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Describe the effects of the Wall Street crash on the USA by 1932.

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Introduction

Assessment Objective 1 Roosevelt and the New Deal 1. Describe the effects of the Wall Street crash on the USA by 1932. In October 1929 the Wall Street stock market crashed, the American economy collapsed, and the USA was left in depression which destroyed much of the prosperity of the 1920s 'golden period'. There are many reasons why the Wall Street crashed in 1929, for example, speculation, overproduction, trade and poverty, which were all weaknesses in the American Economy. During the 1920s, America was experiencing a boom. Speculation was a major activity to a lot of Americans. They brought and sold shares, trying to make as much profit as they could. It seemed to most Americans that the stock market was a quick way to get rich. Anyone could buy shares; it didn't even matter if you were poor except if things should go wrong and you couldn't afford to pay back bank loans, because you didn't even need to pay the full value of the shares. Instead, you could buy 'on the margin', meaning you only had to put forward a 10% deposit to buy the shares, and could borrow the rest by loans from banks. Americans would buy these shares, watch their value rise and then sell the shares at a later date at a higher price. Many Americans decided to join the stock market because there was confidence in it. People were confident that prices would keep rising and that there would be more buyers than sellers. Through most of the 1920s the rise in share prices was quite steady. There were even some downturns, but in 1928 Speculation really took hold. Demand for shares was at an all-time-high and prices were rising at a un-heard-of rate, more than they were worth. People were becoming more and more confident in speculation because everyone was making such large profits, at that time. ...read more.

Middle

If things did ever get better and people got their jobs back, the golden period of the 1920s could never be repeated. The crash had destroyed the one thing that was crucial to the prosperity of the 1920s: confidence. The confidence there had once been in America and its economy had been lost and would probably never be found. 2. Compare the New Deal to Republican polices before 1932. There were many worrying economic effects following the Wall Street Crash. The rich lost most because they had invested a lot. There was therefore a downturn in spending on goods. Companies failed and went bust because nobody was buying so trade fell because the poor couldn't afford it and Europe's tariffs were too high. Farming also fell because the cost of transporting animals was more than the cost of animals themselves. People therefore became unemployed because companies could not afford to pay them wages. Also, many people had borrowed money in order to buy shares that were now worthless. They were unable to pay back the loans to the banks and insurance companies, so they went bankrupt. Some banks themselves also went bankrupt. Hoover cut taxes to help stimulate people to buy more goods, but confidence was lost. In 1929 banks failed and people stopped trusting in them. There was also the human cost of the depression caused by the crash. People in undeveloped areas were hardest hit by the Depression, because they had already been unprivileged during the 1920s. Huge numbers of farmers, new immigrants and blacks were unable to pay their mortgages. To make things worse for farmers, over farming drought and poor conservation turned millions of acres into a dust bowl, which gave farmers little option but to leave their 'desert' lands. Unemployment was also a big problem. Because of overproduction, money had been spent on goods which could not be sold, therefore no profit could be made and companies lost a lot of money and had to sacrifice things like workers, leaving them unemployed. ...read more.

Conclusion

The Second New Deal- strongly on the people's minds at the time of the 1936 election - was also highly successful when it was launched in 1936. It consisted of three main elements, one of them, the Wagner Act, allowed for trade unions and gave them the right to negotiate for better pay and working conditions with employers. The SSA (Social Security Act) provided state pensions for the elderly and for widows, and allowed state governments to try to work with the Federal government to provide much needed support for the disabled and ill. The act also set up a scheme of unemployment insurance, allowing employers and workers, who paid a small contribution to the fund each week, to receive a small amount of benefit if they could not find work. The third and final part of the second New Deal was the WPA (Works Progress Administration), which brought together all the alphabet agencies whose job it was to provide jobs for the unemployed. It also extended this by setting up projects, which created jobs for a range of professions including actors, artists and photographers, as well as office workers. The government paid artists people to paint pictures that were displayed in the city or town that they showed. Photographers worked for the New Deal's Farm Security Administration Photographic Project, which took 80,000 photographs of farming areas during the New Deal. All these new agencies provided jobs and gave the American people the individuality that they wanted back again - to be able to make their own money rather than relying on charity or government hand-outs. In 1932, while the American people had the incentive of the first New Deal, they did not know whether to trust Roosevelt or not, but because of their situation, had no choice. In all, Roosevelt's New Deal looked much more promising than Hoovers polices. Although some of Hoovers polices were successful, it seemed as though he wasn't doing much to help America; whereas Roosevelt seemed to go out there and sort it, directly intervening and helping people. GCSE History Rachel Stevens Coursework 10B1 1 ...read more.

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