USA Topic Two - Depression and New Deal 1929-1938 Flashcards
What was the impact of the Wall Street Crash on unemployment in America?
- October 1929: 500,000 unemployed
- December 1929: over 4 million unemployed
- 1933: 15 million unemployed
What overall impact did the Wall Street Crash have?
- it had shattered public confidence
- it had plunged the USA into deep economic depression
What % of US banks collapsed due to the Wall Street Crash, what was the impact of this?
20% of US banks
- brought ruin to those who had savings invested in them
How were real wages impacted by the depression (1929-1931)?
1929-1931: real wages fell by 16%
How was construction impacted by the depression (1929-1931)?
construction fell by 78%
How was investment impacted by the depression (1929-1931)?
investment decreased by 98%
Why did workers and families suffer because of the depression?
- there wasn’t any jobs for workers
- families had no income at all
- families were sometimes left homeless
- families broke down
How were workers and families effected by the depression?
- Hoover encouraged voluntarism (aid through voluntary work)
- 1930: soup kitchens and bread lines established in towns to provide direct help to those impacted by the depression
- Nearly 1 million workers left home in search of work (hobos)
Why did ethnic minorities suffer because of the depression?
- many had suffered racial discrimination for generations
- they struggled to gain and maintain work
- the situation was worse in the South
How were ethnic minorities effected by the depression?
- rapid decline in economic activity led to a rise in racial discrimination
- employers had a preference for white workers
- during the depression, 500,000 Mexicans were forced to leave the USA
Why did farmers suffer because of the depression?
- overproduction and lack of demand led to loss of profit
- farmers were in debt from machinery bought in WW1
How were farmers effected because of the depression?
- 1929-1932: farm incomes fell by 2/3
- fall in demand caused over-production
- the collapse of the banking sector damaged farmers who lost their livelihoods
Why did veteran soldiers suffer because of the depression?
- not able to work in some cases
- no benefits in place to help through the period of economic downturn
How were veteran soldiers effected because of the depression?
- people who fought in WW1 were particuarly effected by the depression
- 1932: 21,000 protestors marched on Washington
- demanded that bonuses due to be paid out in 1945 should be paid immediately to help with the effects of the economic depression
- Hoover declared their marches a threat to democracy and the army responded to the marchers violently
Who was Herbert Hoover?
- 31st President of the USA
- business man
- self-made millionaire (his career symbolised the American Dream)
What political standing was Herbert Hoover, what policy did he believe in?
- Republican
- laissez-faire
When was Herbert Hoover elected President?
- elected in November 1928
- became President in January 1929
What and when were the key events of Hoover’s presidency?
1929: Hoover sets up the Federal Farm Board
1930: Hoover signs the Hawley-Smoot Tariff Act
1932: Reconstruction Finance Corporation set up by Hoover
1932: US Army ordered to remove the Bonus Army Veterans by Hoover
1932: Franklin D. Roosevelt defeats Hoover in the election
How was Federal Government limited through the depression (1929)?
- 1929: Federal government expenditure was only 3% of GNP
- 1990s: Federal government expenditure was 20% of GNP
Was Federal or State and Local Government more powerful in 1929?
- State and Local Government was more powerful
- budget was 5x greater for state and local government than Federal government in 1929
- Hoover initailly sought to work through local government iniatives
When was the Federal Farm Board created by Hoover?
1929
What was the Federal Farm Board?
- it aimed to supervise a cutback in production in order to deal with over-production following WW1
- uneffective as Hoover limited the scale of the intervention
Why was the Federal Farm Board a failure?
led to the creation of the Dust Bowl through overworking the soil - worsened the sitaution of farmers
When was the Hawley Smoot Tariff Act?
1930
What did the Hawley Smoot Tariff Act do?
- raised duties on a range of farming products and manufactured goods
- raised duties now at an average level of 42%
Why was Hoover criticised for the Hawley Smoot Tariff?
- Hoover criticised for ‘choking off international trade’ when foreign markets were needed most
- it produced retaliation from other countries who raised their taxes on American goods
- it contributed to the downward spiral in world trade
What did Hoover establish to try and tackle the banking crisis, when?
the Reconstruction Finance Corporation (RFC) in October 1932
What did the RFC introduce?
- Reconstruction Finance Corporation
- a capital fund of $500 million which could be leant to railroads, banks and other financial institutions- only $10 million was eventually spent by the bankers in control of the fund
Why was the RFC a failure?
- Reconstruction Finance Corporation
- too little, too late
- by 1932: 522 banks had already collapsed
What are the left-wing criticims of Hoover?
- he did too little, too late
- he shouldn’t have clung to laissez-faire attitudes and voluntarism
- he saw his job as only to encourage and reassure
What are the right-wing criticisms of Hoover?
- he did too much
- his iniatives harmed the morale of big business
What were Hoovervilles?
shantytowns formed mainly from cardboard for people who had lost their jobs and homes
How was Hoover’s reputation irredeemably destroyed?
- the existence of Hoovervilles as symbolising his failures through the unprecedented economic depression
- the violence occured against the Bonus Army Veterans in 1932 under his orders
Why may Hoover not be entirely responsible for the worsening economic position of America?
- he had pressure to please everyone
- Hoover initailly did not know the scale of the problem - as the rest of America didn’t
- Hoover was basing his response on the past experiences of the short-lived 1921 recession - didn’t require much intervention
- He had limited resources due to the lack of power of the Federal Government
- Congress was very hostile towards Hoover following the 1930 election
What can the declining economic state of the US be seen as a result of?
the systematic failures of the entire US government
How was GNP impacted by the depression?
GNP fell dramatically
How was construction impacted by the depression?
Construction fell by 78%
How was manufacturing impacted by the depression?
Manufacturing decreased by 54%
How was investment impacted by the depression?
Investment decreased by 98%
How did the poor and unemployed receive aid under Hoover?
- help came from voluntary organisations
- President Hoover encouraged this
By 1930 how had aid for the poor and unemployed progressed?
Soup kitchens and breadlines were set up in towns to provide relief
How many people left home to search for work?
Nearly a million
By 1931 what was noted about school children in a survey?
All school children were inadequately fed
What did suicide rates rise by between 1929 and 1932?
14%
What did marriages fall by?
10%
How many Mexican citizens were forced to leave the US because of a rise in racial discrimination?
almost 500,000
What group of people were the first to be fired when the depression hit?
black Americans
What did farm incomes fall by?
2/3
What did the Bonus Marchers want?
To receive their bonus from WW1 immediately and not in 1945
What does the RFC stand for?
Reconstruction Finance Corporation
What did the RFC do?
- introduced in January 1932
- $2 billion made available to rescue banks, trusts, credit unions and other financial institutions
What did the Federal Farm Board do?
authorized to help farmers stabilise prices by buying surplus farm supplies and by subsidising farms
What was the Hawley Smoot Tariff?
Raised the tariff to 60%
What sort of action did Hoover encourage?
Voluntary action
When was the Emergency Relief and Construction Act?
1932
What was the Emergency Relief and Construction Act?
- 1932
- appropriated funds for federal relief loans to the states and new public works construction.
Why did Hoover fail to end the depression?
- He didn’t do enough to help
- Believed that the cause of the depression was an international problem
Why did Hoover not do enough to help end the depression?
believed that the government didn’t have a role in the economy
Why did Hoover blame the cause of the depression on international reasons?
blamed the loans that the US had given out after WW1
Why did the Hawley Smoot Tariff fail?
- restricted international trade at a time when it was essential to boost the economy
Why did the Federal Farm Board Fail?
- didn’t have the power to halt production
- encouraged over production
- was paying well over market price for farm surplus
How did FDR tackle banking in his first new deal?
- The Emergency Banking Act March 1933
- Fireside chats used to communicate via the radio his plans to the public
- Glass-Steagall Act June 1933
- The Gold Reserve Act January 1934
What was FDR’s first move when dealing with banking in America?
created a bank holiday from 6-9th March 1933 which closed all the banks
When was the Emergency Banking Act and what did it do?
- March 1933
- US Treasury investigated all the banks and only reopened them if they were financially secure
When was the Glass-Steagall Act and what did it do?
- June 1933
- Separated investment and commercial banking
How was the Glass-Steagall Act successful?
it helped to restore faith in the banking system
When was the Gold Reserve Act and what did it do?
- January 1934
- Devalued the $ against the rate of gold
- FDR hoped that this would make exports cheaper - this didn’t work
Did FDR succeed in reforming banking in his first new deal?
- FDR was able to restore confidence and trust in the banks which was arguably his most pressing issue
- In this respect he was successful
- he didn’t however make much progress in tackling deep rooted issues in America such as lack of branch banking
How did FDR tackle agriculture in his first new deal?
- The Agricultural Adjustment Administration (AAA) June 1933
- Tennessee Valley Authority (TVA)
- The Rural Electrification Agency 1935
When was the AAA established and what did it do?
- Agricultural Adjustment Administration
- June 1933
- Set about stabilising prices
- prevent agricultural surpluses
- farmers would reduce the acreage under cultivation or reduce their production
What was the impact of the AAA?
- 1935 - 35 million acres had been removed from cultivation
- Not all farmers benefitted such as black sharecroppers
- The dustbowl left many farmers destitute
When was the TVA established and what did it do?
- Tennessee Valley Authority
- May 1933
- Helped farming communities across the south-east of the USA by improving flood controls and providing cheap electricity
When was the Rural Electrification Agency established and what did it do?
- 1935
- Provided low interest loans to rural cooperatives that helped fund the coming of electricity to more remote areas in which big power companies had no interest
- By 1939, 25% of farming families were enjoying electricity
How did FDR tackle industry in his first new deal?
- National Recovery Administration (NRA) June 1933
- Civilian Conservation Corps (CCC)
- Federal Emergency Relief Administration (FERA)
- Civilian Works Administration (CWA) November 1933
- Public Works Administration (PWA) June 1933
When was the NRA established and what did it do?
- National Recovery Administration June 1933
- Created codes of practise for each industry
- Aimed to ensure fair competition, fair wages and hours of work
- Many of the NRA’s codes were declared unconstitutional by the Supreme Court in 1935
When was the CCC established and what did it do?
- Civilian Conservation Corps March 1933
- Offered conservation work to young men aged 18 to 25 for a minimum of six months and a maximum of two years
- CCC programmes were supervised by the army
- Workers lived in segregated camps and took part in hard manual labour
When was FERA established and what did it do?
- Federal Emergency Relief Administration 1933
- Attempt to aid the unemployed
- Under the control of Harry Hopkins
- FERA had a budget of over $500 million
- 5,000 public buildings were built
When was the CWA established and what did it do?
- Civil Works Administration November 1933
- A temporary administration created to solve the problems caused by the winter of 1933 - 1934
- Additional budget of $400 million
- Hopkins hired 4.2 million workers in four months
- CWA provided valuable infrastructure - encouraged further economic growth
When was the PWA established and what did it do?
- Public Works Administration June 1933
- Long term programme which provided real jobs
- Budget was $3.3 billion
Were the New Deal programmes a success?
By 1934, FERA, PWA and CWA had offered work to 30% of the US workforce
Who opposed the New Deal?
- Huey Long
- Father Charles Coughlin
- Frances Townsend
- Congress and the Supreme Court
- American Liberty League
Who was Huey Long?
- Democratic Governor and Senator from Louisiana
- Extremely unpopular for being so left laying
- Assassinated in 1935
Why and how did Huey Long oppose the New Deal?
- Criticised Roosevelt for not doing enough for the poor
What did Huey Long propose in place of the New Deal?
- ‘Share Our Wealth’
- Long promised to confiscate any personal fortune over $3 million
- Proposed an annual income of $2000 to each family in America
- Created 27,000 ‘Share Our Wealth’ clubs across the USA - acted as pressure groups to support Long’s ideas
Who was Father Charles Coughlin?
- Was anti-Semitic and expressed sympathy for Germany and Italy’s fascist regimes
- Had a radio show with 35 million listeners
- He became very unpopular and his radio show was cancelled
Why and how did FR Coughlin oppose the New Deal?
- Teamed up with Frances Townsend
- Initially supported Roosevelt and the New Deal
- Blamed bankers for the depression
- His radical stance became more extreme and alienated many Americans
- Claimed the New Deal was a communist conspiracy and Roosevelt was a dictator
- Set up the National Union of Social Justice
- Tried to gain better wages for workers
Who was Frances Townsend?
- Supported ideas of old-age pensions
- Townsend campaigned for a better deal for old people
Why and how did Frances Townsend oppose the New Deal?
- Criticised the New Deal as he felt it didn’t go far enough
- The ‘Townsend Plan’ proposed a federal pension of $200 per month to everyone over 60
- By 1935, over 500,000 people had joined his Townsend clubs to support his plan
- As a result, Roosevelt proposed his own old-age policy, which was less generous
What was the American Liberty League?
- Conservatives who opposed the New Deal
- formed in 1934
- membership consisted mainly of wealthy business elites and prominent political figures
- Emphasised private property and individual liberties
Why and how did the American Liberty League oppose the New Deal?
- The league labelled Roosevelt’s AAA ‘a trend toward fascist control of agriculture’
- Wealthy donators dominated so that few bankers, industrialists and businessmen accounted for more than half of the League’s 1935 budget on the national level
- Spent roughly $1,200,000 in total across its six-year life
- Membership peaked at 125,000 in mid 1936
- Membership declined rapidly following the 1936 election
Why and how did Congress and the Supreme Court oppose the New Deal?
- Struck down several New Deal measures as being unconstitutional
- Declared the AAA unconstitutional in 1936 - killed the alphabet agency off
- Had a legal stance and in 1935 it effectively declared the National Recovery Administration (NRA) illegal
- Argued that Roosevelt had tried to impose the power of the federal government on state governments
- 11 out of 16 of the Alphabet Agencies were declared unconstitutional
- Argued that the entire premise of the New Deal was unconstitutional - the federal government didn’t have the right to impose its decisions onto states
When was the Revenue Act passed?
1935
What was the Revenue Act?
- the Wealth Tax Act was passed to pay for New Deal programmes
How was tax increased to under the Revenue Act?
- increased the rate of tax from 63% to 79% on incomes over $5 million
- Raised $250 million per year - not enough people earned that much
- increased taxes on businesses
Why was the Revenue Act passed and what did people think about it?
- passed to appease Huey Long supporters (share our wealth)
- people called FDR a class traitor
What act was passed under the Second New Deal in July 1935?
Wagner Act - known as the Labour Relations Act
What was the 1935 Wagner Act?
enacted to appease the growing trade unions
Who did the Wagner Act exclude?
- agricultural workers
- public employees
- black Americans
- Hispanic Americans
- women
When was the Social Security Act passed?
1935
What was provision like for the elderly before the Social Security Act 1935?
no system to look after the elderly
Why was the Social Security Act passed in 1935?
in response to Frances Townsend
Who funded the Social Security Act 1935?
employers and employees
What did the Social Security Act 1935 introduce?
- pensions to be paid out at between $10 - $85 per month
- Unemployment benefit included at a max of $18 for 16 weeks only
Who did the Social Security Act 1935 exclude?
- farm workers
- domestic servants
- self-employed
Why did veteran soldiers suffer because of the depression?
- not able to work in some cases
- no benefits in place to help through the period of economic downturn
Who was FDR?
- Franklin D Roosevelt
Which election did Roosevelt win?
the 1932 election
What political party did FDR belong to?
- the Democratic party
- meant he favoured government intervention
What did FDR immediately state that Hoover never did?
the importance of a balanced Federal Budget
What was FDR like as a President?
- charming and charismatic
- under the surface he was secretive and a ruthless politician
