The 1930s - Depression and New Deal

• Speculation


  Buying shares in the hope that their value will rise so they can be sold for a profit
• Buying on the margin


  Borrowing money to buy shares, with the intention of selling them when they rise in value to pay back the loan and make a profit
• Hooville 


  The nickname given to shanty towns built by the homeless after the Crash
• Franklin D. Roosevelt


  President of the USA from 1933-1945
• Bonus Marchers


  Ex-soldiers who marched to Washing, demanding their pensions to be paid early
• Did Hoover do anything to help the economy?


  Initially no - he was reluctant due to his lassez-faire beliefs, however he did take some action
• Hoover's actions - taxes

  • He cut taxes to try and encourage people to buy more goods
  • However, he then passed the Revenue Act of 1932, which was the largest peacetime tax increase in US history, after his other measures failed to make a significant impact
• Hoover's actions - wages


  • He tried to persuade businesss leaders not to cut wages, because that would lead to lower spending, reduced demand and do more damage to the economy
• Hoover's other actions


  • Set up the Reconstruction Finance Company, which propped up banks to stop them going backrupt and
  • Put money into public works programmes such as the Hoover Dam on the Colorado River
• How the Depression affected people in the countryside


  • People in agricultural areas were hit hardest by the Depression
  • Farm prices fell, which led to farmers being unable to pay mortgages and going bankrupt
  • Most had no choice but to leave and become migrant workers, travelling and picking up work wherever they could
  • African Americans often lost land before their White neighbours
  • There was also a drought in the south and midwest in 1930
  • The drought and overfarming caused the topsoil to turn to dust, which was whipped up by the wind, turning areas into "dust bombs"
• How the Depression affected people in cities

  • Unemployment rose rapidly
  • For example, in 1932, in Cleveland (the "Steel City"), 50% of workers were unemployed, and this figure was 80% in Toledo
  • In 1931, 238 people were admitted to a NYC hospital suffering from malnutrition or starvation - 45 of them died
  • Many lost their homes
  • While some were taken in by relatives, most ended up on the streets
  • Every town had a "Hooverville" - a shanty town of ramshackle huts where migrants lived while they searched for work
• The Bonus Marchers


  • In June 1932, thousands of servicemen demonstrated outside the White House demanding their bonuses (a kind of pension) be paid early
  • Hoover refused to meet them
  • On 28th July, police and troops were set on the marchers with tear gas and guns, killing two of them
• When was the election?

  • November 1932
  • FDR was inagurated in January 1933
• Why did Hoover lose the 1932 election?


  • His treatment of the Bonus Marchers
  • He was blamed for not doing enough to allieviate the impact of the Crash
  • He blocked a $2 billion relief bill
  • Republicans had been in power since 1920, it was time for a change
  • He did little to help farmers, who made up a large fraction of the electorate
• Why did Roosevelt in the 1932 election?


  • He embarked on a countrywide tour of the US with his idea of a "New Deal" for America, making speeches from his train
  • The Democratic Party employed Charles Michaelson to produce a campaign that mocked Hoover's "prosperity is just around the corner" approach
  • He radiated warmth and inspired confidence
  • Believed in using public money to restart the economy and create jobs
  • No more lassez-faire
• Brains Trust


  The advisors who helped FDR set out the New Deal
• Emergency Banking Act


  Closed all banks for 4 days until they had been assessed by the government
• Fireside Chats


  FDR's weekly radio broadcast to the American people, explaining his actions
• What was the aim of the first New Deal?


  To meet the urgent needs of the poor
• What was the aim of the second New Deal?


  To transform American society
• When was the first New Deal?


  1933
• When was the second New Deal?


  1935
• The Emergency Banking Act and Securities Exchange Comission


  • Closed banks
  • All banks closed for four days, were assessed, and then 5000 trusted banks allowed to reopen with support
  • Effective at ending bank closures
• FERA - Federal Emergency Relief Fund


  • Met the urgent needs of the poor
  • $500 million was spent on soup kitchens, blankets, employment schemes and nursery schools
  • Effective because of how much money was spent
• CCC - Civillian Conservation Corps


  • Tackled unemployment
  • Unemployed young men could sign on for work for six months which was renewable if they could not find work
  • Most of the work was on environmental projects in national parks
  • Around 2.5 million people were helped by this scheme
• AAA - Agricultural Adjustment Administration


  • Tackled problems facing farmers
  • Set quotas to reduce farm production and slowly drive prices up
  • Helped farmers modernise and use farming methods that would conserve and protecct the soil
  • Given help with paying mortgages
  • While it individually helped farmers, modernisation did put more farm labourers out of work
• PWA - Public Works Administration


  • Tackled unemployment
  • Used government money to build schools, damns, roads, bridges and airports, which would be vital for America in the long term, and created many jobs in the short term
  • Millions of jobs created
• NRA - National Recovery Administration


  • Improved industry conditions
  • Outlawed child labour
  • Set out fair wages and sensible levels of production
  • The idea was to give workers money to spend wothout overproducing and causing a slump
  • Although it was voluntary, it was effective
  • Over two million employees joined the scheme
• TVA - Tenessee Valley Authority

  • Tackled poverty in the Tenessee Valley and the lack of co-operation between states
  • The power of the TVA cit across local state's governments
  • The focus of their work was to build a series of dams on the Tenessee River, which would bring water to the dry land, provide electricity and create jobs
  • It was effective - the dams worked, provided electricity and jobs, and revitalised farmland
• The Revenue Act


  • Increased taxes on the wealthiest Americans
  • 75% on wealth over $5 million
• Undistributed Profits Act


  Taxed businesses
• Wagner Act


  Made employers use trade unions to negotiate pay and conditions for workers
• Social Security Act


  Introduced state pensions for widows and the elderly, and National Insurance for sickness
• Works Progress Administration


  Extended the role of the original WPA to help the arts (painters, photographers, etc.)
• Resettlement Administration


  Helped small-hold farmers resettle to better qualiity land and farms
• Farm Security Administration


  Replaced the RA in 1937, annd gave loans to small holders
• Reactions to the New Deal - doing too much


  • People like business owners and Republicans said that the New Deal was complicated, interfered wiith the market too much, and was too similar in principle to the USSR
  • It was argued that Roosevelt was becoming like a dictator
  • According to critics, high taxes discouraged people from working hard, and gave money to people for doing nothing
• Reactions to the New Deal - not doing enough

  • Huey Long
  • A Louisiana senator, who criticised the New Deal for not doing enough to help the poor
  • He put forward schemes to cut wealth and income
  • Was regarded as one of the most dangerous men in the USA
  • Dr Fancis Townsend
  • Funded several "Townsend Clubs" to campaign for a pension of $200 a month for people over 60, providing that they would spend it that month