The Wall Street Crash
Key Words -
- Depression - a period of extended and severe decline in a nation's economy, marked by low production and high unemployment.
The Roaring Twenties, the decade that led up to the Crash, was a time of wealth and excess. Despite caution of the dangers of speculation, many believed that the market could sustain high price levels. However, the optimism and financial gains of the great bull market were shattered on 'Black Thursday', October 24, 1929, when share prices on the New York Stock Exchange collapsed. Stock prices plummeted on that day, and continued to fall for a month. This led to the Great Depression, the largest economic crisis in America's history.
The Great Depression
Key Words -
The market crash marked the beginning of a decade of high unemployment, poverty, low profits, deflation, plunging farm incomes, and lost opportunities for economic growth and personal advancement. Although its causes are still uncertain and controversial, the net effect was a sudden and general loss of confidence in the economic future. The usual explanations include numerous factors, especially high consumer debt, ill-regulated markets that permitted overoptimistic loans by banks and investors, the lack of high-growth new industries, and growing wealth inequality, all interacting to create a downward economic spiral of reduced spending, falling confidence, and lowered production. Industries that suffered the most included construction, agriculture, shipping, mining, and logging as well as durable goods like automobiles and appliances that could be postponed.
Key Words -
- Rugged Individualism
President Hoover took the view that the Depression would not last long after the American economy collapsed. He thought the country would soon return to prosperity. He soon realised that the government had to do something as poverty mounted in the USA. To solve the problem of food prices falling and low income for farmers Hoover tried to produce more produce and grow more crops, but this did not work because no civilians could afford to buy the extra food. Hoover also tried to help starving and jobless citizens, and to do so he created a government scheme. The schemes role was to build a new dam on the Colorado river. For the scheme the government provided $423 million dollars and employed some men, but this was not enough to get the whole country working.
Republican Action cont.
In 1930 the Hawley-Smoot Act was passed, which increased taxes on foreign goods, therefore making them more expensive. He hoped this would make Americans buy cheaper, American goods, but this was not the case. Hoover did not seem to understand that Americans could not afford to buy any goods, no matter where they came from. One scheme which did help was made in 1932, when the government provided $1500 million to help bankrupt businesses get back on their feet.
The 1932 Presidential Election
American civilians voted for Roosevelt instead of Hoover because the Republican policies had not been acceptable to the American people, people disliked him because of his shameful treatment of the Bonus Marchers, he seemed to think the Depression was a blip and it wasn't and he also seemed very cold and distant. Also the Republicans seemed determined to carry on Prohibition and this angered the American people.
People voted for Roosevelt because he made the effort to travel thousands of miles all over America to campaign to millions of people, he promised to end Prohibition, the Democrats had positive policies to dealing with the Depression and Americans felt they could trust him. He also had overcome polio as a child, so Americans thought this made him seem trustworthy and down to earth. He was also a fantastic public speaker and was the first President to host weekly radio shows, which he did so with his 'Fireside Chats'.
The New Deal
- getting Americans back to work
- protecting their savings and property
- providing relief for the sick, old and unemployed
- getting American industry and agriculture back on their feet.
To carry out this programme the government would put money into the economy, e.g. 'priming the pump'. This would create more jobs and give people more money to spend. The demand for goods would increase, resulting in more jobs, and restore 'the cycle of prosperity'.
The First Hundred Days
- 4th March - Roosevelt inaugurated.
- 5th March - closed banks.
- 9th March - selected banks reopened.
- 31st March - the Civilian Conversation Corps set up.
- 12th May - the Agricultural Adjustment Act passed.
- 18th May - the Tennesse Valley Authority created.
- 18th June - the National Industrial Recovery Act passed.
The Alphabet Laws
- the WPA (Works Progress Administration), 1935 - aimed to give the unemployed work to benefit their local community. They built many new schools, hospitals and roads.
- the TVA (Tennesse Valley Authority), 1933 - it helped farmers experiment with new farming methods. It supervised the buildings of dams and lakes in an area which covered seven American states. They helped stop flooding and soil erosion, and brought electricty and new industries to one of the poorest parts of America.
- the CCC (Civilian Conversation Corps) - unemployed young Americans were given food and lived in special camps. They were paid a dollar a day to work in the forests. They planted trees and restocked rivers with fish. Around 2.5 million found work with the CCC.
- 1935 - National Labour Act - which allowed workers to form trade unions.
- 1935 - the Social Security Act - this gave government pensions to the old, sick and disabled. Also introduced the USA's first unemployment benefit.
- 1938 - the Fair Labour Standards Act - this brought pay rises and shorter hours of work for thousands of Americans, because it lay down basic minimum wages and maximum hours of work.