The Development of the USA, 1929-2000
Economic Downturn And Recovery:
The Wall Street Crash-
Example to explain what shares are:
Company A releases 100 shares of £1000 each. This means the company is worth a hundred
thousand pounds as everyone who has a share owns 1%, as 100 people own the company. If a
boss wanted to have bigger ownership and say over the company, then they'd have to buy at
least 51% of the shares, so that they could rule out the other 49% when it comes to making
decisions for the company. People put their shares into companies in hope that the money
they've put in will be used by the company to create a 'product' that will lead to the company
getting more money. This money is profit to the people who have put their shares into the
company. If the company uses the money that the shareholders have put in, to create a 'product'
that fails, then the price of the company may drop to £200. This means that the shareholders
have lost £800 due to the company's failure in the industry.
- Stocks: all of the shares into which ownership of a corporation or company is divided.
- The stock market is where shares are traded
In 1929, the stock market rapidly crashed, with the main cause being due to the period of
speculation (the purchase of an asset with the hope that it will become more valuable in the
near future) that preceded it. Millions of people invested savings or borrowed money to buy
stocks, which pushed prices to unsustainable levels.
Soon, the speculation subsided and people were unable to buy shares as they were so
expensive, leading to the price of the shares crashing.
The shares are a demand and supply by the people scheme, which means that people decide
how much the price of them are worth, by considering the company's success rate to provide a
high profit with the shares put in.
People began selling shares due to the fear of the stock market failing. On Tuesday 29th
October 1929, Black Tuesday happened, in which, 16.5 million shares were sold. The value of
all shares had dropped by $40,000 million by the end of 1929.
Life During The Depression-
Between the end of 1929 to 1932:
● 2.5 million unemployed due to the crash of the economy (black workers were the first to
be sacked- 50% unemployed)
● factories and businesses began to close down
● Hooverville - alternative homes built by the unemployed during the Great Depression,
cheekily named this to spite the president at the time, Hoover
● some people drifted across the country- hobos
, ● farmers were unable to sell products, leaving the food to rot.
● 'The Dust Bowl' - states (Colorado, New Mexico and Kansas) were hit with drought and
high winds, creating dust storms from the soil, affecting 20 million hectares.
Due to the Wall St Crash, people were left in an economic and social slump, leading to the
Great Depression.
Many people suffered reductions in income and poverty, also creating a major crisis in social life
as well as economic. There were massive declines in social health, with the suicide rates rising
dramatically from 12.6 suicides per 1000 people in 1926 to 17.4 per 1000 at its peak in 1932.
Marriages fell from 1.23 million in 1929 to 982,000 in 1932, with a decline in birth rates
following. Also, some schools were closed down as there wasn't enough pay for the teachers.
Bonus marchers (WW1 veterans/ex-soldiers) had been promised a bonus, payable in 1945 but
due to the Great Depression, they marched into Washington in May and June 1932, in support
of a Bill which would allow the bonus to be paid early. These 12,000 men (along with their wife
and children) built a Hooverville outside the government, yet they were refused their money as it
would've cost the government $2.3 million. Most of the marchers went home after this refusal
but around 5,000 stayed so Hoover sent in the army to clear them out. Conflict broke out and 2
veterans were killed with 100 injured and a baby dying of tear gas poisoning, convincing the
American people that Hoover didn't care.
Early Republican Attempts To Deal With The Depression (1930s)-
Laissez faire- the government not interfering with the economic affairs of individuals and society/
a relaxed or 'hands off' attitude from the government to society's affairs
Rugged individualism- individuals are responsible for their own lives
President Herbert Hoover believed in rugged individualism as he had a laissez faire attitude. He
believed people should be able to look after themselves and not expect charity or social security
from the government. Therefore, he never gave unemployed people much help. To try and pull
the US out of the Great Depression, Hoover put in Hawley, the Smoot Tariff Act in 1930. This
protected US farmers by increasing import duties on foreign goods. However, in retaliation,
other countries refused to trade with the USA. Hoover also decided to cut taxes by $13 million
so people would have more money to spend and stimulate the economy. The measures put in
place by Hoover all failed as he couldn't escape the fact that unemployment rates continued to
rise. Many citizens saw him as uncaring.
Roosevelt and the New Deal-
Roosevelt defeated Hoover in the [residential election by a landslide victory in 1932. As part of
his New Deal, he promised federal action for the American people based on the three Rs:
- relief
- recovery
- reform
,During his first 100 days, due to the severity of the Depression, Roosevelt was granted
emergency powers (meaning he could pass laws very quickly).
● Firstly, he stabilised the banking system. The Emergency Banking Act closed all banks
for 10 days. This new law authorized the Treasury Department to begin opening them
when the banks could prove they were healthy. Barely a week after, all banks were
opening again.
● The Economy Act was also put into place. This cut the pay for everyone working in the
government (Roosevelt also took a pay cut to show he was prepared to help the people),
the army, navy and air force by 15%. The one billion dollars saved from this was used to
help the unemployed.
● Roosevelt held 'fireside chats', to help reassure the people that his methods were
working.
● He also established numerous organisations as part of his New Deal, which became
known as the 'Alphabet Agencies'.
● The New Deal successfully created millions of jobs, improved conditions for farmers and
created a semi welfare state for disadvantaged Americans.
● A few of his policies were criticized for being a short term fix as they were believed to not
be doing enough and some believed his actions were un- American and unconstitutional.
● Ultimately, it was WW2 which lifted America out of the Depression.
Success of the New Deal Criticisms of the New Deal
● Unemployment rates reduced from ● The government intervened too
24.9 million in 1933 to 14.3 million in much in the business of Americans
1937 ● The Supreme Court announced that
● The AAA led farmers money doubling the AAA and NRA were
between 1932 and 1939 unconstitutional
● The TVA improved the life of 7 million ● The AAA didn't help people who
people depended on farmers for their
● The CCC created work for 2.75 income. It was seen as morally
million people wrong to destroy food when people
● The NRA and the Wagner Act were starving.
brought better working conditions for ● Many believed Roosevelt's projects
workers and introduced trade unions were short term solutions, e.g the
(labour unions) CCC
● The PWA and WPA created work for ● People thought trade unions were
4 million people un- American (as it was believed to
● Roosevelt restored faith in the be a more communist thing) and that
American people - he kept up his they challenged the idea of rugged
election promises of helping to individualism
, reduce unemployment and make ● Many of the Alphabet Agencies
America a better place. discriminated against black
Americans and women
Alphabet Agencies- specific areas of society designed to help them get out of the Great
Depression e.g. AAA0
AAA- Agricultural Adjustment Act which was a federal law passed in 1933 which offered farmers
subsidies (a form of financial aid offered by the government) in exchange for limiting their
production of certain crops. This was meant to limit overproduction so that crop prices could
increase.
TVA- Tennessee Valley Authority provided jobs and electricity to the rural Tennessee River
Valley.
CCC- Civilian Conservation Corps was established to relieve unemployment during the Great
Depression by providing national conservation work, primarily for younger unmarried men.
NRA- National Recovery Administration authorized the president to institute industry wide
codes, intended to eliminate unfair trade practices, reduce unemployment, establish minimum
wage and maximum hours and guarantee the right of labour to bargain collectively.
Wagner Act- establish the legal right of most workers to join labour unions and to bargain
collectively with their employers
PWA- Public Work Administration was designed to reduce unemployment and increase
purchasing power through construction of highways and public buildings.
WPA- Works Progress Administration was an American New Deal agency, employing millions of
jobseekers to carry out public work projects.
Fair Labour Standards Act- increased minimum wages and maximum hours were established
for all employees of business engaged in interstate business
Social Security Act- established benefits for the elderly, orphaned or those injured in industrial
accidents
The Second New Deal was the legislation that Roosevelt and Congress passed between 1935
and 1938:
● Roosevelt altered his policy making due to the complaints made from the first New Deal
● WPA hired nearly 10 million Americans
● Wagner Act was introduced
● Fair Labour Standards Act was introduced
● The Social Security Act was passed meaning the government accepted full responsibility
for meeting the basic needs of its citizens
