USA depth studies-school notes

1. How significant was the policy of laissez-faire as a cause of the economic boom of
the 1920s [40]

Introduce the topic

The American economy experienced a boom unprecedented in the history. They
often credited rapidly developing industries for the boom. Factories make and sell a
lot of goods and they put the money generated back into the factories, generate
more money.

Provide context:
Provide outline:

Part A
Laissez fair contribute to the boom

Little background of the topic:

The American economy benefited from the First World War, and in the 1920s the
USA enjoyed an economic boom which was encouraged by the policies of successive
Republican presidents. Harding, who took office in 1921, promised to take the USA
“back to normalcy”, whereby the focal point of America was shifted to the growth of
business instead of the participation in foreign conflict.

Explain the laissez faire/ republican policy in contribution to boom:

Part B
Other factors

Industries/Auto-mobile:

The car industry was important because:

It pioneered new techniques of production which other industries copied;
Henry Ford’s standardisation of machine parts was also imitated;
It led to the expansion of cities and the development of suburbs;
It resulted in a vast national network of roads. (During the 1920s, they spent about
$1 billion a year on highways);
It encouraged the construction industry - they built petrol stations, as were hotels
and restaurants;
It helped other industries to explode. For example, cars used 90 percent of America’s
petrol, 80 percent of the country’s rubber, and 75 percent of its glass;

Modernisation in Industry:

Assembly line
The chain reaction to that
US economy benefited from the war. There are several reasons:

a. The war was fought in Europe and badly affected the economies of leading
European countries-notably Britain, France and Germany, which had to divert their
resources to the war effort
b. These countries bought much-needed supplies-especially food, raw materials and
munitions from the USA. The money that poured into the USA from Europe fuelled
the growth of US industry and agriculture.
c. Many countries also borrowed enormous sums of money from the USA. American
bankers and business people increasingly invested in Europe, and these investors
made sizeable profits when the European economies recovered in the 1920s.
d. During the war, European countries could not maintain their pre-war export levels.
American manufacturers and farmers took over European overseas markets and
expanded them further. For example, USA replaced Germany as the world’s leading
producers of fertilisers and chemicals.

New technology increase production:

The 1920s was a period of significant innovation in technology. Electricity developed
slowly before the war, but during the 1920s, the electricity industry experienced an
enormous boom. By 1929, most houses in America had electricity and 70 per cent of
them used it for lighting. Because of the development of factories to produce
consumer goods for the American people, the demand for electricity doubled.
Electrical power provided a cheap, efficient source of power for factories. This meant
large numbers of complex machines could be used simultaneously, which made it
possible to introduce mass production techniques. Technological advances led to
both the development of new industries and an increase in productivity in existing
ones. The advances included automatic switchboards, conveyer belts and concrete
mixers. The electricity, car and film industries benefited most from the new
machinery.

Mass consumption
Mass marketing and credit scheme
2. The economic boom led to great prosperity in the USA in the 1920.’ How far do
you agree? [10]

Who benefited:
Many different groups did benefit from the economic boom. First, new industries
like the motor industry prospered. Ford and other car manufactures mad huge
profits during the economic boom as sales increased due to the lowering of prices,
which was a result of mass production.
WOMEN LIVES

Not all enjoyed:

Farmers
Over production, less consumption, declining exports, lack of overseas market,
competitions from foreign countries, technologies(less farmers needed)

Minorities
Black, natives, traditional industries

Generally, boom only benefited new industries, not that inclusive. Unequal
distribution of wealth

3. The boom made US economy more secure. How far do you agree? [10]

Confidence of people

However,

People who suffered during the boom

Bank problems
4. How important was agriculture to the American economy in the 1920s? [40]

Introduction to topic:

Important:
How it helped the economy before the 1920s
talk about WW1 and the booming agriculture industry
sold foodstuff to europe during the war
at the same time took over the europe's economy, traded with europe's colonies

It showed the unequal distribution of wealth during the 1920s

Farmers
Over production, less consumption, declining exports, lack of overseas market,
competitions from foreign countries, technologies(less farmers needed)
Total income dropped from $22bn to $13bn by 1928
The introduction of ‘Hire Purchase’ and new machines such as combine harvesters
and tractors meant that farmers could produce more food using less people. This led
to an increase in unemployment and a drop in wages for farm labourers. Farming
areas such as the South and the Mid West were badly affected.

Other important elements:

New technology increase production:
The 1920s was a period of significant innovation in technology. Electricity developed
slowly before the war, but during the 1920s, the electricity industry experienced an
enormous boom. By 1929, most houses in America had electricity and 70 per cent of
them used it for lighting. Because of the development of factories to produce
consumer goods for the American people, the demand for electricity doubled.
Electrical power provided a cheap, efficient source of power for factories. This meant
large numbers of complex machines could be used simultaneously, which made it
possible to introduce mass production techniques. Technological advances led to
both the development of new industries and an increase in productivity in existing
ones. The advances included automatic switchboards, conveyer belts and concrete
mixers. The electricity, car and film industries benefited most from the new
machinery.

Mass consumption
Mass marketing and credit scheme

Industries/Auto-mobile:

The car industry was important because:

It pioneered new techniques of production which other industries copied;
Henry Ford’s standardisation of machine parts was also imitated;
It led to the expansion of cities and the development of suburbs;
It resulted in a vast national network of roads. (During the 1920s, they spent about
$1 billion a year on highways);
It encouraged the construction industry - they built petrol stations, as were hotels
and restaurants;
It helped other industries to explode. For example, cars used 90 percent of America’s
petrol, 80 percent of the country’s rubber, and 75 percent of its glass;

Modernisation in Industry:

Assembly line
The chain reaction to that

Confidence of people

Republican policies

Conclusion:
How important was the lack of central economic planning led to the Wall Street
Crash in 1929?

How significant was overproduction as a cause of the Wall Street Crash in 1929?
Explain your answer.

How significant was the gap between the rich and the poor in the USA in causing
the Wall Street Crash?

How significant was overproduction as a cause of the Great Depression? [40]

How important were bank failures as a cause of the Great Depression? [40]

How important was the Wall Street Crash as a cause of the Great Depression in the
USA? Explain your answer.[40]

How significant was the loss of confidence in the economy as a reason for the
Depression in the USA in the 1930s? Explain your answer.[40]

How important was Hoover as a reason for Roosevelt’s success in the 1932
Presidential election?

How significant was Hoover’s dislike of government involvement in the economy in

determining his response to the Depression?

Why Roosevelt won?

Hebert Hoover:

In 1928, the Republican party nominated Herbert Hoover, a world famous mining
engineer, for the presidency.Hoover, a self-made millionaire, expressed his view
that the American system was based on "rugged individualism" and "self-reliance."
Government, which had assumed unprecedented economic powers during World
War I, should, in his view, shrink back to its pre-war size and avoid intervening with
business.President Hoover was unprepared for the scope of the depression crisis,
and his limited response did not begin to help the millions of Americans in need.

Likewise, Hoover was not completely unaware of the potential harm that wild
stock speculation might create if left unchecked. As secretary of commerce, Hoover
often warned President Coolidge of the dangers that such speculation engendered.

However, fearful of creating a panic, Hoover never issued a stern warning to

discourage Americans from such investments. Neither Hoover, nor any other
politician of that day, ever gave serious thought to outright government regulation
of the stock market.
Belief: Government should help big businesses, But not directly the people

Hoover’s opponents painted him as uncaring toward the common citizen, even
though he was in fact a philanthropist and a progressive before becoming
president. . He was inclined to give indirect aid to banks or local public works
projects, but he refused to use federal money for direct aid to citizens, believing
the dole would weaken public morale.

Instead, he focused on voluntarism to raise money.Relief should be provided by

local government or charities.The President waged a campaign to convince
businessmen to keep wages up so that consumption levels would not decline.

This approach was less than successful. While businessmen maintained wage levels
temporarily, they cut back on the number of their employees because of dropping
consumption levels. Hoover also failed in his confidence campaign to convince
consumers to keep purchasing. Seeing other workers laid off and fearing for their
own future, labourers cut back on purchases thus guaranteeing further lay-offs.

As the Depression became worse, calls grew for increased federal intervention and
spending. But Hoover refused to involve the federal government in forcing fixed
prices, controlling businesses, all of which he felt were steps towards socialism. In
1932 he blocked the Gardner-Wagner Bill, which would have allowed Congress to
provided $2.1 billion to create jobs.

Hoover’s failures
-the beliefs he stuck to
-that led to the actions

Some of what Hoover’s did, however it may be too late:

He set up Reconstruction Finance Company (1932), that made long-term low

interest loans to banks and big businesses in hopes of prompting economic
recovery. While RFC loans did forestall the peaking of the banking crisis until 1933,
they failed to promote economic recovery. Expansion was the last thing on the
minds of most businessmen in 1932. Therefore, businesses didn't borrow to
expand, workers weren't rehired, and thus there was no increase in consumption
by rehired laborers.The loans went to banks and big businesses not to the
unemployed, homeless, or needy.

In 1932 he introduced Emergency Relief Act-300million to help the unemployed,

and Home Loan Act-to stimulate house building and home ownership.
-He did put money into public works programme; the Hoover Dam on the
Colorado River, but too little to have a real impact on unemployment.
1. Many Americans were outraged as Hoover decided to use considerable force
against many elderly, destitute army veterans who had fought for their country in
the First World War. During the Bonus Marchers.
President Herbert Hoover then ordered the U.S. Army to clear the marchers'
campsite. Army Chief of Staff General Douglas MacArthur commanded a
contingent of infantry and cavalry, supported by six tanks. The Bonus Army
marchers with their wives and children were driven out, and their shelters and
belongings burned. Hoover himself seemed uncaring over the Bonus Army incident.
To pay the bonus would have cost $2.3 billion, and Hoover felt that it was simply
too much. Hence, congress and many US citizens saw Hoover as a callous and
uncaring man. People found his comment of ‘prosperity around the corner’ rather
hollow.

F. D. Roosevelt:

Many leaders of the Democratic Party saw in Roosevelt an attractive mixture of

experience (as governor of New York and as a former vice-presidential
candidate) and appeal. He had already helped the poor as governor of New York
State by setting up the first state-run relief scheme. This made him popular with
the workers, if not businessmen.Also, his ideas in the election campaign seemed
radically different from Hoover’s “rugged individualism” and were therefore
popular with the voters.Roosevelt campaigned on a promise to help those affected
by the Depression.

In contrast to Hoover, he ran a positive and energetic campaign. In reality, many of

his ideas were quite traditional and sometimes they were vague and contradictory,
but the electorate was desperate for change and liked the promises of a “New
Deal”. He travelled around America to bring his message to ordinary people,
despite his disability from polio

He used his experience as governor of New York. He met and spoke with union
leaders and businesses; went on a grand tour of the USA to drum up support
attacking Hoover. He was much more approachable and charismatic than Hoover,
and a more confident public speaker.

He promised an active government, planned to use public money to create jobs,

during his election campaign, Roosevelt promised a “New Deal” for everyone.He
said the government would have a more active role in the economy, and would
stop the rich from exploiting the poor.
The New Deal was a comprehensive and broad set of government-directed
projects introduced by President Franklin Delano Roosevelt in an attempt to help
the United States economy emerge from the Great Depression. It launched in the
early 1930s and was designed to bolster the United States economy, reduce
unemployment, provide a social safety net, and in-still confidence in the
government’s ability to protect its citizens

Roosevelt’s campaign for president was necessarily cautious. His opponent,

President Herbert Hoover, was so unpopular that FDR’s main strategy was not to
commit any gaffes that might take the public’s attention away from Hoover’s
inadequacies and the nation’s troubles

The aims of this deal were Relief, Recovery and Reform. While Roosevelt was
making promises of greatness and hope, Hoover was keeping to the thoughts and
promises he had when he won the election in November 1928 but these were all
wrong. Roosevelt’s election campaign was all about the things he had promised
when he was not running for President.

Roosevelt :
-his personalities
-what he promised

School Exam:
How important were the Republican government’s actions after the wall street
crash as a reason for Roosevelt’s victory in 1932? Explain your answer.

Break down question to

Part A: Roosevelt Won due to republican government’s actions: Hoover’s failures
Part B : Other factors that led to his winnings: his own strengths
Time frame: After WSC to 1932

The wall street crash was the fall in the stock market that was unprecedented. It was
largely credited to the speculation of stocks during the boom which was affected by
the drop of confidence of the Americans during the 1920s. After the boom, many
criticised the actions of the republican government, where the party dominated the
country’s politics at that time. In 1932, Franklin D Roosevelt, the democrat, took over
the presidential seat.

The republican government at that time was Hebert Hoover who was a self made
millionaire through his own business. He believed in the idea of rugged individualism
and was firm that the government should interfere less in the business world as the
business leaders will know what suits them best. There were also less care given to
the people as he believed that those who were poor were the ones who did not work
as hard enough as those who were rich.

Hoover stick on the the policy of protectionism where tariff were still high for imported
product, even after the wall street crashed in the 1929. This was initially aimed to
promote the local products. One of the tariff was the smooth-hawley tariff. Those
tariffs by the republican government created retaliation tariffs from foreign country
which reduces the exports of American products. The smooth-hawley tariff have
reduced the international trade by two third. As a major trading hub, this was a big hit
for America. With the reduction in global trades, exports become lower and it was
even harder for the business people to recover from the loss during the wall street
crash.

Another policy that Hoover sticked to was the laissez faire attitude. As mentioned, he
did not want to interfere too much with the business world. But what the people truly
wanted after the wall street crash was the help from the government. Likewise,
Hoover was not completely unaware of the potential harm that wild stock speculation
might create if left unchecked. As secretary of commerce, Hoover often warned
President Coolidge of the dangers that such speculation engendered.However,
fearful of creating a panic, Hoover never issued a stern warning to discourage
Americans from such investments. Neither Hoover, nor any other politician of that
day, ever gave serious thought to outright government regulation of the stock market.
After the crash, Hoover did not provide any welfare benefits nor healthcare benefits
for the people.

As the Depression became worse, calls grew for increased federal intervention and
spending. But Hoover refused to involve the federal government in it. Hoover was
‘stubborn’ with his own idea that stimulating cash flow within the economy could
improve the situation. However, this was a time where people felt less secure to
spend and will rather save up instead. He also urged employers to pay the workers
for inorder to increase their disposable income but what he did not notice was that
the corporations were all at the brink of insolvency or bankruptcy.

This in return caused Hoover’s opponents to paint him as uncaring toward the
common citizen, even though he was in fact a philanthropist and a progressive
before becoming president. . He was inclined to give indirect aid to banks or local
public works projects, but he refused to use federal money for direct aid to citizens,
believing the dole would weaken public morale.

Adding to it was the case of the Bonus Marchers, these were the veterans who tried
to demand for their pensions to be paid for them. They gathered peacefully outside of
the government’s compound just wanting to seek their rights to be met. Hoover in
turn not only did not satisfy their demand or talk to them the reasons for the money
not being given, he ordered general Mac Arthur to burn down their camps and
remove all of them from the protest. This truly ruined the image of Hoover. It caused
Roosevelt to have a high advantage. At a point, Roosevelt was just trying not to
commit any gaffes so that the public will focus on the republican failing actions.

On the other hand, it was also due to Roosevelt's actions that led to his own win. He
used to be a mayor and have managed to be quite successful, gaining popularity for
what he has done for the people. He provided aids for the people which truly helped
them a lot. His own personal character was also a reason. He was seen as humble,
and was a very well known public speaker.

What he promised for the Americans after the wall street crash was really the reason
why he had won. He promised an active government who will provide a strong new
deal for the people to help all of the Americans. In addition to that, his plan was the
3Rs, Relief, Recover and Reform. This was what the American people wanted to see.
Weighting all of the above, the republican government’s action after the wall street
crash was admittedly the main catalytic factor for Roosevelt win in 1932. Sticking on
to the old policy and the bonus marchers crisis were just not demands of the people;
not what they hope to see during the economic struggle. Instead, Roosevelt
managed to stand out at that time, proposing based on the people's needs: new deal
and active government, and won the election easily with a landslide.