1929 crisis, Roosevelt and the New Deal
« House beautiful » in the Twenties
A great boom
- « Roaring Twenties »
- By 1928: before the crash, the USA = 42% of the world production
- Industrial organization of work + capitalism
- Principal creditor, the bank of the world
- The beginnings of mass-consumption (a majority of city- dwellers)
- Mass credit
- Becoming rich was seen as possible
- 700 movies /year
- Skyscrapers ...
President Hoover
- On March 4, 1929, at his presidential inauguration, Herbert Hoover stated, “I have no
fears for the future of our country. It is bright with hope.”
To sum up:
- The « Roaring Twenties »
- The USA dominating the world economy
- Boundless confidence in the future; confidence feeds confidence - Beginning of mass-
consumption
- Speculation-based success
And then there was the Wall Street Crash
- October 29, 1929, or Black Tuesday, witnessed thousands of people racing to Wall
Street discount brokerages and markets to sell their stocks. Prices plummeted
throughout the day, eventually leading to a complete stock market crash.
The Stock Exchange Crash/Krach
- September 1929: the purchase of shares started to slow down
- Rumors that the boom might be over people rushed to sell their shares
before prices fell even more
- 24 October: a panic; share prices fell dramatically (Black Thursday)
- 29 October: The rate of listed stocks fell by around $30 billion (Black Tuesday)
- Between September 1 and November 30, 1929, the stock market lost over
one-half its value, dropping from $64 billion to approximately $30 billion.
- Thousands of people were ruined
- The bursting of the bubble
- The Wall Street Crash = the box of matches/detonator, not the cause of the
Great Depression. While it is misleading to view the stock market crash of
1929 as the sole cause of the Great Depression, the dramatic events of that
October did play a role in the downward spiral of the American economy. The
crash, which took place less than a year after Hoover was inaugurated, was the
most extreme sign of the economy’s weakness
To sum it up:
- A panic
- The fear of a revolution, that the Stock Exchange of Wall Street could be assaulted
- Waiting for a miracle A slow but fatal spiral
How did the Depression affect people in the USA ?
- Millions of ruined investors (and creditors when shares bought on credit)
- Unemployment: probably undervalued (rural jobless not considered): probably 25%
of the total labor = 11/12 Million in March 1933 out of 126 Million in total (up to 15
Million?)
- + authoritative diminishing of workhours (short time working)
- At Ford’s: 130 000 workers 37 000 Wages: $50 to $16/month
- 1/8 farmers lost their property
- Some categories of people more affected: women, African Americans (50% of
jobless), the elderly, all the more since no infrastructure to support people apart
from private charities (but fewer donators)
- Detroit (car industry) + Middle-West
- Standard of living got worse: breadlines, eviction of tenants who could not afford the
rent, starvation, Hooverville’s, teenagers wandering on the streets....
- Soup kitchen
- « Dust bowl » = a series of unprecedented dust storms that affected the Great Plains
by 1934, 1935 and 1939-40, destroying agriculture in Oklahoma or Arkansas.
Roosevelt and The New Deal
- Hoovers’ policies had very little impact on the consequences of the Depression.
- F. D. Roosevelt the Democrat running for presidency beat Hoover in the November
1932 election.
- Roosevelt: 51 – Wasp – New Yorker – Harvard – stricken with polio by 1921
(paralyzed legs) - brilliant communicator (radio talks : « fireside chats »)
- Election speech: « I pledge you, I pledge myself, to a new deal for the American
people »
- A new deal = a new hope, a complete change in political methods.
- 3 aims : relief, recovery, reform
Relief: direct help to destitute people
Recovery: reducing unemployment, boosting the demand for goods and get the
economy start again
Reform: take measures to prevent a new economic disaster in the future.
- At that time, FDR as the other leaders worldwide were not experts in economy....
From 1933 to 1940, 15 measures were voted, in different directions :
- confidence in banks restored (no loss if a new crisis)
- compensations to the farmers with a reduction in production to raise prices (the farmers
had to burn their crops and cattle while people were starving ! )
- projects in the countryside such as building roads, dams, hospitals... (the workers were
given only a small wage but it had a great psychological impact) (NRA, 1933)
- child labor and job discrimination forbidden
- minimum salary , maximum 8 hour working-day
- the Social Security Act (1935) (but not very effective)
a step towards social welfare /Welfare State
- The Tennessee Valley Authority = national dire
+the end of Prohibition! Alcool(1933)
Results
- Unemployment remained an important issue (8 Million jobless people by 1937) - Dustbowl
in the mid-1930s + labourers had to leave
- Supreme Court’s opposition
- Not enough spending to support industry
- Social Security: did not concern Black people and lowly jobs - Attacks from businessmen,
FDR seen as a betrayer.
+ creation of new jobs + confidence
+ welfare state
When was the Great Depression over?
- The war gets the US out of the Depression
- Process of urbanization
