The Great Depression in the USA

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Lead up to the depression

The depression was on a huge scale that had never been seen before, it took the country 12 years to recover

In the cities

  • Not enough people could afford to buy American goods such as cars so factories couldn't make goods to sell
  • The surplus stock couldn't be sold abroad so factories cut production, wages and workforce

In the country side

  • Farmers produced too much, eventually food prices and their income fell
  • Famers could not pay debts or mortgages, so banks repossesed their belongings

New York

  • share prices plummeted so banks who had invested customer's money in shares lost a fortune, they collected outstanding loans which led to a loss in confidence
  • Many companies went bankrupt once their debts had been called in with 109,371 closed 
  • Production fell, more factories closed and unemployment rose to 14million by 1933
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Effects - Unemployment

Unemplyment was a major issue in America that affected one in every four men. The scale was unprecedented

  • By 1933, 25% of people were unemployed
  • In northern cities it was worse due to the closing factories and reducing workforce
  • In Chicago nearly half of thw workforce was unemployed
  • The Black community was hit hardest - in Charleston 70% of black people who were the working age were unemployed
  • Hundreds and thousands of people had to travel 
  • By 1933 it rose to 14million people unemployed

Demand dropped because people didn't have the money to buy consumer goods or an excess of the necessitites

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Effects - Businesses

Due to the unemployment, Americans had much less money to spend on goods which unfortunately led to many closing down:

  • Many American industries, ecspecially agriculture depended on the export trade
  • When foreign countries stopped importing American goods there was a disastrous effect
  • US exports fell from $10billion to $3billion 1929-32
  • More than 100,000 businesses had to close down
  • Industrial production fell by 40%
  • 1/3 of farmers lost their farms
  • Sales in American shops fell by 50%
  • Wages fell 60%
  • 10,000 Americans went bankrupt between 1929 and 33
  • The worst failure was the Bank of America, in 1931 it ruined 400,000 depositors
  • Farm income dropped by 60% whilst productiononly fell 15% in price to many sold up
  • Over production of the soil in some places made it infertile so even a small income was hard to come by for many
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Effects homelessness

Due to the unemployment, many families were left without an income so could not afford their mortgage or rent. This lef them on the streets:

  • There were no dole payments to help out the unemployed
  • Possessions had to be sold to pay debts or credit taken out during the boom years - if they couldn't their house was repossessed
  • Those who fell behind on rent were evicted and those who had mortgage payments they couldn't meet, their homes were taken
  • In 1932, 1/4 of Americans lost their homes
  • The homeless ended on streets, sleeping on park benches
  • People deliberately got themselves arrested to spend a night in jail
  • Many moved to waste ground where shanty towns were built - these were called hoovervilles as an insult to President Hoover whom they blamed
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Effects - Reliance on charities

Becuase help did not come from the state and there was no social security system, there was no money to help people without jobs, food and shelter except from charities

  • Some towns and cities set up their own public relief which would provide shelter, food, clothes or even jobs
  • Private charities such as the Salvation Army helped
  • Wealthy Individuals made contributions to the needy including the likes of Al Capone
  • For the hungry there were soup kitchens, bread kitchens or cheap food centres
  • Breadlines, which were queues of people, were a common sight
  • Begging was also common
  • However, the depression lasted 12 years and it wasn't long for the charities to run out of money
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Effects - Farmers

The farmers were a group of people that suffered a huge blow during the depression of the USA

  • Farmers sold even less of their produce during the depression
  • Prices fell so low it wasn't worth harvesting the crops and wheat was often left to rot
  • The soil continued to be overfarmed which continued to damage it
  • In the years after 1930 there was a drought, worsening the soil
  • Strong winds and not enough rain turned the soil to dust -this was called the 'dustbowl'
  • Many farms had to be abandoned
  • Many people drifted to California to work on fruit farms
  • Overproduction also drove prices down
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Effects - The Bonus Army

After WW1 soldiers were promised bonuses in 1945, by 1932 many of these soldiers began to demand it upfront as many had no money and felt they deserved better for being patriots

In 1932, 20,000 veterans turned up to Washington to protest, setting up a hooverville opposite the White House

Congress voted against but they continued to stay anyway

Hoover first used the police and then the army to remove them who used tanks and tear gas, he drove them out and set fire to the camp

The bonus army was defeated but Hoover was even more unpopular

2 were killed and there were ovre 1000 injured

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Positives of the 1930s

Despite the negatives it wasn't all bad in America, there was also many positives to comment on:

  • The Empire State Building was opened in 1931, the Hoover Dam in 1936 and the Golden Gate Bridge in 1937

New industries continued to be developed, ecspecially electricity

  • 1938 saw the state of 'nylons', non-stick pans and fibreglass

In 1939 the first television channel was established

  • Air travel grew from 48,000 in 1928 to 1.1,illion in 1938

Entertainment continued to develop. Millions of people went to the movies or musicals

  • Bingo boomed and so did the sales of beers (in new cans)
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Hoover's Actions

Hoover believed in a policy known as 'rugged individualism'

  • By 1930 taxes were cut to increase people's spending power
  • The government provided $4000million for major building projects in the construction industry in order to provide new jobs
  • In 1931 work began on the Hoover Dam on Colorado River
  • In 1932 the Reconstruction Finance Corporation provide loans of $2500million to businesses to aid recovery
  • In 1932 the Emergency Relief Act gace $300million to the states to help with unemployment
  • he helped farmers by buying food at higher than the market prices
  • The Hawley-Smoot tarrif act was 40%

Effectiveness:

  • The $4000million wasn't enough to halt the depression
  • The higher prices encouraged more overfarming creating a larger surplus
  • Countries retaliated to the higher tarrif, which stopped a lot of exporting
  • Leaving aid as the town's responisbility resulted in near bankruptcy for some towns
    'In Hoover we trusted, now we are busted' 
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Why did Roosevelt win the election

  • His background and experience - as he was from a wealthy family he had acristocratic support as well as a good start in life, he trained as a lawyer but entered for the democrats in 1910 and then was elected senator in New York
    He was elected as governer in New York in 1928 and 1930 which helped him to develop his ideas and led him to the conclusion that government must take responisbility - as early as 1928 Roosevelt urged for an unemployment and pension scheme. This helped him to gain the nomination in 1932
  •  His election campaign - Roosevelt wsa a natural campaigner who was cheerful and a good communicator. The country gained an image of a warm hearted man with poise and self-assurance. He was no match  for Hoover who was on the offensive and was distant in his speeches
  • The state of the US - The unemployed had to eat at soup kitchens or waited for leftovers outside restaurants. Unemployment was rapidly rising - (1.5million in 1929; 5million in 1930; 9million in 1931 and 13million in 1932). In the summer of 1932 the Bonus Army set up camp and many thought that America was having a revolution and many were shocked at the violence. Rural areas were in crisis as farm prices collapsed and relief was running out
  • His ideas - He wanted a 'New Deal' where the Federal Government played a bigger role and had the opposite views to Hoover. He wanted to set up programmes and spend money to create jobs which would create a cycle of prosperity
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What were the aims of the New Deal

Recovery - He wanted to revive the economy by getting industry going and people working again

Relief - He wanted to relieve extreme poverty, feed the starving and stop people losing their homes and farms. He wanted to change the mindset to a more optimistic one

Reform - He wanted to make the USA a better place for ordinary people by bringing in measures such as unemplyoment insurance and old-age pension and help for the sick, disabled and needy

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Restoring confidence in banks

Since 1930 over 5000 banks had closed and the system was on the point of collapse, savers had withdrawn their money and businesses had been unable to pay back loans

  • Roosevelt immediately closed all the banks for 4 days which he called a 'four bank holiday'
  • He rushed an Emergency Banking Act throught congress in just eight hours
  • Only banks that were honest and well run were allowed to reopen
  • The re-opened banks were supported by government loans to help them continue to operate and reassure people that their money would be safe
  • The government had secured people's money
  • The public's confidence in the banking system was restored
  • Customers redepisited $1billion shortly after
  • Only 62 banks closed down the next year compared to 5000

COMPLETE SUCCESS

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The Fire Side Chats

Aims:

  • To get trust from the public through the radio and to inspire their confidence
  • He wanted to explain his actions in a simple and direct way

Effects:

  • Astonishingly successful, none more so thant the first broadcast in 1933 about the banks
  • His talks were listened to by millions of Americans
  • He invited people to write about their problems and a staff of 50 were needed to handle the truckload whilst Hoover had only had one man
  • It created a lot of confidence
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Alphabet Agencies - FCA and AAA

FCA - Farm Credit Administration (Short-term, immediate relief)

  • Set up to help farmers to prevent them losing jobs
  • Made loans to a fifth of all farmers 

AAA - Agricultural Adjustment Agency (Long-term, recovery)

  • Set up in May, 1933
  • Aimed to tackle the issue of low food prices due to overproduction
  • Paid farmers to reduce production of items such as cotton to drive up prices
  • Roosevelt took land out of production and had livestock killed
  • The work of the AAA led to better standards of living for farmers and between 1932 and 1935, total farm income rose from $4.5billion to $6.9billion
  • The act was very popular with farmers
  • 95% of tabacco farmers signed up
  • As an emergency measure the AAA effectively dealt with the crisis
  • However there was a large amount of criticism when food was destroyed and millions were starving
  • There was public outcry when 6million piglets were killed
  • Sharecroppers and labourers lost jobs though this would have happened anyway
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Alphabet Agencies - CCC

CCC - Civilian Conservation Corps (Relief and Recovery)

  • March 1933
  • Aimed to tackle the problem of many unemployed young men
  • Gave jobs to men 17-24 (later increased to 28)
  • The men were employed to work in the forests, parks and other public areas
  • They lived in camps, were provided with food and shelter and recieved a small wage of $1 a day
  • They plnated 1.3billion trees, dealt with forest fres and installed 65,100 miles of telephone wire
  • Altogether 3 million young people were involved who benefited from training and experience and they also enjoyed the fresh air and excersize
  • However, they were criticised for focusing on white men, there not being a guarentee of a job after and it being cheap labour
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Alphabet Agencies - CWA and PWA

CWA - Civilian Works Administration (Short-term, immediate relief)

  • November 1933
  • A short-term scheme designed togive as many jobs as possible (4million over the winter of 1933-34)
  • Some useful work was carried out, cleaning leaves or building roads whilst shows by out of work actors simply gave them something to do
  • For the first winter it gave quick relief for people who could have otherwise frozen
  • It criticised as somejobs had no clear purpose

PWA - Public Works Administration (Recovery measure

  • June 1933
  • This aimed to create jobs of real and lasting value
  • $7billion was spent employing skilled men to build dams, bridges, sewage systems and houses
  • Between 1933 and 39 the PWA had built 70% of America's schools and 35% of their hospitals
  • $3.3billion was spent and hundreds and thousands of jobs were created and it also created more jobs in the building materials industry
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Alphabet Agencies - FERA

FERA - Federal Emergency Relief Act (Relief)

  • May 1933
  • Designed to help the homeless, poor and people on the brink of starvation
  • $500million was spent
  • Most of the money went on soup kitchens and to provide, clothing, schools and employment schemes
  • Some states didn't want to give more money as they thought that the poor deserved it, they were treated badly, having to wait in long lines on hot days, after filling in forms there were still long waits
  • Established the idea of federal government giving funds for relief even if what was established under FERA was dissappointing

HOLC - The Home Owners Loan Corporation, 1933

  • Attempted to stop people losing their homes by loaning money to over 1million people
  • Loans were also given to new buyers
  • Mortgage rates were low
  • 300,000 loans were given out
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Alphabet Agencies - NRA

NRA - National Recovery Administration, June 1933 (Reform and Recovery)

  • Aimed to increase worker's wages so they had more money to spend on goods
    -to increase factory's prices so factories could employ more men
    -to give workers a fairer deal in the workplace
  • Codes were drawn up for each industry for owners and businesses to sign
    -there were fixed prices for goods
    -limited worker's hours
    -forbade child labour
  • Workers were given the chance to join trade unions and brutal strike-braking practices were outlawed
  • Businesses that signed up could use the NRA's sign, the blue eagle
  • People were encouraged to buy blue eagle labeled products
  • Business men hated the inteference but the scheme was not compulsory 
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Alphabet Agencies - TVA

TVA - Tennessee Valley Authority, May 1933

  • Set up to develop the Tennessee area, which  was the poorest area and cut through 7 states
  • It was poverty stricken with soil erosion and flooding
  • 33 dams were built for the river which brought lots of electricity
  • The quality of the land was improved for farming and forests were planted
  • A 650mile waterway was built for easy access
  • Power stations were built for the farmers
  • One of the most impressive agencies where thousands of people were employed, the land was improved and health and welfare facilities were provided
  • Tennessee became a holiday destination
  • The area was completely rejuvinated
  • Locals liked it as they were given a say into the development
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2nd New Deal - WA and SSA

The Second New Deal was developed in time for re-election where he wanted to please the public and prove himself to them

A 2nd New Deal was needed as the first had not tackled all the problems and America was still suffereing from a depression, more work still had to be done. The 2nd New Deal aimed at reforming aspects of American Society and improving conditions for ordinary people

Wagner Act, 1935

  • Trade unions were given power and employes had to listen to them
  • It was for workers who wanted to create a union and to prevent employers sacking workers who worked in the unions

Social Security Act, 1935

  • It was a pension for people over the age of 65 who couldn't work, for women who had to look after children and also to support the handicapped
  • it proposed an unemployment scheme to be provided by individual states, with aid from federal government
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2nd New Deal - WPA and RA

WPA - Works Progress Administration, 1935

  • Gave work to 2 million each year
  • Built roads, public buildings, schools, bridges, tunnels, sewers, and a windbreak of trees 1600km long to stop the dustbowl
  • 7% of the budget created projects for artists, writers, actors and musicians
  • The National Youth Administration was simila but for younger people

RA - Resettlement Administration, 1935

  • Aimed to move 500,000 families to better land and resettle in houses
  • Helped sharecroppers and tenants (which the AAA didn't affect) their land was taken out of production or they were evicted
  • In 1937 it was replaced with the Farm Security Administration which gave them loans so they could buy their own land

The second new deal aimed to get the civilians and people back on track rather than the country and the economy. It was for the people who had not benefited from the first. 

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Achievements of the New Deal

Increased Confidence
Optimism
Improved general conditions- e.g. new schools and hospitals
Improved the economy
Unemployment fell
Improved working conditions for many
Farming had improved slightly
Banking crisis was resolved
It brought recovery to America and reduced the amount of people it affected and prevented possible expansion
It didn't bring America out of the depression

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Against Roosevelt - Republicans and Businesses

Republicans were against Roosevelt 'too much intervention'

  • They claimed Rooselvelt was a dictator with too much power comparing him to Hitler and Stalin
  • They said that the NVA and TVA were too communist, comparing it to the economic planning of the Soviet Union
  • They beleived that Social Security went against America's way of life and would make people lazy
  • They objected to the huge cost of the New Deal, claiming it was being wasted due to acts such as the WPA which was paying for unnecessary Jobs

Business were against Roosevelt 'too much intervention'

  • They did not like the inteference and were angry about his support for Unions and rising wages which ate up their profits
  • They disliked having to pay social security for their workers
  • Objected to schemes such as the TVA which they claimed unfairly competed with privately owned businesses
  • They criticised the codes and regulations of the NRA and other agencies as they were too confusing to administer. They created the Liberty League in 1934 to oppose the Deal
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Against Roosevelt - The Rich and Trade Unions

The Rich were against Roosevelt for 'too much intervention'

They resented having to pay higher taxes for things that didn't affect them

They were bitter for having some of their power taken away

They felt Roosevelt had betrayed them as they were paying for people they didn't like

Trade Unions were against Roosevelt for 'not enough done'

The NIRA allowed workers to join a union but some employers still ignored the new regulations so many wanted more

Although the New Deal set up the Wagner Act it remained common practice for companies to go to great lengths to prevent unions organising thw workers (some used violence)

Some unions formed the Comittee for industrial Organisation (CIO) which aimed to organise workers in mass production industries and to bring in unskilled workers without a union

The CIO organised sit down strikes and other tactics to increase the pace of change, in 1937 there were 477 sit down strikes involving 400,000 workers

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Against Roosevelt - Long and Townsend

Huey 'Kingfish' Long was against Roosevelt for 'not enough done'

  • Huey had ben elected governer of Louisiana a poor, southern state in 1928
  • he won due to high taxes on the rich to spend money for more roads, hospitals and schools
  • He carried out his promises but he was corrupted and used bribes
  • At first he was a supporter of the New Deal but by 1934 he was attacking it for doing too little
  • He proposed the 'Share of Wealth' scheme where all personal fortunes of over $5million were to be confiscated and shared
  • he said every family should be given between $4,000 and $5,000.
  • Huey also promised a minimum wage, houses for war veterans, pensions and a completely free education
  • He remained very popular with white people in Lousiana but had many opponents and was assassinated in 1935 by a young doctor

Doctor Francis Townsend was against Roosevelt for 'not enough done'

  • He proposed everyone over 60 should get a pension of $200 a month provided they spent it that month and left their job leaving jobs for young people. It created a demand for goods and helped the neglected old. 7000 'Townsend Clubs' sprung up throughout America
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Against Roosevelt - Coughlin

Father Coughlin was against Roosevelt for 'not enough done'

He was known as the radio priest and broadcasted his ideas to some 40million Americans onSunday Evenings; 'The Golden Hour of the Little Flower'

At first he had nothing but praise for Roosevelt but it turned to viscious attacks later on, claiming that he wasn't doing anywhere near enough

He thought he was failing to tackle the problems of the poor

He set up the National Union for Social Justice which attracted millions of Americans from all around the country

However as time went on his ideas became confused and his audience had faded by 1940

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The Supreme Court's Opposition

  • In 1935 the Supreme Court ruled that the National Industrial Recovery Act was unconstitutional because the constitution didn't allow a president to make laws to control business
  • In 1936 it declared the AAA unconstitutional on the grounds that regulations about agriculture could only be made by individual states

However the 9 judges of the Supreme Court were old and traditional.

  • 6 were over 70 and FDR wanted them to retire
  • He asked congress to give him the power to appoint 6 new ones sympathetic with his views
  • His idea to 'pack the court' with his own judges caused alarm even among his supporters
  • The judges were shaken up and some volunteered to retire and the new judges were less hostile to FDR's views
  • The most useful parts of the NIRA were accepted in more carefully constructed laws
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Argument for and against the New Deal

Positives

  • Jobs were created and many new industries revived
  • The banking crisis was reesolved
  • Confidence was greatly increased
  • Millions were helped out of the depression
  • Roosevelt had pumped money into the economy
  • Americans felt the government was on their side
  • There was a mindset change of who should be supported
  • Poor areas had been rejuvinated

Negatives

  • In 1935, 1/3 of the black community were dependent on relief payouts
  • Farmers and labourers continued with a very low standard of living
  • There were still 11million people unemployed in 1938 (the lowest was 8million)
  • The economy became reliant on money, when it was removed slightly- so did progress
  • Many areas were still very poor
  • High interest rates prevented recovery
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Impact of WW2

Impact of WW2 in 1939:

  • They were able to sell weapons to the allies
  • The Lend-Lease act meant Britain handed over overseas military bases so that the US could supply the Allies with the war materials as neccessary - to be paid after the war
  • America sold armements worth $50billion to its allies and the manufacture stimulated American Industry

Impact of joining WW2:

  • Unemploymeny reduced to 3 million
  • Man power, industry and agriculture were dedicated to the fight
  • Billions of dollars were spent on military equipment ans supplies adn to produce thes goods, American industry employed more people
  • It lifted America out of the depression
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