THE WALL STREET CRASH
Weakness in US economy
Companies tried high-pressure advertising
But with workers wages not rising and prices not falling, demand decreased
They spent 3 billion dollars in magazine advertising in 1929
The majority of americans who were poor couldn't pay goods with any method
The market for the goods was largely the rich and the middle classes
American industries producing more of the goods than they could sell
More than 500 banks had failed each year
Mainly small banks
Unequal distribution of wealth and the precarious state of banks
The construction industry had started its downturn
THE WALL STREET CRASH, OCTOBER 1929
Speculators tried desesperatly to get rid of of 13 million shares at a fraction of the price they paid
It was the worst day for the Wall Street
On Tuesday 29 October 1929 it was clear to speculators that banks were not going to intervene to support the price of shares
Speculators became nervous and started to sell
Many investors had borrowed money to buy shares and couldn't afford to have shares worth less value than their loan.
In june 1929 the official figures showed fall
By summer 1929 weakness begin to show
The economic consequences of the wall street crash
Production was rising again slightly and there was hope that the situation was more settled, in the middle of 1931
Hoover cut taxes to encourage people to buy more goods
President Hoover reassured the nation that prosperity was "just around the corner"
The worst of the depression because the crash had destroyed the one thing that was crucial to the properity of the 1920's
The CONFIDENCE
People were unable to pay back their loans to the banks and insurance companies
They went bankrupt
Many others borrowed money in order to buy shares that were worthless
Theere was a downturn in spending because rich had always been the main buyers of American goods
The rich lost most because they had invested most
Large speculators were ruined
Banking crisis
People felt that hard currency was the only security
Problems in the European banks affect the USA
2294 banks went bankrupt in 1931
1352 banks went bankrupt in 1930
Including the NY bank, that had 400,000 depositors, a lot of immigrants and new yorkers
The worst failure in the American history
659 banks failed in 1929
So people stopped trusting them and lost their savings
Downward Spiral
International trade collapsed
Farm prices were already low before the crash . People in towns coulnd't afford to but much food so prices went into a freefall. Then the prices for transporting the animals was higher than the price of the animal it self.
In 1933 the USA was in the worst economic depression the world ever seen
Workers were laid off or paid less, they bought less
A downward spiral was firmly established
Between 1928 and 1933 production fell by 40% and salaries 60%
banks had less money to give for loans to business or to people as mortgages on homes.
banks started to demand business repay loans
some others reduced production and salaries
business that coulnd't afford to do so went bankrupt
The human cost of the Depression
In the towns
Every town had a HOVERVILLE
This was a shanty towns samshackle huts were the migrants lived while they were looking for work
Many children lived in wagons or tents next to the tracks.
A big number of men travelled from one place to another on railway freight wagons seeking work
Some people did queued for bread and soup dished out by charity workers
People had to sell their houses or were kicked out because they couldn't pay rent.
Many ended up on the streets
Unemployment rose rapidly
In the countryside
In Southern and Midwest states over-farming and drought caused a topsoil to turn to dust
Black farmers were worse than white farmers
animals killed because farmers couldn't take them to the market
Wheat and fruit were left to rot
There was lot of hunger. Kids were ill and died from malnutrition
They lost their land and farms first
Most farmers had to pack their things and live in the road
They picked up work where they could
Some farmers organised themselves to resist banks to take their homes
As farm income fell, large numbers of farmers coulnd't afford their mortgages
People in agricultural areas were the hardest hit by the depression
The 1932 presidential election
The bonus marchers
General Douglas MacArthur conviced himself with no evidence that they were communist agitators so he ignored Hoover's instructions of treat marchers with respect and with troop and the police burned the marchers' camps with tear gas
Thousands of servicemen who had fought in the WWI marched on Washington asking for their war bonuses to be paid early
Hoover refused to meet them and said to the general Douglas MacArthur to handle the situation
They camped outside of the white house and sang patriotic songs
Hoover's reputation was demaged by an event in June 1932
Hoover's failings
He believed that social security was not the responsability of the government
Hoover tried little to help people
that was worse for his reputation
Government help was not needed
Hoover and most republicans were very reluctant to change their basic policies. They said that business should be left alone to bring back prosperity.
hoover dam on the colorado river
He put money into public work programmes
Set up the Reconstruction Finance Company
helped banks to stop them going to bankrupt
He tried to restart the economy in 1930 and 1931 with tax cuts
'Do-nothing' president
Roosevelt's characteristics
His main characteristics as a politician
Not afraid to ask for advice from experts
Plans to spend public money on getting people back to work
Not radical but he believed in 'active government'
Frankin Roosevelt was the opponent of Hoover in 1932 elections
He was democrat
SPECULATION
Confidence was vital.
If people believed that prices would rise there would be more buyers than sellers. But if people believed that prices might stop rising there would be more sellers. That is what happened in 1929
In 1928 there were lot of demands for shares and prices were rising
Banks got involved in speculation
Women were involved in speculation
The 'petticoat line'
Speculators borrow money to buy some shares, then sell then sell them again at a higher price
600,000 new inventors were speculators
The stock market was an easy and
quick way to get rich
Anyone could buy shares to send them later at a higher price
In 1920 there were 4 million share owners but in 1929 there were 20 million
Veredicts on the New Deal
It is difficult to say is the New Deal was a sucess or not. To answer that you have to take in count the reasons it was created
Impact of the New Deal
Impact on industrial workers
Many strikes broke up with violence in 1930
Unions were still treated with suspicion by employers
Big business were still powerful in the USA despite being challenged by the government
The Union of Automobile Workers was recognised by the two most anti-union corporations: General motors and Ford
Some unions combinated as the Committee for Industrial Organisation - large enough to bargain with big corporations
Rooselvelt's Government tried to support unions and make large corporations negotiate with them
The NRA and the 2nd New Deal stregthened the position of labour unions
Impact on confidence in government
The New Deal undetermined local government
The New Deal divided the USA. Rooselvelt and his officials were accused of being communists and of undermining American values. Ickes and Hopkkins were both accused of being antibusiness because they supported trade unions
The New Deal handled billions of dollars of public money, but there was no corruption scandals
restored the faith of the Americans in the government
The End of the New Deal
The problem was that USA was no longer united behind his New Deal as it had been in 1933
In 1938, the Republicansdid well in the congressional elections
Now it was more difficult for Rooselvelt to push his reforms through the Congress
But he still was popular with most Americans
Middle class voters lost some confidence in him
The recession damaged Rooselvelt
Unemployment spiralled upwards once more
He laid off many workers who had been employed by the New Deal's own organisations
Rooselvelt did what conservatives wanted: he cut the New Deal budget
In 1937 prosperity seemed to be returning
Opposition from the Supreme Court
Most of the main measures in Roosevelt's second new deal were approved by the court from 1937 onwards
Roosevelt's plan was rejected
Even so, his actions didin't were pointless
The supreme court had been shaken by Roosevelt's actions
Roosevelt asked the congress to give him the power toappoint six more supreme court judges that fit more with the new deal
The american public were alarmed because they saw that as a attack to the American system of government
Roosevelt was angry because that group of old republicans should deny democracy by throwing out laws that he had been elected to pass
Roosevelt the american supreme cort that were the republicans opposed to the new deal
Roosevelt's problems continue after the election in 1936
Opposition to the New Deal
Rooselvelt fight back
He won the elections again with 27 million votes
The highest margin of victory ever achieved by a US president
Rooselvelt was facing criticism and tactics against him
Big business and Republicans used a smear campaign
Employers put notes into their workers' pay packets saying that New Deal Schemes would never happen.
They said he was ill with a sexually transmitted disease rather than polio
The Second New Deal
The most significants aspects:
The Ressettlement Administration
The farm security administration remplaced the RA in 1937
And it gave special loans to small farmers to helped them to buy lands
Helped smallholders and tenant farmers who didn't were helped by the AAA
Moved 500,000 families to better lands and houses
Built camps to provide decent living conditions and work for migrants
The Works Progess Administration
Organisations whose aim was to create jobs and to extended works
The Social Security Act
Provided state pensions for the eldery and for widows
Allowed state governments to work with the federal government to provide help for the sick and the disabled
A scheme insurance, that was that employers made a small contribution to a special fund each week, if they became unenployed, they would receive a small amount to helped them until they found a job
The Wagner Act
forced employers to allow trade unions in their companies and to let employers negotiate pay and conditions
One month later he prestented to the lides of the Congress a huge range of laws that he wanted passed.
This was known as the Second New Deal
They convinced him to take radical steps to achieve his vision
Tuesday, 14 May 1935, a key date. Rooselvelt met with a group of senators and close advisers who shared his views and aims
By May 1935 Rooselvelt was facing lot of criticism
Impact of the Hundred Days
Restore confidence in government
How successful was the New Deal
The Tenesse Valley Authority
Rooselvelt set up an independent organisation called the Tenesse Valley Authority
People lived in poverty
Most houses didn't gave electricity
The area had also great social problems
The area had physical problems
It was a huge area that cut across 7 states.
The Hundred Days
The final measure was the National Industrial Recovery Act. It set up two important organisations
The National Recovery Administration improved working conditions in industry and outlawed child labor. It also set out fair salaries and sensible levels of production.
firms that joined used the blue eagle as a symbol of presidencial approval
The idea was to estimulate the economy by giving workers money to spend, without overproducing
The Public Works Administration used government money to build public institutions
The Agricultural Adjustment Administration tried to have a view of the long term problems farmers were facing
Help farmers to modernise
It set quotas ti reduce the farm productionin order to force prices gradually upwards
The Civilian Conservation Corps was aimed at unemployed young men.
These plan helped around 2.5 million
The Federal Emergency Relief Administration tackled the need of the poor
Every sunday he would bradcast on radio to the nation
'fireside chats'
Rooselvelt sent 15 proposals to Congress and all of them were adopted
He took the time to explain to the people what he was doing and why
The Emergency Banking Act and the Securities Exchange Comission gave americans a taste of hoe the New Deal was going to be
Rooselvelt's advisers set some rules and regulations to prevent the speculation that contributed to the Wall Street Crash
Rooselvelt ordered all banks to close and to remain closed until government officials had checked them
In the first 100 days of Rooselvelt precidency, he worked round the clock with his advisers ('Brains Trust') to produce a big range of sweeping measures
The campaign
Rooselvelt won
It was the worst defeat Republicans had ever suffered
In a campaign trip he made 76 speeches. He promised a 'New Deal'. Not only his policies attracted support, it was also his personality
He made personal contact with american people and offer hope and a way out of the depression
he was warm and trustworthy
Rooselvelt plans were rather vague and general, but he realised people wanted action
With the ill-feeling towards Hoover expressed by the hole country, Rooselvelt was confident of victory.
He attacked the attitude of Hoover and the Republicans
