Depression and New Deal, 1929–38 — Edexcel A-Level History
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Depression and New Deal, 1929–38 explained
Depression and New Deal, 1929–38 covers 4 specification points, including Growth of unemployment; collapse of GDP;… and The Smoot- Hawley Tariff; homelessness and the….
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The spread of the depression, 1929–32: growth of unemployment; collapse of GDP; effects on workers, families, farmers and ethnic minorities; ‘gangsterism’.
After the Wall Street Crash in October 1929, depression spread through the US economy. Unemployment grew from around 1.5 million in 1929 to roughly 12–13 million by 1932, about 25% of the workforce. GDP collapsed from about $104 billion in 1929 to around $58 billion in 1932, a fall of roughly 44%. Workers faced wage cuts, short-time working and dismissal; families lost homes and savings as banks failed. Farmers suffered falling crop prices and foreclosures, worsened by the Dust Bowl. Ethnic minorities, especially African Americans and Hispanic workers, faced higher unemployment and discrimination. ‘Gangsterism’ flourished as Prohibition created black markets; organised crime figures like Al Capone gained power and public notoriety amid economic desperation.
Hoover’s response to the depression, 1929–33: the Smoot- Hawley Tariff; homelessness and the Hoovervilles; the Reconstruction Finance Corporation; Emergency Relief and Construction Act 1932.
President Hoover’s response to the depression combined voluntary cooperation, limited federal intervention and faith in self-reliance. The Smoot-Hawley Tariff of 1930 raised duties on over 20,000 imported goods, aiming to protect US farmers and industry, but retaliation by trading partners reduced international trade. Homelessness increased as evictions and foreclosures rose; shanty towns known as Hoovervilles appeared, their name mocking the president. In 1932 the Reconstruction Finance Corporation (RFC) was created to lend federal money to banks, railroads and other large businesses, but it lent cautiously and did little for individuals. The Emergency Relief and Construction Act 1932 extended RFC lending to states for relief and public works, but funding was limited and slow to reach the unemployed.
Roosevelt and the First New Deal, 1933–35: emergency relief; public works; the alphabet agencies; help for farmers; reforming the financial system; opposition to Roosevelt’s policies, including Huey Long and the Supreme Court.
Roosevelt's First New Deal tackled the Depression through emergency relief, public works and the alphabet agencies. The Federal Emergency Relief Administration gave grants to states for direct relief, while the Civilian Conservation Corps and Public Works Administration provided work. The Agricultural Adjustment Act helped farmers by paying them to cut output, raising prices. Financial reform included the Emergency Banking Act, the Glass–Steagall Act separating commercial and investment banking, and the Securities and Exchange Commission. Opposition came from Huey Long's Share Our Wealth movement and a conservative Supreme Court, which struck down the NRA in 1935 and the AAA in 1936.
The Second New Deal, 1935–38: the Wagner Act (1935) and industrial relations; the Social Security Act 1935; the Revenue Act 1935; opposition to the Second New Deal.
The Second New Deal shifted towards reform. The Wagner Act (1935) protected workers' rights to organise and bargain collectively, creating the National Labor Relations Board to oversee elections and investigate unfair practices, which transformed industrial relations and boosted union membership. The Social Security Act 1935 introduced old-age pensions, unemployment insurance and aid to dependent children and the blind, though farm and domestic workers were excluded. The Revenue Act 1935 raised taxes on high incomes and large estates. Opposition to the Second New Deal came from business, the Republican Party, the Liberty League and the Supreme Court.
Your focus
- Describe the growth of unemployment and the collapse of GDP between 1929 and 1932 using accurate figures.
- Explain the effects of the depression on workers, families, farmers and ethnic minorities.
- Assess the significance of ‘gangsterism’ in the context of the depression.
Show all 12 objectives
- Describe Hoover’s key responses to the depression, including the Smoot-Hawley Tariff, the RFC and the Emergency Relief and Construction Act 1932.
- Explain how homelessness and Hoovervilles reflected the human impact of the depression and criticism of Hoover.
- Evaluate the effectiveness and limitations of Hoover’s measures in addressing the depression.
- Describe the main emergency relief and public works measures of 1933–35.
- Explain how alphabet agencies and farm policies addressed different problems.
- Evaluate the extent and limits of financial reform and opposition to Roosevelt.
- Describe the key provisions of the Wagner, Social Security and Revenue Acts.
- Explain how the Second New Deal changed industrial relations and welfare.
- Evaluate the nature and impact of opposition to the Second New Deal.
Depression and New Deal, 1929–38 exam tips
Marking Points
- Unemployment rose sharply from about 1.5 million in 1929 to around 12–13 million by 1932, roughly 25% of the labour force.
- GDP fell from about $104 billion in 1929 to around $58 billion in 1932, a decline of approximately 44%.
- Workers experienced wage cuts, short-time working, dismissal and loss of bargaining power; many families lost homes and savings when banks failed.
- Farmers faced falling prices for crops such as wheat and cotton, foreclosures and, in the Plains, the environmental disaster of the Dust Bowl.
- Ethnic minorities, including African Americans and Hispanic workers, suffered disproportionately high unemployment and discrimination in relief and employment.
- ‘Gangsterism’ grew from Prohibition-era organised crime; figures such as Al Capone exploited demand for illegal alcohol and gained influence during the depression.
- The Smoot-Hawley Tariff (1930) raised tariffs on over 20,000 imported goods, intended to protect US producers but provoking foreign retaliation and reducing world trade.
- Homelessness grew as evictions and foreclosures increased; Hoovervilles were shanty towns named to criticise Hoover’s perceived failure to act.
- The Reconstruction Finance Corporation (RFC), established in 1932, lent federal funds to banks, railroads and large businesses to stabilise the economy, but its cautious lending limited its impact.
- The Emergency Relief and Construction Act 1932 allowed the RFC to lend to states for relief and public works, but the scale was small and slow, so it did not meet the needs of the unemployed.
- Hoover’s approach reflected beliefs in voluntary action, balanced budgets and limited federal responsibility, which shaped the scale and timing of his responses.
- Explains emergency relief: the Federal Emergency Relief Administration (1933) channelled federal grants to states for direct payments and work relief.
- Explains public works: the Civilian Conservation Corps (1933) employed young men, and the Public Works Administration (1933) funded large-scale construction.
- Explains the alphabet agencies: bodies such as the NRA, AAA, TVA and CCC addressed banking, industry, agriculture and regional poverty.
- Explains help for farmers: the Agricultural Adjustment Act (1933) paid farmers to reduce acreage and livestock, aiming to raise prices.
- Explains financial reform: the Emergency Banking Act (1933) reopened sound banks, Glass–Steagall (1933) separated commercial and investment banking, and the SEC (1934) regulated markets.
- Explains opposition: Huey Long demanded wealth redistribution; the Supreme Court ruled the NRA unconstitutional in 1935 and the AAA in 1936, prompting Roosevelt's court-packing plan.
- Explains the Wagner Act (1935): it guaranteed workers the right to join unions and bargain collectively, setting up the National Labor Relations Board.
- Explains industrial relations: union membership grew sharply, the CIO organised mass-production industries, and sit-down strikes tested the new legal protections.
- Explains the Social Security Act 1935: it created federal old-age pensions, unemployment insurance funded by payroll taxes, and grants to states for dependent children and the blind.
- Explains the Revenue Act 1935: it increased taxes on high incomes, inheritance and corporate profits, aimed at reducing inequality.
- Explains opposition to the Second New Deal: business groups, the Liberty League and Republicans condemned the measures as class legislation.
Examiner Tips
- 💡Use specific figures for unemployment and GDP to support analysis of the scale of the depression.
- 💡Link each effect to a named group, such as workers, families, farmers or ethnic minorities, to show understanding of diversity of experience.
- 💡When discussing ‘gangsterism’, connect it to Prohibition and economic desperation rather than treating it as separate from the depression.
- 💡Explain the purpose and consequences of each measure, such as the Smoot-Hawley Tariff’s effect on international trade.
- 💡Use the term Hoovervilles to illustrate public perception of Hoover’s response, linking homelessness to political criticism.
- 💡Compare the scale of the RFC and the Emergency Relief and Construction Act 1932 with the scale of the depression to assess their effectiveness.
- 💡Link each agency to its purpose and to a specific group affected, rather than listing initials.
- 💡Use the opposition clause to build analysis of why the First New Deal was contested.
- 💡Support claims with named legislation and accurate dates within 1933–36.
- 💡Distinguish the aims of each 1935 Act and the groups each affected.
- 💡Use opposition to show that the Second New Deal was contested, not universally welcomed.
- 💡Refer to specific provisions, such as the National Labor Relations Board, to support analysis.
Common Mistakes
- Error: stating that unemployment reached 25 million by 1932. Correction: about 12–13 million people were unemployed, roughly 25% of the workforce.
- Error: claiming GDP fell by 25% between 1929 and 1932. Correction: GDP fell from about $104 billion to around $58 billion, a fall of approximately 44%.
- Error: treating all Americans as equally affected. Correction: workers, families, farmers and ethnic minorities experienced different and often more severe effects, with African Americans and Hispanic workers facing additional discrimination.
- Error: stating that the Smoot-Hawley Tariff lowered tariffs. Correction: it raised tariffs on over 20,000 imported goods.
- Error: claiming the RFC gave direct relief to unemployed workers. Correction: the RFC primarily lent to banks, railroads and large businesses; the Emergency Relief and Construction Act 1932 extended lending to states for relief and public works, but it was limited.
- Error: describing Hoovervilles as government-built housing. Correction: Hoovervilles were makeshift shanty towns built by homeless people, named sarcastically after Hoover.
- Treating the New Deal as a single programme: correct by distinguishing first-term measures of 1933–35 from the later Second New Deal.
- Dating the Supreme Court's AAA ruling to 1935: correct by noting the NRA was struck down in 1935 (Schechter) and the AAA in 1936 (Butler).
- Confusing relief with recovery: correct by separating immediate aid to the unemployed from longer-term economic rebuilding.
- Confusing the Wagner Act with the Social Security Act: correct by linking the Wagner Act to labour relations and the Social Security Act to welfare provision.
- Assuming Social Security covered all workers: correct by noting the exclusion of agricultural and domestic workers.
- Claiming the 1935 Social Security Act included disability grants: correct by specifying it covered old-age pensions, unemployment, dependent children and the blind.