Wall Street Crash, stock market crash in the United States in 1929.
Wall Street Crash, stock market crash in the United States in 1929. In 1927, after having focused on investing abroad and with the US economy growing stronger, the financiers based in New York's Wall Street turned their attention to their home market. As they bought into the stock market, so the prices of securities rose. As they bought more and more, prices went higher and higher, and ordinary investors were attracted to invest by the apparently effortless boom that was created. By the middle of 1929 it was estimated that about nine million Americans (out of a population of 122 million) had capital invested in the stock market. Many invested all their savings, encouraged by incompetent or dishonest advisers. Companies were set up with misleading or even fraudulent prospectuses and, such was the faith in the market's ability to deliver extravagant returns, their shares were quickly snapped up. In March 1929 Herbert Hoover was inaugurated as president, and his predecessor Calvin Coolidge ventured the opinion that share prices were low. But some were beginning to worry that, like all bubbles, this one must burst. The Federal Reserve Bank raised the interest rate, but only by 1 per cent, and it advised banks not to lend clients money for stock market investment-advice later retracted as a result of pressure from one of its directors, who was heavily involved in stock market operations.
In time, some of the professionals decided that there might be more money to be made by switching from being a market bull to a market bear and selling short. The selling of shares gathered momentum. On October 23 more than six million shares were traded at ever decreasing prices. On the following day, "Black Thursday", more than twice those numbers were traded. On Monday nine million shares changed hands; $14 billion had been wiped off the value of shares in less than a week. Then, on "Black Tuesday", everything fell apart; the share price of many big companies including General Electric and Woolworth collapsed. In that one day more than 16 million shares were traded and another $10 billion was wiped off share values. What happened on Wall Street was mirrored on other stock exchanges in the United States from Chicago to San Francisco.
It was a stark end to a decade that had been marked by optimism, high employment, and prosperity. Not surprisingly, confidence in banks and bankers, the stock market and stockbrokers evaporated. Bankruptcies and destitution were rife. Mortgage foreclosures increased. The middle classes retrenched. Many lost their jobs; unemployment rose by nearly two million within half a year. Although when it began some thought it was merely a welcome correction in the market, the crash marked the start of the worldwide Great Depression and created the conditions for the New Deal introduced by Franklin D. Roosevelt in 1933.
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It was a stark end to a decade that had been marked by optimism, high employment, and prosperity. Not surprisingly, confidence in banks and bankers, the stock market and stockbrokers evaporated. Bankruptcies and destitution were rife. Mortgage foreclosures increased. The middle classes retrenched. Many lost their jobs; unemployment rose by nearly two million within half a year. Although when it began some thought it was merely a welcome correction in the market, the crash marked the start of the worldwide Great Depression and created the conditions for the New Deal introduced by Franklin D. Roosevelt in 1933.
New Deal, name given to the peacetime domestic programme of United States president Franklin D. Roosevelt, and especially to the innovative measures taken between 1933 and 1938 to counteract the effects of the Great Depression.
Both Roosevelt and the US Congress, in trying to reduce unemployment and restore prosperity, endorsed a wide spectrum of new federal programmes and agencies, most popularly identified by alphabetical titles. Roosevelt, a skilful political leader, helped win support for an unprecedented array of new services, regulations, and subsidies. Yet no single political philosophy or set of coherent goals ever unified these disparate programmes, most of which he developed with the aid of the so-called Brain Trust. This informal group from outside government included professors, lawyers, and others who came to Washington to advise Roosevelt, in particular on economic affairs.
Early Legislation
Roosevelt's overwhelming victory in the 1932 election, coupled with the urgency of the worst economic collapse in US history, opened the way for a flood of legislation in 1933. The Emergency Banking Act provided for federal bank inspections, thus helping restore popular confidence in the wake of widespread bank failures. A second act set much more stringent rules for banks and provided insurance for depositors through a Federal Deposit Insurance Corporation. Two acts, one in 1933 and one in 1934, mandated detailed regulations for the securities market, enforced by a new Securities and Exchange Commission, or SEC. Several bills addressed the question of housing by providing mortgage relief for farmers and homeowners and offering loan guarantees for home purchasers through the Federal Housing Administration, or FHA. A Federal Emergency Relief Administration expanded existing relief grants to the states, and a Civilian Conservation Corps, or CCC, provided work relief for young men under a type of military discipline. Congress established a Tennessee Valley Authority, or TVA, to develop the Tennessee River in the interest of navigation and flood control and to provide electric power to a wide area of the south eastern United States.
The most important legislation of 1933 involved the major economic sectors. As a climax to a decade of wrangling, Congress in 1933 enacted a complex new farm bill, the Agricultural Adjustment Act. It provided several mechanisms to help raise agricultural prices, but the one most extensively used involved contractual reductions of surplus crops in return for government payments. The National Industrial Recovery Act, or NIRA, was the most innovative early New Deal measure. It provided for two major recovery programmes-a vastly expanded public works effort, carried out by a Public Works Administration, and a complex programme to regulate American business and ensure fair competition. A National Recovery Administration (NRA) approved and enforced a set of competitive codes for each industry.
The Second New Deal
The hopes of 1933 for early recovery proved illusory. The US Supreme Court declared many of the hastily drafted early bills unconstitutional. These reverses, plus increasing political opposition to Roosevelt, triggered a second flood of legislation, beginning in 1935, which some observers called the Second New Deal. Roosevelt now exploited developing class divisions; formed closer alliances with organized labour, and increasingly castigated the big-business groups that opposed his New Deal programmes. Among the new measures were higher taxes for the rich, strict regulations for private utilities, subsidies for a Rural Electrification Administration, and what amounted to a bill of rights for organized labour. The National Labor Relations Act of 1935 gave federal protection to the bargaining process and established a set of fair employment standards. The federal Fair Labor Standards Act of 1938 mandated maximum hours and minimum wages for most categories of workers.
By 1935, several Roosevelt advisers welcomed massive new federal expenditures to induce more private demand, even at the price of budget deficits. A huge relief appropriation of almost $5 billion reinvigorated several programmes and funded a new federalized work relief programme administered by the Works Progress Administration (WPA). Perhaps of greatest enduring significance, Congress in 1935 enacted the Social Security Act, which contained three major programmes-a retirement fund, unemployment insurance, and welfare grants for local distribution (including aid for dependent children). These programmes, coupled with a new subsidized public housing programme, began in the United States what some now refer to as a welfare state.
The pressures for new legislation abated after 1937, and opposition to extending the New Deal mounted rapidly, especially in the South. By 1939 public attention focused increasingly on foreign policy and national defense. The New Deal was over, but it had permanently expanded the role of the federal government, particularly in economic regulation, resource development, and income maintenance. Although in itself it failed to stimulate full economic recovery, it provided the federal government not only with increased controls over money supply and Federal Reserve policies but also with increased understanding of the economic consequences of its own taxing, borrowing, and spending-thus helping it to limit the impact of later recessions. In addition, the New Deal coalition, centered in the Democratic party, dominated the electorate and the nation for years thereafter.
Steinbeck, John Ernst (1902-1968), American writer and Nobel laureate, who described in his work the unremitting struggle of people who depend on the soil for their livelihood.
Steinbeck was born on February 27, 1902, in Salinas, California, and educated at Stanford University. As a youth, he worked as a ranch hand and fruit picker. His Cup of Gold (1929) romanticizes the life and exploits of the famous 17th-century Welsh pirate Sir Henry Morgan. In The Pastures of Heaven (1932), a group of short stories depicting a community of southern California farmers, Steinbeck first dealt with the hardworking people and social themes associated with most of his works. Among his other early books are To a God Unknown (1933), the story of a farmer whose belief in a pagan fertility cult impels him, during a severe drought, to sacrifice his own life; Tortilla Flat (1935), a sympathetic portrayal of Americans of Mexican descent dwelling near Monterey, California; In Dubious Battle (1936), a novel concerned with a strike of migratory fruit pickers; and Of Mice and Men (1937), a tragic story of two itinerant farm labourers yearning for a small farm of their own.
Steinbeck's most widely known work is The Grapes of Wrath (1939; Pulitzer Prize, 1940), the stark account of a family from the impoverished Oklahoma Dust Bowl migrating to California during the economic depression of the 1930s. The controversial novel, received not only as realistic fiction but also as a moving document of social protest, is an American classic.
Other works include The Moon Is Down (1942), Cannery Row (1944), The Wayward Bus (1947), East of Eden (1952, filmed in 1955), The Winter of Our Discontent (1961), and America and Americans (1968). In 1962 he wrote the popular Travels with Charley, an autobiographical account of a trip across the United States accompanied by a pet poodle. Steinbeck was awarded the 1962 Nobel Prize for literature. He died on December 20, 1968, in New York. His modernization of the Arthurian legends, The Acts of King Arthur and His Noble Knights, was published posthumously in 1976.
A major literary figure since the 1930s, Steinbeck took as his central theme the quiet dignity he saw in the poor and the oppressed. Although his characters are often trapped in an unfair world, they remain sympathetic and heroic, if defeated, human beings.1
