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why was the depression so serious for american society and the economy…
why was the depression so serious for american society and the economy
the growth of unemployment and collapse of GDP
only a small proportion of people were directly effected by the wall street crash since the majority of america didn't own shares
however the number of unmployed rose form 500,000 to over 4 million . by 1933 this had risen to 15 million. these figures did not inclue the hundreds of thousands who were working part time
real wages between 1929 to 1931 fell by 16%
manufacturing fell by 54% in the period 1929-31 construction fell by 78% between 1929-31 and investment fell by 98%
republicans were in congress and didn't want to change its policy of laissez-faire so didnt really step in
the effects of the depression on society
The USA did not have a old age pension scheme or a national system for unemployment welfare . helping these people was the responsibility of state governments and only a few of them had systems
mayor of detroit home of the worlds car industry said in 1932 that the city was on the verge of bankruptcy if it did not get federal aid
president Hoover encouraged voluntarism . by 1930 many soup kitchens and breadlines were set up in towns to provide direct help to those affected by the depression
national suicide rate increased by 14% between 1929-32 and marriages fell by 10% and birth rate fell
the rapid decline in economic activity led to a rise in racial discrimination . several employers adopted a preferential hiring system for whites.several states banned non US citizens from public works programs
between 1929- 1932 farmers incomes fell by 2/3rd . farms were being forced to be auctioned for example in the agricultural state of Lowa saw 1/8 farms being put up for auction between 1930-32
gangsterism
by 1930 gangsters had developed a widespread network of illegal activities connected to alcohol, gambling and other black market trading
other gangsters carried out US bank robberies. one of the most famous and notorious was Bonnie and Clyde
why did hoover fail to end the depression
smoot-hawley tariff 1930
on the 17th June 1930 import tariffs were raised to the highest level in US history in an attempt to protect the US economy
average tariffs on imported agricultural and industrial goods rose to 40%
while this was to try and help american industry it actually made it worse as other countries followed in suit and did the exact same thing making t hard to export american goods and aided a contraction rather thsn a expansion of the economy
homelessness and hoovervilles
there was no federal welfare system so people had to rely on help from the state and most of them failed to offer anything more than short term help which led to a rapid rise in homelessness
13 million americans lost their jobs during hoovers presidency and 62% were out of work for more than a yr
hoover blankets - the newspapers people used to keep warm at night while sleeping rough
the shanty towns became known as hoovervilles . homes in hoovervilles were makeshift shacks and usually built on waste land
the reconstruction finance corporation
the corporation was give $2 billion of tax payers money to to assist directly banks and insurance companies who were in financial trouble
90% of the money went in loans to small and medium sized banks to try to revise the US banking system but it was only a partial success
the RFC failed to encourage banks to lend more to businesses that were facing severe financial problems
by the autumn there was no signs of economic recovery however FDR did use the RFC as part of his attempt to bring about economic recovery
emergency relief and construction act July 1932
past on the 21st July 1932 was the USA;s first massive relief program. a corporation was set up and give $1.5 billion to fund public works for the unemployed
economist Lippmann stated that $2 billion would be enough to help just 10% pf the unemployed
it was major change in federal government policy however it was too late and the depression was so deep that dramatic change was required to end the economic crisis
opposition to the first new deal
the second new deal
the wagner act june 1935
helped to give the trade unions basic rights
the guffrey snyder act 1935 -
the guffrey vincent act 1937 -
fair labour standards act 1938 -
the revenue act august 1935
it increased the rte of income tax from 63 to 79% on incomes over $5 million and raised an addition $250 million a yr
the extra money was spent on new deal projects such s creating work
this received a lot of criticism form the rich
the social security act june 1935
helped to set up a social security system employers and workers would even pay in and provide minimal payment to those who were unemployed . they wont only be allowed for 16 weeks and at a maximum of $18 a week. the act was not fully comprehensive a it excluded those workers who needed it most such as self employed, farmers and domestic servants
more aid to farmers
opposition to the second new deal
how successful was the first new deal ?
alphabet agencies
the TVA (Tennessee valley authority) created in may 1933 it established networks of dams to control the flow of the river and create hydro-electric power. it helped with electrification in 1933 only 2% of farms in the area had electricity and this rose to 75% by 1945. flooding and soil erosion was prevented , increasing the agricultural yield of the area
the CCC (the civilian conservation corps ) march 1933. programs were set up which was supervised by the army to provide work (mostly manual labour )to men aged 18 to 25 for a minimum of 6 months and up to 2 yrs . the launch involved removing 250,000 off the unemployment lists . they lived on site and were segregated for blacks and whites.pay was $1 a day plus lodging and food. of the $30 25 was sent home to their families
the PWA (public works administration) June 1933 it was a long term program of stimulating economic growth . it gave the unemployed emergency work however it was giving out boondoggle jobs. however they did end up building 13,000 schools and 50,000 miles of road
help for farmers
The AAA (agricultural adjustment administration) was set up to try and help stabilise farm prices through the government purchase of agricultural surpluses. by 1935 35 million acres of cultivate had been removed but farm income rose form $4.5 billion to $6.9 billion
not all farmers benefited though, many black american sharecroppers were still without electricity. and with the climate change and poor agricultural method there was a dust bowl. by the mid 1930s thousands of poor farmers had fled to find a better working life
reforming the financial system
the emergency banking act march 1933- he ordered a national bank holiday from the 6th to the 9th march to try and restore confidence in the banking system. the US treasury investigated all the banks threatened with collapse and only when the treasury approved would they be allowed to reopen on the 10th of march
the glass steagall banking act - June 1933 it separated commercial and investment banking they also created the FDIC which guaranteed all bank deposits to the value of $5,000
the federal securities act - may 1933 it made sure that all new shares purchased had to be registered with the FTC
the gold reserve act ( jan 1934) and the silver purchases act (june 1934) -it devalued the US dollar against the rate of gold to try and make US exports cheaper and then try to increase prices by raising the amount of silverage in US coinage. unfortunately both were unsuccessful