United States 1919-1941 Economic Boom PDF

United States 1919-1941 The Boom 1920 - Dynamic growth of the american economy after WWI - American business grew more quickly than ever before, faster and cheaper ways of production - Production went up and prices went down so ordinary people could buy goods - Families bought...

United States 1919-1941 The Boom 1920 - Dynamic growth of the american economy after WWI - American business grew more quickly than ever before, faster and cheaper ways of production - Production went up and prices went down so ordinary people could buy goods - Families bought houses in the suburbs of rapidly growing cities - Money to spare (music, radio, cinema and sport industries boomed) - Investments in the stock market, loans and shares - Homes supplied with electricity, roads, buildings and skyscrapers built Factors Behind the Boom Industrial Strength - USA vast and rich in natural resources - People living in cities and towns worked in industries and commerce - No need to export outside nor import raw materials needed as they were available - Massive steel, coal and textile industries, leading oil producer - Development of new technology (motor cars, telephones, electric lighting) - Most efficient and productive agriculture The First World War - They tried hard to stay out of the fighting - They lent money to the Allies and sold arms, munitions and foodstuffs throughout the period - USA had outstripped Germany in the supply of chemical products, manufacture of explosives - When it joined the war it was not long enough to be drained of resource like europe so the economy grew fast once again by 1922 Republican Policies and Presidents - From 1920 to 1932 all republican presidents - Belief 1: Laissez-faire (government should interfere as little as possible in everyday lives of the people, leave business people to do their job “rugged individualism”) - Belief 2: Protective tariffs (import tariffs that made it expensive to import foreign goods which protected businesses against competition allowing companies to grow rapidly) - Belief 3: Low taxation (if people kept their own money they would spend it on american goods and wealthy people would reinvest in industries) - Belief 4: Powerful trusts (huge supercorporations were allowed to do what they wanted, “captains of industry” were alleged to know better than politicians) - 1921-23 Warren Harding - 1923-29 Calvin Coolidge - 1929/-33 Herbert Hoover New Industries and Methods - Exploitation of resources and raw materials to produce steel, chemicals, glass and machinery - Electricity took over and by 1929 almost all urban homes had it - New industries foundation of boom in consumer goods (telephones, radios, vacuum cleaners and washing machines) - Mass production methods (more goods produced more cheaply) The car - The automobile industry/motorcar was the most important to boom - Before they took long time to be made and were very expensive - Henry Ford revolutionized car production, in 1913 he set up the world’s first moving assembly line (workers had one or two specific tasks as car frames moved past them, production of the Model T began) - By 1927 a new car was produced every ten seconds - Not only produced employment directly but also in all other industries (glass, leather, steel and rubber were required to produce a new vehicle also petrol and roads) - Road construction was the biggest single employer in the roaring 20s - The car made it possible to live in the suburbs boosting house building which also stimulated the growth of hundred of small businesses (holiday resorts, gas stations, hot dog stands) Mass consumption - Sophisticated sales and marketing techniques to get people to buy goods - Advertisers who had learnt in wartime propaganda setup agencies to sell clothing, cars and cigarettes - Growth in mail order companies, people could buy the goods from catalogues - People could borrow money easily because of credit, “buy now, pay later” hire purchase - Chain store emerged (same shop selling the same product all across the USA) A State of Mind - In the post-war depression being careful with money and saving was good seen - As economy picked up americans became confident and began to spend more on goods and entertainment - Consumer Society - Banks lent money to businesses and consumers reflecting the confidence in economy - Companies expanded and invested as consumer demand increased - Consumers bought goods on credit and borrowed to buy shares Problems in Farming Industry Declining exports - After war Europe imported less food from USA as it was poor - Result of tariffs imposed by US New competitors - Competition from Canadian and Argentine wheat producers Overproduction - When farming was doing well more land was being farmed so improved machinery and fertilizers were bought - As a result, it produced surpluses of food nobody wanted/needed Falling prices - Prices plummeted as desperate farmers tried to sell their production - Hundreds of rural banks collapsed during this period Prohibition  - Alcohol industry was a major consumer of american wheat and barley - Demand for this resourced fell as a result of prohibition of this industry The affected - Rich americans wanted fresh vegetables and fruit - However, most farmers were at hardship which represented a serious issue - This problems directly affected more than 60 million americans - Three carters of african american became unemployed as they had always done the least skilled jobs in the rural areas - Farming communities were the most critic of the laissez faire policies Why Didn’t Traditional Industries Prosper - Workers in older industries did not benefit much either - The coal industry was a big employer but began to struggle - Over production of coal reduced the price of it and therefore profits, coal power was losing out to new sources like electricity and oil - Leather, textiles and shoe making struggled as competition from industries using new man-made materials and mechanisation (workers lost their jobs as mechanisation increased) - 42% of Americans lived below the poverty line (didn’t have money to pay for essentials) - Growth in traditional industries was slow, and profits began to decline over time Unemployment - Industries were growing by electrifying and mechanising production so unemployment remind an issue through this period - Poor whites, african american, hispanic people and usa’s large immigrant communities - This was not only of individual concern but also damaging american industry - The boom was led by ordinary families buying things for their homes, with many families too poor to buy such goods the demand for them began to fall - Republican policy remained meaning nothing being done about unemployment or poverty Chicago 1920s - Chicago one of america’s biggest cities, centre of steel, meat and clothing industries - In slack periods people would be seasonally unemployed (italian, polish and african american workers) - Only 3% of semi-skilled workers owned a car, in rich areas 29% owned a car - Workers did not buy items in credit as they preferred to save money for when they might become unemployed - Poor white americans were in middle class districts where they shopped at local grocer’s instead of using the chain stores Entertainment - The term roaring twenties is mainly associated with entertainment and changing morality - Working hours fell and wages rose for most americans - Spare time and money was channelled into entertainment, huge leisure industry Radio - Almost everyone listened to the Radio  - Most households had their own radio - Poorer districts shared, by 1930 every two to three poor households had a one of their own - Choice of programmes grew quickly, 1921 only one licensed radio station, by the end of 1922 there were 508 of them Jazz - Radio gave much greater access to new music, jazz became and obsession among the youth - African Americans who moved from the country to the cities brought jazz and blues music - Blues popular among african americans while jazz captured both white and african american youth - 1920’s the jazz age because of its power, along with it new dances (Charleston) and new styles of behaviour (image of the flapper, woman who wore short dresses makeup and smoked in public) - Older generation saw jazz and everything associated as a corrupting influence on the young people of the USA Sport - Baseball became a big money sport with legendary teams (NY Yankees and Boston Red Sox) - Baseball stars became national figures - Boxing was very popular with heroes like world heavyweight champions - Millions listened to sporting events on the radio Cinema - Small suburbs in LA (hollywood) a major film industry was developing, all year round sunshine meant studios could produce large numbers of films - All movies were silent until 1927 when the first “talkie” movie was made - Movies became a multi-billion dollar business, by the end of the decade a hundred million tickets were estimated to be sold each week - Working people in Chicago and poor people spend their leisure budget on movies Morals - Before war, sex had still been a taboo subject, after the war it became a major concern of tabloid newspapers, hollywood films and everyday conversation - Cinema quickly discovered the selling power of sex and were considered daring - Both male an female stars were presented and sold as sex symbols - Conservative rural states were worried by the sex-obsessed films and threatened to introduce censorship legislation - Contraceptive advice was openly available in the real world for the first time - Sex outside marriage was much more common Women in 1920s Before WW1 - Had to wear restrictive clothes and behave politely - Expected not to wear makeup, take part in sports nor smoke in public and be housewives - Relationships with men were strictly controlled and had to have a chaperone - In most states they could not vote and very few paid jobs open to them In the 1920s  - Impact of war: when USA joined the war some women were taken into the industries and given experience of skilled factory work - The vote: women got vote in all states - The car: they shared the liberating effects of the car - Housework: domestic work was made easier by new electrical goods (vacuum cleaner) - Behaviour: traditional roles were eased, they could wear daring clothes, smoked and kissed in public and drank with men Employment - In urban areas women took on jobs provided by the new industries - They had money of their own so they became the particular target of advertising - Women were seen as the ones who made decisions about the new items for the home and choosing the cars Choices - Films and novels exposed women to a wider range of role models where they saw sexy and daring heroines as well as women in traditional roles - Women were less likely to stay in unhappy marriages Limitations - Women were less paid than men even when doing the same job, their employment increased as it was cheaper - Women in no way achieve equality with men in politics, they had no access to political power - Political parties wanted them to vote but not to be candidates as they were “unelectable” - Eleanor Roosvelt had a high public standing as she was involved in the league of women voters, women’s trade union league, women’s city club and NY state democratic party women's division How did women respond? - Most women did not copy what they saw on films (women living passionate lives full of steamy romance) - The reaction of many women was one of opposition and outrage in fact - Strong conservative element in american society, traditional religion and old country values - For most, raising a family and maintaining a good home for their husband was their priority Intolerance Towards Immigrants - While some were experiencing liberation, others were facing intolerance and racism - Vast majority of americans were either immigrants or descendants of them - Jewish immigrants fleeing persecution, italians fleeing poverty - US pride itself on being a “melting pot”, theoretically individual groups lost their ethnic identity and blended together to be americans but it was not always like that - In big cities the more established immigrant groups (irish americans, french canadians and german americans) competed for the best jobs and the best available housing, these groups looked down on more recent european immigrants and this had nothing but contempt for african americans and mexicans who were at the bottom of the scale The Red Scare - Racist attitudes towards immigrants were worse by increased fear of communism - USA feared the recent immigrants from europe were bringing similar radical ideas as russian’s after the revolution this reaction was called the Red Scare  - Some american workers went on strike, even police in boston and lobsters and thieves roamed the city, race riots in 25 towns which only confirmed americans fears - Fear of communism combined with prejudice against immigrants - Fears were not totally unjustified as many immigrants did hold radical political beliefs, anarchist published pamphlets and distributed them widely - Bombs were planted all around the US and those known to have radical beliefs were rounded up in Palmer Raids (generally immigrants and evidence was often flimsy) - Palmer tried to use fear of revolution to build up his own political support but eventually caused his own downfall by predicting a revolution that did not happen - Trade unionist, african americans, jewish and catholics found themselves accused of being communists Sacco and Vanzetti - They were two italian high profile victims of the Red Scare - Arrested in 1920 on suspicion of armed robbery and murder, they were self-confessed anarchists (the trial became more of their radical ideas than for murder) - After six years of legal appeals they were executed and protests stormed around the world from both radicals and moderates that saw the unjust trial conducted Immigration quotas - In 1917 immigrants from China were banned - 1921 Emergency Quota Act, limited total immigration to 3% of a country’s foreign born population living in the US, making it harder for southern and eastern europeans to move compared to northern and western europeans - 1924 National Origins Act, limited total immigration to just 150k per year, banned Asian immigrants, allegedly to preserve US homogeneity (WASPs) African Americans - The first Africans in the US were slaves brought by white settlers in the seventeenth century - When slavery ended in the nineteenth century, there were more African Americans than white people in south US - White governments introduced many laws to control their freedom as they feared their power (could not vote, were denied access to good jobs and worthwhile education, in the 1900’s they suffered great poverty) The Ku Klux Klan - The Ku KLux KLAN was a white supremacy movement formed in the 1950s by soldiers after the American CIvil War that used violent methods to intimidate African Americans aiming to keep whites in control - After a period of decline, the Klan saw a resurgence following the release of The Birth of a Nation in 1915 set after the civil war which glorified the Klan as defenders of decent American values against renegade African Americans and corrupt white businessmen - With support from prominent figures like president Wilson (who broadcasted the film in the white house) the Klan became a powerful political force in the early 1920s - The Klan declined after 1925, after one of its leaders was convicted of a vicious sexually motivated murder when he became an informer and the corruption of the Klan became common knowledge. Jim Crow  - African Americans in the South faced intense racism despite theoretical freedom in 1865 after the Civil War. - White supremacy remained through the discriminatory set of laws and practices known as Jim Crow. - African Americans were prevented from voting by literacy tests, intimidation and violence - Discrimination in employment and education was widespread. - Infrastructure was designed to reinforce the perception of African Americans as second-class citizens. - Thousands of monuments erected to white Confederate Civil War soldiers and commanders after years of the war as an attempt of reminder of white dominance to African Americans - Some states have begun to address these issues; since 2018, over 120 Confederate statues and memorials have been removed. Strange Fruit - African Americans faced violence if they stood up for themselves and they often faced violence even when they had done nothing at all. - In 1930, 16-year-old James Cameron was arrested with two other African American men on suspicion of murder of a white man and the rape of a white woman - A mob formed with the intent to lynch the suspects, they broke into the jail, dragged out the two men, and hanged them. - Cameron doesn't know why he was saved; the crowd had placed a rope around his neck before suddenly releasing him, he referred to his survival as "a miraculous intervention." - A photograph of the lynchings inspired writer Abel Meeropol to create the poem "Bitter Fruit," referring to the lynched men later renamed "Strange Fruit." - Thousands of African Americans were murdered by lynching in this period, faced by intimidation, discrimination and poverty, many African Americans left the rural South and moved to the cities of the northern USA. Improvements - African Americans in the North had better access to quality jobs and education (Howard University was an exclusively African American institution for higher education) - A small but growing African American middle class developed in cities and the success of black capitalist movement thrived, promoting economic success within the community. - African American artists and writers flourished during this time and the popularity of jazz made many African American musicians into high-profile media figures Beginnings of the Civil Rights movement - African Americans also entered politics - DuBois founded the National Association for the Advancement of Colored People (NAACP) that campaigned to end racial segregation laws and to get laws passed against lynching. - Marcus Garvey founded the Universal Negro Improvement Association (UNIA) urging African Americans to be proud of their race and colour, it helped them set up their own businesses - Reverend Earl Little was one of the members attracted to Garvey’s movement, he was beaten to death by Klan thugs in the late 1920s, but his son went on to be the civil rights leader. Continuing inequality - Although important, these movements failed to change the USA dramatically.  - Many African Americans in the northern cities lived in great poverty, lived in poorer housing, had poorer education and health services than white people (black women worked as low-paid domestic servants, car factories employed few or had a white people-only policy) - In Chicago they suffered great prejudice from longer-established white residents “there is nothing in the make up of a negro, physically or mentally, that should induce anyone to welcome him as a neighbour” - African Americans faced violence when trying to access parks, playgrounds, and beaches in Irish and Polish neighbourhoods, they were attacked by gangs called "athletic clubs." which contributed to the isolation of African American communities, turning many into ghettos. - Prejudice also existed within African American communities as middle-class African Americans in ghettos often blamed newly arrived southern migrants for exacerbating white racism. - West Indians contributed to inter-racial tension, as many were better educated and more militant who were often prouder of their heritage compared to newly arrived African Americans from the South, leading to further divisions. The Vanishing Americans - Native Americans were the original settlers of the North American continent, during the rapid expansion of the USA they almost disappeared as an ethnic group, the ones to survive were forced to move to reservations in the midwest, they were referred to as "the vanishing Americans." in the 1920s - In the 1920s the U.S. government became increasingly concerned about the treatment of Native Americans as many had served in the armed forces during WWI, helping shift white attitudes toward them. - A census and major survey in the late 1920s revealed severe poverty among Native Americans, with lower life expectancy, poorer health, and inadequate education. They faced extreme discrimination and were losing their land rapidly. - Mining companies could legally seize large tracts of Native American land, leading many to sell their land out of desperation. - Cultural erosion occurred as children were sent to boarding schools aimed at assimilating them into white American culture, often destroying their traditional beliefs and languages. - A significant turning point came in 1924 when Native Americans were granted U.S. citizenship and the right to vote, later in 1928 Meriam Report called for extensive improvements in laws, leading to reforms introduced under Roosevelt's New Deal. Religious Intolerance - There was an increasing divide between urban and rural America in the 1920s. - Younger people and professionals in cities embraced consumerism and party culture of the Roaring Twenties and adopted liberal and progressive views on race relations and religion. - In rural populations, particularly in the South and Midwest's "Bible Belt," many attended church regularly and held traditional and conservative opinions. - Some Protestant churches claimed that urban life was immoral and threatened American societal values. The Monkey Trial  - In 1925, a conflict arose between evolutionists and creationists over differing beliefs about human origins. Evolutionists supported Charles Darwin's theory of evolution, while creationists upheld the literal biblical creation story originating a conflict known as the Monkey Trial. - In 1925 the Butler Act was passed in Tennessee. This prohibited schools from teaching Darwin's theory of evolution because it contradicted the Bible. Six other states followed suit and passed similar laws. The American Civil Liberties Union (ACLU) promised to defend anyone who challenged this law. - John Scopes, a science teacher, agreed to be tried for teaching evolution, leading to a high-profile trial in July. The ACLU enlisted prominent lawyer Clarence Darrow to defend Scopes, while anti-evolutionist leader William Jennings Bryan prosecuted. The trial gained massive public attention, being the first to be broadcast on national radio. Although Scopes was guilty under the law, the trial aimed to highlight censorship of free speech. - Darrow's cross-examination of Bryan exposed weaknesses in the anti-evolutionist position, leading to public mockery. Scopes was convicted and fined but the trial symbolised a defeat for American fundamentalism, weakening the anti-evolution movement. Reasons for Prohibition - In rural areas of the USA there was a strong temperance movement where members agreed not to drink alcohol and also campaigned to get others to give up alcohol (most were devout Christians who saw the damage alcohol did to family life) - Main movements: Anti-Saloon League and the Women's Christian Temperance Union and were so strong that they persuaded their state governments to prohibit the sale of alcohol within the state. - Through the early twentieth century it became a national campaign to prohibit alcohol in the country, leading industrialists backed the movement as they believed workers would be more reliable if they did not drink and politicians backed it to get votes in rural areas - Supporters of prohibition became known as 'dries' and brought some powerful arguments to their case like '3000 infants are smothered yearly in bed, by drunken parents' - Drinkers were accused of being unpatriotic cowards during WW1, most of the big breweries were run by German immigrants who were portrayed as the enemy. - The dries claimed that communists thrived on drink and that alcohol led to lawlessness in the cities, particularly in immigrant communities. - Saloons were seen as dens of vice that destroyed family life - In 1917 the movement had enough states on its side to propose the Eighteenth Amendment to the Constitution which prohibited the manufacture, sale or transportation of intoxicating liquors. In 1920 It became law and known as the Volstead Act. Impact of Prohibition - Prohibition lasted from 1920 until 1933. It is often said that Prohibition was a total failure. This is not entirely correct. Levels of alcohol consumption fell by about 30 per cent in the early 1920s (see Figure 24). - Prohibition gained widespread approval in some states, particularly the rural areas in the Midwest, although in urban states it was not popular (Maryland never even introduced Prohibition). The Government ran information campaigns and Prohibition agents arrested  offenders (see Figure 25). Two of the most famous agents were Isadore Einstein and his deputy Moe Smith. They made 4392 arrests. Their raids were always low key. They would enter speakeasies (illegal bars) and simply order a drink. - Einstein had a special flask hidden inside his waistcoat with a funnel attached. He preserved the evidence by pouring his drink down the funnel and the criminals were caught! Supply and Demand - Prohibition proved impossible to enforce effectively in the cities. - Enforcement was underfinanced and there were not enough agents - Millions of Americans, particularly in urban areas, were simply not prepared to obey this law and a vast network of suppliers stepped in to meet the demand for illegal alcohol. Bootleggers - The suppliers of illegal alcohol were called 'bootleggers' and some made vast fortunes. - Illegal alcohol came from Canada as the vast border was impossible to patrol and other brought in alcohol by sea through the waters outside US control - Captain McCoy was very famous and specialised finest Scotch whisky ('the real McCoy’) Stills - Illegal distilleries sprang up all over the USA as people made their own illegal whisky - The stills were a major fire hazard and the alcohol they produced was frequently poisonous. - Agents seized many of them but not all could be captured Speakeasies - Speakeasies were well supplied by bootleggers - Most Americans had no need for their own still as tey simply went to their favourite speakeasy. - By 1925 there were more speakeasies in American cities than there had been saloons in 1919. - Izzy Einstein filed a report to his superiors on how easy it was to find alcohol after arriving in a new city. Chicago: 21 minutes, Atlanta: 17 minutes, Pittsburg: 11 minutes, New Orleans: 35 seconds Corruption - Prohibition led to massive corruption as many of the law enforcement officers were themselves involved with the liquor trade. - The breweries stayed in operation by bribing local government officials, Prohibition agents and the police to leave them alone. - One in twelve Prohibition agents was dismissed for corruption, police officers were quite prepared to direct people to speakeasies in cities Gangsters - The most common image people have of the Prohibition era is the GANGSTER who generally came from immigrant backgrounds and - Organised gangs made about 52 billion out of the sale of illegal alcohol and some bootleggers had a network of paid officials that allowed him to escape charge after charge against them. - In the early 1920s the main gangs were Jewish, Polish, Irish and Italian who came from poorer backgrounds within these communities, poorly educated but clever and ruthless.  - Dan O'Banion (Irish gang leader murdered by Capone) - Pete and Vince Guizenberg (hired killers who worked for Bugsy Moran and died in the St Valentine's Day Massacre) - Lucky Luciano (Italian killer who spent ten years in prison) - The gangs fought viciously with each other to control the liquor trade and also the prostitution, gambling and protection rackets that were centred on the speakeasies. - Made use of new technology, automobiles and the Thompson submachine gun - By the late 1920s fear and bribery made law enforcement ineffective. Chicago and Al Capone - Al Capone arrived in Chicago in 1919, on the run from a murder investigation in New York and ran a drinking club for his boss Johnny Torio but later took over and proved to be a formidable gangland boss. - He built up a huge network of corrupt officials among Chicago's police, local government workers, judges, lawyers and Prohibition agents and even controlled Chicago's mayor, William Hale Thompson. - High-profile and popular figure in the city as he attended sports games and gave generous tips and donations - Capone was supported by a ruthless gang, handpicked for their loyalty to him. He killed two of his own men whom he suspected of plotting against him by beating their brains out with a baseball bat. - By 1929 he had destroyed the power of the other Chicago gangs, committing at least 300 murders in the process. - St Valentine's Day Massacre in 1929 peak of his violent reign where his men murdered seven of his rival Bugsy Moran's gang, using a false police car and two gangsters in police uniform to put Moran's men off their guard. The end of Prohibition - The St Valentine's Day Massacre was a turning point as the papers screamed that the gangsters had graduated from murder to massacre. - It seemed that Prohibition, often called 'the Noble Experiment', had failed as it had made the USA lawless, the police corrupt and the gangsters rich and powerful. - When the Wall Street Crash was followed by the Depression in the early 1930s, there were also sound economic arguments for getting rid of it as legalising alcohol would create jobs, raise tax revenue and free up resources tied up - Democrat president Franklin Roosevelt was elected 1932, Prohibition was repealed 1933 Causes of the Wall Street Crash Speculation - Stock market investment was attractive during the economic boom; the economy was thriving, more buyers than sellers led to rising share values. - Many Americans viewed the stock market as a quick path to wealth; anyone could buy shares, watch their value rise and then sell the shares later at a higher price - Share ownership increased from 4 million in 1920 to 20 million in 1929. - Speculation is a form of gambling; speculators don't intend to keep their shares for long, they borrow money to buy them and sell quickly for profit  - Women played a significant role in speculation and banks also engaged in lending $9 billion for it in 1929. - Through most of the 1920s the rise in share prices was quite steady, with some downturns speculation took hold in 1928 - Demand for shares was at an all-time high and prices were rising at an unheard-of rate. - Confidence was key; rising prices led to more buyers, while fears of a downturn led to selling and ultimately, the crash in 1929. Weakness in the US economy - Construction industry’s , one of the leading signs of health in any economy, downturn began in 1926. - Farming struggles were noted in the 1920s as well as the decline in coal, textile, and traditional trades. - Concerns included unequal distribution of wealth and unstable banks. - By 1929 other economic sectors showed strain after the 1920s boom, which was driven by increased sales of consumer goods (cars, electrical appliances). - Excess production led to a surplus; the market largely consisted of wealthy and middle classes. By 1929 wealthy consumers had already purchased goods; the poor majority were unable to buy, despite credit options. - Companies tried high-pressure advertising but with workers' wages not rising and prices not falling, demand decreased - American industry could not export surplus due to European inability to afford goods and retaliatory tariffs Wall Street Crash, October 1929 - By the summer of 1929 weaknesses were beginning to show; car sales were slowing and in June the figures for industrial output showed a fall for the first time in four years. - Speculators on the American stock exchange became nervous about the value of their shares and began to sell. Many investors had borrowed money to buy their shares and could not afford to be stuck with shares worth less than the value of their loan. - Soon other investors sold their shares and within days panic set in. - In October 1929 it became clear to the speculators that the banks were not going to intervene to support the price of shares - Wall Street had its busiest and its worst day in history as speculators desperately tried to dump 13 million shares at a fraction of the price they had paid for them. Consequences of the Wall Street Crash - The rich lost most because they had invested most - As they had always been the main buyers of goods, there was an immediate downturn in spending - Many had borrowed money to buy shares that were now worthless so they were unable to pay back their loans making the insurance companies and banks go bankrupt - It destroyed the one thing crucial to prosperity: confidence Banking crisis - Banking crisis peaked in 1929 with 659 bank failures and loss of trust led to mass withdrawals of savings.  - In 1930, a thousand banks failed, including the significant Bank of the United States that had about one-third of New Yorkers depositors - The failure was the worst in American history, around the country a billion dollars was withdrawn from banks and put in safe deposit boxes, or stored at home. Downward Spiral - Americans now kept their money instead of buying new goods and shares which meant banks had less money to give out loans and mortgages - So banks started to demand businesses to repay loans, the ones that couldn’t went bankrupt and others cut production, laid off workers and reduced wages - Between 1929 and 1933 both industrial and farm production fell by 40% and wages by 60% - As workers were laid off or paid less they bought less, reduction in spending was devastating since american economy relied on continued high spending - By 1933 there were 14 million unemployed and 5000 banks had gone bankrupt - This problems had also an impact on the countryside, people in towns could not afford to boy so much food so prices went into freefall - International trade had collapsed due to depression in other countries and tariffs on imports Human Cost of the Depression Countryside - As farm income fell, huge numbers of farmers were unable to pay their mortgages so they tried to resist banks seizing their homes along with other farmers - Most had no choice but to pack into their trucks and live on the road picking up work where they could - Black farmers lost their lands and farms first - Hunger stalked and children fell ill and died from malnutrition while food left to rot as farmers could not afford to take them to the market - Over farming and drought caused the soil to turn to dust in the southern and midwest states which was whipped by the wind to create the dustbowl - Dust covered everything making life unbearable so most packed and headed for California to look for work Towns - Unemployment rose rapidly, city workers were forced to sell their homes or were kicked out because they could not pay rent - Workers who had contributed to the prosperity now queued for bread and soup given by charity workers - Thousands of children lived in wagons or tents, every town had hoovervilles (shanty town of ramshackle huts where migrants lived while searching for work) - In 1931 hundreds of people were admitted to the hospital in NY suffering from malnutrition and starvation 1932 Presidential Election Hoover - the ‘do nothing’ president - Hoover was criticised for not doing enough for the people who were hit by the depression - Hoover believed in rugged individualism, he opposed to the government providing welfare support for people without jobs  - Many Americans fell into desperate poverty as banks failed and unemployment rose - Measures enforced by Hoover, too little and too late: - Tried to restore economy with tax cuts - Hawley Smoot Act to put further tariffs on imported goods - Encourage businesses not to cut wages or dismiss workers - National Credit Corporation to help failing banks but bankers refused - Put money into public work programmes which created a lot of jobs but not enough - Reconstruction Finance Corporation to provide loans for failing banks and businesses - Federal Farm Board to buy from farmers and help them but prices continued to drop Bonus Marchers - June 1932 demonstrators marched on washington demanding war bonuses to be paid early - The Bonus Army peacefully camped outside the White House waiting for Hoover’s response singing patriotic songs - Police were sent to deal with the demonstrators but then Hoover ordered MacArthur to handle the situation, he ignored Hoover’s instructions to treat them with respect as he believed they were communist agitators - Tear gas was used on the demonstrators and their camp was burned down representing a political disaster for Hoover Roosvelt’s characteristics - He was not radical but believed in active government to improve the lives of ordinary people - He promised a New Deal for the people focusing on the 3 Rs - Recovery (of the economy) - Relief (for the unemployed and those in poverty) - Reform (of the financial system to make a fairer society and prevent depression) - Had plans to send public money on getting people back to work - He was not afraid to ask for advice from experts (factory owners, economists, union leaders) The Campaign - While Roosevelt could be criticised for being vague, Hoover was criticised for his inaction - The open hostility Hoover received during his campaign tour (having objects thrown at him or his vehicle) was the most damaging for his campaign - Roosevelt’s plans were vague and general but people wanted action whatever it was - Not only his policies attracted support but his personality, he offered hope and a way out of the terrible situation they were in - He inspired confidence and surprised people as he was paralysed from his waist down but still used a walking stick to incur he could stand during his speeches - The republicans were defeated in the elections after the democrats won in the congress The New Deal The Hundred Days - His advisers said 'During the whole Hundred Days Congress, people didn't know what was going on but they knew something was happening, something good’ - Every Sunday he would broadcast on radio to the nation to explain what he was doing and why  - In the first hundred days of his presidency Roosevelt sent fifteen proposals to the congress and all fifteen were adopted. Measures introduced to tackle loss of confidence in banks and the stock market: - The Emergency Banking Act All banks in the USA were closed for a four-day bank holiday while government officials checked them over to see if they were stable enough to run. About 5% of banks were permanently closed down and confidence was quickly restored - The Securities Exchange Commission (SEC) To help restore investor confidence in the stock market the government officials tightened up rules and regulations to stop the reckless speculation that had caused the Crash in 1929. Measures to tackle issues of poverty and unemployment: - The Civilian Conservation Corps (CCC) Unemployed young men could sign on for periods of six months, which could be renewed if they could still not find work. Most of the work done was on environmental projects in national parks and the money earned generally went back to the men's families. - The Federal Emergency Relief Administration (FERA) To help state and local governments create temporary work for the unemployed and provide help for those in desperate need. To restore some self-esteem to those out of work and living in poverty. - The Civil Works Administration (CWA) To help unemployed Americans during the winter of 1933-34, it provided a further four million short-term jobs. Measures to help Americans at risk of losing their home due to unemployment and falling wage: - The Home Owners Loan Corporation (HOLC) Over 1 million families received loans by 1935, but it stopped offering help after this date and instead focused on repayments. - The Agricultural Adjustment Administration (AAA) It set quotas to reduce farm production in order to force prices gradually upwards, it helped farmers to modernise and to use farming methods that would conserve and protect the soil, farmers could also receive help with their mortgages. However, it failed to help smaller tenant farmers, farm labourers and African-American sharecroppers, also modernisation within farming put more farm labourers out of work. The National Industrial Recovery Act (NIRA) set up two important organisations: 1. The Public Works Administration (PWA) It used government money to build schools, roads, dams, bridges and airports. It spent $7 billion in total on job creation schemes and built 70% of US schools and 35% of hospitals in the 1930s. This would be vital once the USA had recovered but required a huge amount of public money in the form of taxes to pay for it all. 2. The National Recovery Administration (NRA) It improved working conditions in industry, outlawed child labour and set out fair wages and sensible levels of production. The idea was to stimulate the economy by giving workers money to spend, without over-producing. It was voluntary, but firms that joined used the blue eagle as a symbol of presidential approval. The Tennessee Valley Authority - The Tennessee Valley was a huge area that had great physical problems; in the wet season the river would flood and in the dry it would reduce to a trickle, the soil was eroding and turning the land into desert as the farming land was a dustbowl. - It also had great social problems; people lived in poverty and the majority of households had no electricity. - Roosevelt therefore set up an independent organisation ‘The Tennessee Valley Authority’ which is considered one of the most successful of the new agencies created - It would cut across the powers of the local state governments - Its main focus was the construction of 33 dams on the Tennessee River which transformed the area as land could be irrigated and electricity could be provided to homes and businesses. - Jobs were created, including the hiring of some African Americans and many new industries were formed as a result. In the 1930s new textile mills opened which employed thousands of women in the area. - The TVA also led to the displacement of nearly 15,000 families, some Native American archaeological sites and cemeteries were destroyed. Impact of the Hundred Days - The measures introduced restored confidence in the government immediately and they stopped investors pulling money out of the banks. - Banking measures saved 20% of homeowners and farmers from repossession, it brought electrical power to underdeveloped areas, created thousands of jobs and built landmarks like San Francisco's Golden Gate Bridge. - However, the creation of the alphabet agencies came at a huge cost as public spending and debt increased significantly. - Investing public money into the economy to create jobs is often called 'pump priming' which was opposed by republicans and industrialists who felt that taxpayers' money was being wasted. - Roosevelt did try to balance the federal budget by cutting government spending elsewhere - Salaries and pensions for some government employees were cut by 15% - Military spending was reduced. - Taxes were raised on the rich. - Prohibition was repealed and the Beer Act put taxes on alcoholic beverages. - The first New Deal had failed to end the Depression and many critics remained. The Second New Deal Key Meeting (14 May 1935) - Roosevelt met with supportive senators and advisers after facing a barrage of criticism - He was persuaded to take radical steps towards his vision of a fairer America. Introduction of the Second New Deal - Presented a wide range of proposed laws to Congress.  - Focused on improving conditions for ordinary Americans: - Strengthening unions for workers' rights. - Providing financial security for the elderly. - Continuing efforts to reduce unemployment. Significant Programs of the Second New Deal - Resettlement Administration (RA) It Aimed to assist smallholders and tenant farmers overlooked by the AAA, it moved over 500,000 families to better-quality land and housing - Farm Security Administration (FSA) Replaced RA in 1937 and gave special loans to small farmers to help them buy their land. It also built camps to provide decent living conditions and work for migrant workers. - Works Progress Administration (WPA) Replaced RA in 1937 and gave special loans to small farmers to help them buy their land. It also built camps to provide decent living conditions and work for migrant workers. - Wagner Act It forced employers to allow trade unions in their companies and to let them negotiate pay and conditions. It made it illegal to sack workers for being in a union and it established a National Labour Board to oversee disputes between trade unions and employers. - Social Security Act It provided state pensions for the elderly and for widows, it allowed state governments to work with the federal government to provide help for sick and disabled people and it set up a scheme for unemployment insurance. If workers became unemployed they would receive a small amount to help them out until they could find work. Opposition to the New Deal Not Enough - A number of high-profile figures raised the complaint that the New Deal was not doing enough to help the poor. - Despite the New Deal measures, many Americans remained desperately poor. The hardest hit were African Americans and the poor in farming areas. - A key figure was Huey Long. He became Governor of Louisiana in 1928 and a senator in 1932. His methods of gaining power were unusual and sometimes illegal (they included intimidation and bribery). However, once he had power he used it to help the poor. He taxed big corporations and businesses in Louisiana and used the money to build roads, schools and hospitals. He employed African Americans on the same terms as white people and clashed with the Ku Klux Klan. - He supported the New Deal at first, but by 1934 he was criticising it for being too complicated and not doing enough. He put forward a scheme called Share Our Wealth. - All personal fortunes would be reduced to $3 million maximum, and maximum income would be $1 million a year. Government taxes would be shared between all Americans. He also proposed pensions for everyone over 60, and free washing machines and radios. Long was an aggressive and forceful character with many friends and many enemies. Roosevelt regarded him as one of the two most dangerous men in the USA. Long was assassinated in 1935.  - Dr Francis Townsend founded a number of Townsend Clubs to campaign for a pension of $200 per month for people over 60, providing that they spent it that month, which would stimulate the economy in the process. A Catholic priest, Father Coughlin, used his own radio programme to attack Roosevelt. He set up the National Union for Social Justice and it had a large membership. Too Much - The New Deal soon came under fire from sections of the business community and from Republicans for doing too much. There was a long list of criticisms: - The New Deal was complicated and there were too many codes and regulations. - Government should not support trade unions and it should not support calls for higher wages - the market should deal with these issues. - Some business leaders set up the Liberty League in 1934 and claimed the New Deal was destroying free enterprise in the USA. - Schemes such as the TVA created unfair competition with private companies. - The New Deal schemes were like the economic plans being carried out in the communist USSR and unsuitable for the democratic, free-market USA. - Roosevelt was behaving like a DICTATOR. - High taxes discouraged people from working hard and gave money to people for doing nothing or doing unnecessary jobs (see Source 10). Roosvelt fights back - Roosevelt was upset by the criticisms, but also by the tactics used against him by big business and the Republicans. They used a smear campaign against him and all connected to him. They said that he was disabled because of a sexually transmitted disease rather than polio. Employers put messages into their workers' pay packets saying that New Deal Schemes would never happen. Roosevelt turned on these enemies bitterly (see Source 12). And it seemed the American people were with him. In the 1936 election, he won 27 million votes - with the highest margin of victory ever achieved by a US president. He was then able to joke triumphantly, - 'Everyone is against the New Deal except the voters. Opposition from the Supreme Court - This Court was dominated by Republicans who were opposed to the New Deal and had the authority to overturn laws deemed unconstitutional - In May 1935, the Schechter Poultry Corporation case came before the Court as the company had been found guilty of violating NRA regulations by selling diseased chickens, filing false sales claims, exploiting workers, and threatening government inspectors. It appealed to the Supreme Court, which ruled that the government had no right to prosecute, declaring the NRA and the AAA unconstitutional for undermining state power. - Roosevelt was angered by the Court's old Republicans denied democracy by throwing out laws he had been elected to implement and proposed a "court-packing plan" to appoint six more sympathetic judges. - Roosevelt misjudged the mood of the American public who were alarmed at what they saw as Roosevelt attacking the American system of government so he had to back down and his plan was rejected.  - The Supreme Court had been shaken by Roosevelt's actions and was less obstructive in the future; most of the main measures in Roosevelt's Second New Deal were approved by the Court from 1937 onwards. The end of the New Deal - Events of 1936 took their toll on Roosevelt and he became more cautious - In 1937 prosperity seemed to be returning and Roosevelt cut the New Deal budget like all conservatives wanted - Many workers who had been employed by the New Deal's own organisations were laid off - The cut in spending triggered other cuts throughout the economy and unemployment spiralled upwards once more. - The 1937 recession damaged Roosevelt badly as middle-class voters lost confidence in him. - In 1938 Republicans did well in the congressional elections making it much harder for Roosevelt to push his reforms through Congress - He was still enormously popular with most ordinary Americans but the problem was that the USA was no longer as united behind his New Deal as it had been in 1933 as by 1940 Roosevelt and most Americans were focusing more on the outbreak of war in Europe and on Japan's exploits in the Far East. Impacts of the New Deal Confidence in government - The New Deal restored the faith of the American people in their Government, it was a huge social and economic programme. - Government help on this scale would never have been possible before Roosevelt's time and it set the tone for future policies for the government to help people. - The New Deal handled billions of dollars of public money, but there were no corruption scandals. - The head of the Civil Works Administration, Harold Hopkins, distributed $10 billion in schemes and programmes but never earned more than his salary - The Secretary of the Interior, Harold Ickes, tapped the phones of his own employees to ensure there was no corruption, employed African Americans, campaigned against antisemitism and supported the cause of Native Americans. - It divided the USA as Roosevelt and his officials were often accused of being communists and of undermining American values and it undermined local government. Industrial Workers - The NRA and Second New Deal strengthened the position of labour unions. - Roosevelt's Government generally tried to support unions and make large corporations negotiate with them. - The Union of Automobile Workers (UAW) was recognised by the two most anti-union corporations: General Motors and Ford - Big business remained immensely powerful in the USA despite being challenged by the Government since companies employed their own thugs or controlled local police forces - Unions were still treated with suspicion by employers - Many strikes were broken up with brutal violence in the 1930s. Unemployment and the economy  - The New Deal created millions of jobs, stabilised the American banking system and cut the number of business failures. - The TVA brought work and an improved standard of living to deprived parts of the USA. - New Deal projects provided the USA with valuable resources such as schools, roads and power stations. - However, it never solved the underlying economic problems, their economy took longer to recover than that of most European countries. - Confidence remained low - When Roosevelt cut the New Deal budget in 1937, the country went back into recession and there were 6 million unemployed in 1941. Only the USA's entry into the war brought an end to unemployment. African Americans - Many gained benefits from the Civilian Conservation Corps, other New Deal agencies, relief programmes and the New Deal slum clearance and housing projects. - Some New Deal agencies discriminated against African Americans, racial segregation in the CCC, mortgages were not given to black families in white neighbourhoods. - More black workers were unemployed and much less likely to be given jobs - Domestic workers were not included in the Social Security Act. - Roosevelt failed to put through any civil rights legislation, particularly laws against the lynching of African Americans fearing Democrat senators would not support him Women - The New Deal saw some women achieve prominent positions like Eleanor Roosevelt who became an important campaigner on social issues, Mary Macleod Bethune an African-American woman who headed the National Youth Administration and Frances Perkins who was the Secretary of Labor, removed corrupt officials from the Labor Department and was a key figure in making the Second New Deal work in practice. - Most of the programmes were aimed to help male manual workers rather than women - Local governments tried to avoid paying out social security payments to women by introducing special qualifications and conditions. - Frances Perkins was viciously attacked in the press as being Jewish and a Soviet spy. Even her cabinet colleagues tended to ignore her at social gatherings. Native Americans - Indian Reorganisation Act provided money to help them buy and implore land and control their own trivial areas - Indian Reservation Act helped them preserve and practise their traditions, laws, culture and develop their land as they chose - They remained a poor and excluded section of Society