The Great Depression - USA

1. The Great Depression - USA History 12 Ms Leslie

2. What is a depression? • It’s when trade, production levels, employment and standards of living falls sharply. • This pattern started right after the stock market crash of 1929. • By 1932,countries around the globe began to follow suit and the USA dragged everyone into a depression.

3. 1. The Gold Standard • Before WWI trade was paid for in gold or in currencies based on gold. • It creates stability and confidence among traders. WWI destroyed this practice as countries were borrowing large amounts of money to fund their war. • To pay for goods, governments printed a lot more paper money, creating inflated dollar values.

4. Britain was no longer the leading economic power, USA was. • Post war governments were trying to pay of war-loans. • To do so they needed to increase trade and borrow money. • Britain loans out almost $2.75 billion and the USA $5.75 billion. This helped out the countries borrowing the money, until the lenders would ask for it back.

5. Most European nations experienced a boom in production, except for Britain. • Despite an increase in production, trade did not increase due to heavy tariffs that governments put up to encourage domestic purchases. • Central and Easter Europe wanted to create ‘autarky’ in their countries. Meaning they wanted to be completely self-sufficient and not needing trade. • If countries could not sell their products to other countries, there would be no profits and no way to pay back war time loans.

6. In the USA was the Fordney-McCumber Act of 1922, which raised the price of imported goods to be beyond that of domestic goods. This act was part of the American isolationist policies.

7. 2. Agriculture • Prices for agriculture fell by 30% world wide in 1929. Too much supply, not enough demand. • Farmers were no longer able to purchase machinery and other goods for their farms.

8. 3 Stock Market Boom • People were investing in America and so European nations were loosing out on investment funds. • European industry began to decline and millions lost their jobs.

9. 4. Stock Market Crash • America went in to debt and Canada, Europe and Latin America followed.

10. How to fix it? • President = Herbert Hoover • Hoover’s first move after the market crash was to cut taxes and ease interest rates. • His intention was to spur spending and increase business confidence; unfortunately it ran in tandem with the worst trade legislation in history

11. Smoot-Hawley Tariff 1930 • worst trade legislation in history • This tariff was another increase against foreign products; the purpose was to help American business pick up again. • All it did was cause other countries to raise their tariffs (Australia, Cuba, France, India, Italy, Mexico, New Zealand, Spain and Switzerland.) • International trade was at a virtual standstill.

12. By 1931, America’s desperate attempts to stave off the depression his Europe when Austria’s largest bank collapsed, causing others to fall as well. • American banks called in their European loans, increasing the downward spiral.

13. As trade ended, industry collapsed and people were unemployed. • People were forced into bread lines and lived in shantytowns named ‘Hoovervilles’ because they could no longer pay rent. • By 1932, 25% of employable Americans were out of work. 28% of the population had no income at all. • In New York, 300,000 school children did not get an education because authorities could not run the schools.

14. The International economy fell as well. • In June of 1931, Hoover announced a moratorium on reparations and war debt payments, an action that saved the financial systems of European nations.

15. Bonus Expeditionary Force. • Hoover’s Big mistake of 1932 • These were 20,000 veterans who camped out in the middle of Washington calling for help in hard times. • The Government stood firm and Hoover called in the military to disperse the protesters. • Major Patten of the US Cavalry, acting on orders from the Army Chief of staff, General Macarthur, removed the BEF. • This was a PR Disaster as stories of bayonet charges into hungry but peaceful crowds while the President dined in luxury hit the media

16. Hoover ran for election again in 1932 and was defeated by Democrat Roosevelt.

17. The 1932 election saw a reversal in the republican strong hold of the government. • Roosevelt received 22.8 million votes against the 15.7 million of this opponent. (voting pop. 75 million) This time America voted for change.

18. The New Deal • The First New Deal plan was from 1933-35 to create jobs and set the USA on the road to recovery. • reforms in industry, agriculture, finance, waterpower, labour, and housing, vastly increasing the scope of the federal government’s activities. • Opposed to the traditional American political philosophy of laissez-faire • embraced the concept of a government-regulated economy

19. Roosevelt’s approach was direct government relief programmes. • promised to end Prohibition. • In the first 100 days he sought to restore business confidence by strengthening the banking system.

20. Emergency Banking Bill • was put in place to help the shaky banking system. Over 1/3 of America’s banks had closed. • The act closed the remaining weak ones and only allowed the strong ones of continue.

21. Second New Deal • Focused on the poor and unemployed. • In 1935 there were still 10 million people unemployed. • The Social Security Act provided funds for seniors, Widowed and the maimed. • Unemployment insurance was created for people to pay into if they wished.

22. Roosevelt also worked hard on gaining the trust of the American People. • He used the Radio for ‘fireside chats’ to convince American’s to put their savings back in to the banks. • He also provided $500 million in relief aid to the unemployed and hungry. • He also cut the salaries of government workers to show that everyone had to tighten their belts.

23. Alphabet Acts • Massive reform too place with the Agriculture Adjustment Act (AAA)and the National Industrial Recovery Act (NIRA) and numerous Public Works schemes. • Many of these PW schemes of the first New Deal were make-work Projects, such as the Civilian Conservation Corps (CCC) that had people re-planting forests. Others had people building roads and schools. • The National Recovery Administration abolished child labour and set up the 8-hour day and the minimum wage. Farmers were subsidized to produce less food to drive up prices, ironic in a time where millions were starving.

24. Although unemployment remained high and much money was wasted in the bureaucracy of the New Deal, Roosevelt remained popular and won the next election in 1936. • Americans were happy with allowing the government to intervene with the economy and to bring regulation and social welfare. • In the past America had been run by the interests of big business.

25. Roosevelt remained popular with the public until his death in 1945 while in office. • Wealthy Americans did not support his policies. • They objected to the government interference with business and policies that strengthened trade unions. • Businesses also believed it was an individual’s responsibility to make sure they had enough money for their old age.

26. Roosevelt was accused of being a socialist and his supporters would be hunted down in the 1950’s during the ‘communist which hunts’. • The Supreme Court ruled many of Roosevelt’s policies as unconstitutional, causing Roosevelt to threaten to remove judges from their post. • end