them a new deal
*
13
Q
Aims of the New Deal
A
- Recovery
- Relief
- Reform
To achieve these:
- Gain support using ‘fireside chats’ to share his message directly
- Utilise his majority in Congress to turn New Deal policies into law
- Restore economic activity by using government moeny voted for by Congress to create jobs
- Expand the federal government by settign up new agencies to organise recovery and handle relief
14
Q
First Hundred Days
Tackling banking crisis
A
- Asked Congress to pass the **Emergency Banking Act **which closed all banks for 4 days
- Federal checks carried out and only financially sound banks were allowed to reopen
- Talked aout banks in his fireside chat asking Americans to deposit their savings again to restore confidence
- Immediate crisis over
- Passed law to insure bank deposists up to 2500 dollars and restricting how they could use money
- Restored confidence
15
Q
First Hundred Days
New laws and alphabet agencies
q
A
- **Agricultural Adjustment Act set ** up the Agricultural Adjustment Administration to help farmers
- National Industry Recovery Act established the National Recovery Administration which wrote rules for industries to follow
- Federal Emergency Relief Administration provided relief payments
- Economy Act reduced government running costs by 25%
- The Beer and Wind Revenue Act was the first steps towards the end of Prohibition which the governemnt taxed alcohol
16
Q
First Hundred Days
Solving agricultural crisis
A
- **AAA **aimed to raise the price
- Offered subsidies to farmers who limited proudction
- If a farmer kept an acre of land empty, he recieved around $11
- Less wheat and cotton harvested while demand remained causing the price to rise
- Still too many farm products from previous harvests
- Commodity Credit Corporation which paid farmers to keep extra goods
- If prices rose above the amount the corporation paid, the farmer could buy it back at the orginal price and sell it at a new higher price
- Farm Credit Administration helped improve mortgage arrangements, helping farmers stay on their land
17
Q
First Hundred Days
Helping Industry Recover
A
- NAtioanl Recovery Administration worked with major industries to create industry wide codes
- Set quotas on how much produced, controlled prices, set wages, limited working hours, and banned child labour
- Companies not forced to join but many business leaders recognised the codes would end over production, stop ceomptitive industries from bankrupting each other and improve working conditions
- Any business that followed a code allowed to display symbol of NRA
- NIRA gave workers legal right to join uinons
18
Q
First Hundred Days
Direct Relief
A
- Federal Emergency Relief Act providing $500 million for states to spend on relief
- New money was a grand and did not need repaying
- Helped families have a basic income to survive in the short term
- Home Owner’s Refinancning Act introduced to extend mortgage payments to 20 years
19
Q
First Hundred Days
Work Relief
A
- Civilian Conservation Corps took unemployed young men to the countryside and gave them tough outdoor jobvs including trail biudling and reservoir digging for $30 a month
- Most income to be sent back home ensuring families benefited
- Public Works Administration given $3.3 billion of federal money to spend on big construction projects, such as the Grand River Dam in Oklahoma to create jobs
- Head of FERA set a temporary agency, the Civil Works Administration with a budget of $400 milion - provided work on short term projects so work can begin before winter
20
Q
First Hundred Days
Federal control
A
- In the South, state governemnts did not do enough to help poor
- Tennessee Valley Authority, huge federal planning agency that would help seven states to recover
- Aimed to provide word, generate and extend coverage of electricity, control flooding and improve productivity of land
- Main plan was to build up to 20 dams
- Farmers were to be educated in new farming methods
- Problems of drought and dust storms partly solved
21
Q
Need for Second New Deal
A
- Income still low
- Unemployed remaind high and workers continued to strike
- 1935 provided the circumstances for New Dealers to change that
- Elections to Congress in November 1934 brought in politicians who wanted to reform
- Supreme Court shut down some of the agencies declaring them unconstitutional
- Roosevelt set out to create a second New Deal - provide work relief, support workers in industry, help rural poor, provide for the old
22
Q
Second New Deal
Works Progress Administration
A
- Works Progress Administration 1935
- Projects helped to employ around 8 million Americans and demonstrated how much the federal governemnt was prepared to spend on relief
- Spent 11 billion dollars helping poor people regardless of race
23
Q
Second New Deal
Work relief
A
- Helped the poor find employment
- Work relief projects including the CCC and PWA receieved $4 billion along with the newly formed WPA
24
Q
Second New Deal
Housing
A
- Resettlement Administration although set up to help the rural poor, built new suburban towns for urban families
- Congress passed the Housing Act which set up a new agency to create new homes to replace shanty town
25
# Second New Deal
Working conditions
- **National Labour Relations Act** designed to help improve working lives of industrial workers
- Minimum wage and maximum hours for workers in industry introduced
26
# Second New Deal
Help for farmers - access to land
- **Resettlement Administration** which helped resettle families from overworked land
- Only resettled a few thousnad which led to its replacement by the **Farm Security Administration**
- FSA helped the rural poor to buy their own farms and get new equipment to use on them
27
# Second New Deal
Help for farmers - Migrant workers
- The FSA took action to help migrant workers who travelled across the US in search of work
- Migrant camps to provide shelter to those who had left the Dustbowl for California and paid for doctors and dentists to look after migrants
- Helped keep migrants alive and healthy
28
# Second New Deal
Help for farmers - Farm prices
- First **Agricultural Adjustent Act** declared not valid by the Supreme Court in 1936
- Second **Agricultural Adjustment Act** created compulsory measures to limit production using quotas
- Enforced through heavy taxes on sales above quota
29
# Second New Deal
Help for the old and disadvantaged
- **Social Security Act** 1935
- Created Federal pension system: Employees paid into a pension scheme for their retirement
- Federal unemployment insurance up to 16 weeks
- Federal support for disadvantaged groups: support funded by federal matching grants
- Self funded, meaning it could not pay our pensions immediately and the US economy took longer to recover
- Payouts to disadvantaged groups varied from state to state because it was funded by matching grants
- Domestic servants and agricultural labourers not included in the unemployment and pension schemes
30
# Second New Deal
Help for workers
- **National Industrial Recovery Act** declared invalid by Supreme Court
- **National Labor Relations Bill** which became the **Wagner Act**
- Strengthened labour unions
- Offered federal protection to unions: National Labor Relations Board set up which supervised union egotiations, defended workers who had been fired, and helped unions gain recognition
- Many unions had to striek to force companies to recognise them officially
- Strike could be violent
31
# Second New Deal
Reforming Banks
- Control still divided between Federal Reserve, the states, and the big banks
- **Banking Act of 1935**
- Created a Board of Governors of the Federal Reserve system chosen by president
- Gave various financial powers to the Board, taking them away from the more powerful banks
- Strengthened the central banking system
- No national bank closed and very little had to be paid out in deposit insurance
- US banking system had been modernised
32
Situation before the New Deal
- Most farms lacked electricity
- USA's enormous size meant there were many remote farms
- Families hadno access to the consumer appliances
- Difficult to modernise methods of production because of lack of electricity
33
Rural Electrification
- TVA built dams to generate electricity and lent money to cooperatives to lay power cables
- **Electric Home and Farm Authority** aimed to help farmers buy electrical appliances - encouraged companies to make cheaper models and provided laons backed by the RFC to help farmers buy on an instalment plan
- **Rural Electrification Administration** took over the programme and made loans to rural cooperatives across the USA
- Electrified farms
- Supported local groups
- Boosted demand for electricity
- Slowed down by utility companies worried about losing profits
34
Challenges to the New Deal by Supreme Court
- Schetchter Poultry Corp sargues that the NRA had too much power shutting it down
- Agreed the AAA should not have power to supervise agricultural production
- Roosevelt attempted to have all judges over the age of 70 to be replaced
- After attempt, the court began to side with his polciies
- As judges died or retired, FDR replaced them with symphathetic judges
35
Opposition from Republicans
- Roosevelt was Democrat
- Federal government too powerful
- SPent too much money
- Alfred Landon campaigned for power to be returned to states but did not appeal so most voted Roosevelt
- Struggeled to keep support after a recession in 1937 and his unpopular plan to change Supreme Court
- Worked with southern conservative democrats to - cut spending on relief - investigated alphabet agencies and accused them of communism - blocked New Deal measures
- Republican party ended New Deal as 1938 elections to Congress
36
Business Opposition and Liberty League
- Bsuinesses had benefited from New Deal because it had helped calm an economic crisis
- As problems were over they turned against as - they did not like being told what to do (minimum wage and restrict working hours) - New Deal supported unions - Businesses did not like the way governemnt was spending too much
- Liberty League founded in 1934 and got support from conservatives from both parties and business leaders
- Supported legal challenges to the New Deal
- Struggled to recruit
- Unpopular - Republican Party told them to stay out of 1936 election
- After 1937 iwas garder to get the court to challenge FDR
37
Senator Huey Long
- As governor of Louisana he taxed the rich and big businesses and used it to provide social services and implement reforms
- Set up adult literary programmes and free textbooks to school
- Criticised New Deal saying the NRA was controlled by big business, the AAA left poor farmers homeless, Social Security Act did not reduce gap between rich and poor
- Share Our Wealth - Heavy tax on rich - give money to ordinary Americans
- Problem there was not enough rich people to make it viable
- 8 million people joined Share Our Wealth Clubs making it powerful
- Shot dead in 1935
38
Father Charles Coughlin
- Roman Catholic Priest from Detroit
- 30 million people listened to his weekly radio show
- Initially supported the deal
- Blamed Jews for the Depression
- Thought the New Deal was influenced by Jews and Communists
- SEt up the National Union for Social Justrice in 1934 calling for currency and banking reforms, nationalisation, fairer taxation
- Formed the National Union Party - got under 1m votes
- Second New Deal put in place some reforms he had called for
39
Doctor Francis Townsend
- Formed old age revolving pensions in 1933 ater seeing three elderly women search bins for food
- Proposed everyone over 60 should get 200 a month to spend within 30 days
- Fund this with 2% sales tax
- 500,000 people joined Townsend clubs and 20 million signed petition
- Numbers made no sense - 2% tax could not fund
- Could not challenge Social Security Act
40
Upton Sinclair
- Novelist
- Ran for California governor in 1934 using the slogan ' End poverty in California'
- Argues empty land and shut down factoreis should be opened for unemployed to use to produce what they needed
- Seen as too radical and lost to Republican candidate
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