America: Boom, Bust & Recovery Part 2: 1917-1954

Jess Seales
Mind Map by Jess Seales, updated more than 1 year ago
Jess Seales
Created by Jess Seales over 6 years ago
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Mind Map on America: Boom, Bust & Recovery Part 2: 1917-1954, created by Jess Seales on 05/08/2015.

Resource summary

America: Boom, Bust & Recovery Part 2: 1917-1954
  1. Prohibition (1917)
    1. Why did Prohibition fail?
      1. Factor 1: Bootleggers
        1. Sold illegal alcohol
          1. ‘Medicinal whiskey’
            1. Al Capone made $60 million from speakeasies
              1. 1925 more speakeasies than saloons in 1919
                1. George Remus bought up breweries on the eve of Prohibition, then arranged for 3,000 gangsters to hijack his products and divert them, making $5 million in 5 years
        2. Factor 2: Geographical Difficulties
          1. 18,000 miles of coastline
            1. Smuggling was easy due to large size
              1. Agents only intercepted 5% of alcohol that was coming into the country illegally
                1. By 1924, smuggling business estimated to reach about $800 million
          2. Factor 3: Problems for Treasury Agents
            1. Only 3,000 employed
              1. Paid a salary of $2,500
                1. 10% of agents fined for corruption, easily bribed
            2. Factor 4: Industrial Alcohol
              1. Drinks often dangerous
                1. Made from exotic mixes to remove unpleasant smell and taste
                  1. Poisoning from wood alcohol (alcohol made from wood spirit or methanol), sometimes occurred. From one lot of alcohol, 34 New Yorkers died.
          3. The Depression (1929-)
            1. Why did the Depression last so long?
              1. Factor 1: Inadequate Government Interventions
                1. To solve the uneven distribution of wealth, the government should have increased taxation of the rich to help make income more evenly spread. They could then increase employment using this new revenue, ‘kick starting’ the economy.
                  1. However, the prevailing government policies had been the opposite of this, where they regarded government spending more of a priority than employment issues.
                    1. Hoover believed in ‘self-help’ and charity
                2. Factor 2: Monetary Policy
                  1. A decline in the amount of money in circulation was seen before the Depression began. Failure to increase the amount of money prolonged the depression as people had less money to spend.
                    1. Money in circulation fell by 33% from 1929-1933
                      1. If the government were to slowly inject money into the economy via quantitative easing (avoiding inflation), then the demand for goods would increase and consequently the economy could restart.
                        1. McNary-Haugen Bill (bought surplus farm produce to keep prices high) vetoed by Hoover RFC provided $500 million in relief to businesses but this was insanely inadequate for the amount of businesses failing
                  2. Factor 3: The Extent of the Depression
                    1. No area in the US remained unaffected
                      1. Due to overproduction and under-consumption, employment for industries (e.g. vehicle manufacturing) was almost non-existent
                        1. The geographical extent of the Depression meant that both rural and urban areas suffered, meaning neither could help one another
                    2. Factor 4: Foreign Economic Crisis
                      1. Continuation of high tariffs, e.g. 1930 Hawley-Smoot tariffs, 40% on foreign trade
                        1. US did not devalue its currency when others were losing value, thus making US goods even more expensive for foreigners
                    3. Were Hoover’s policies successful?
                      1. Factor 1: Yes (Aiding Unemployment)
                        1. Hoover involved the government in the economy more than any other previous president
                          1. Hoover set up building programmes to provide new jobs e.g. The Hoover Dam
                        2. Factor 2: Yes (Reducing the Banking Crisis)
                          1. E.g. when businesses were failing because banks wouldn’t lend them money, Hoover set up the RFC in 1932, which provided loans up to $500 million to help businesses
                            1. RFC reduced bank closures for a short time
                          2. Factor 3: No (Inadequate Government Interventions)
                            1. To solve the uneven distribution of wealth, the government should have increased taxation of the rich to help make income more evenly spread. They could then increase employment using this new revenue, ‘kick starting’ the economy.
                              1. However, the prevailing government policies had been the opposite of this, where they regarded government spending more of a priority than employment issues.
                                1. Hoover believed in ‘self-help’ and charity
                            2. Factor 4: No (Hoover’s Continuation of Old Policies)
                              1. McNary-Haugen Bill (bought surplus farm produce to keep prices high) vetoed by Hoover Continuation of high tariffs, e.g. 1930 Hawley-Smoot tariffs, 40% on foreign trade
                                1. US did not devalue its currency when others were losing value, thus making US goods even more expensive for foreigners
                          3. The New Deal (1933)
                            1. How successful was the New Deal? Relief or Recovery?
                              1. Factor 1: Yes (Agriculture, Recovery)
                                1. AAA reduced farm production and provided relief for farmers by paying them to reduce productions = less overproduction
                                  1. Tennessee Valley Authority (TVA) created cheap electricity
                                    1. Farm Credit Act (1933) - offered short-term loans for farmers threatened by closure. Small farmers were able to refinance their mortgages
                                2. Factor 2: Yes (Industrial/Banking Recovery, Recovery)
                                  1. Glass-Steagall Act (1933) – high street banks were not able to take part in investment = removed the problem of stock brokers taking a percentage of profits in shares
                                    1. Truth in Securities Act (1934) – giving correct information on stocks
                                      1. PWA – constructed schools, hospitals = reviving industry
                                        1. Federal Emergancy Relief Act – work training for unemployed
                                          1. CCC – short-term jobs on projects
                                  2. Factor 3: No (Inadequate Policies, Relief)
                                    1. TVA – one area
                                      1. CCC – short term
                                        1. AAA – artificial prices that will decrease in the long term
                                    2. Factor 4: No (Minorities, Relief)
                                      1. Policies favoured white males, women and minorities excluded
                                        1. AAA – pushed African Americans off farms as it paid white landowners
                                          1. Poverty for blacks was so intense that any relief had little effect
                                    3. Opposition to Roosevelt’s New Deals:
                                      1. Opposition from the left: Liberals and radicals opposed due to the lack of relief being provided and for not monitoring the aspects of Capitalism e.g. no tax on rich
                                        1. Opposition from the right: claimed policies were Communist in disguise, and that government intervention was destroying a proud history of self-reliance
                                          1. NRA: (gave self-regulating codes for economic recovery) – declared unconstitutional
                                            1. The ‘sick’ chicken case: firm of butchers in NYC who were selling chickens unfit for eating, were prosecuted by NRA for breaking codes. Codes became illegal and made it so government had no right to interfere in internal state issues
                                              1. AAA: dominated by white powerful landowners, discrimination of African Americans. Roosevelt was reluctant to intervene as he gained so much support from them
                                    4. Impact of WWII (1939-1945)
                                      1. Social
                                        1. Blacks still earned only 40% of whites in the same job
                                          1. Unemployment dropped from 9 million to 780,000 from 1940-1943
                                            1. Women in work grew by 50%
                                              1. Greater equality in distribution of income; richest 5% - their national income dropped from 26% to 16% due to taxation
                                                1. People left farms to work in cities, ‘melting pot’
                                                  1. Over 1 million black people moved to war production areas
                                                    1. Infant mortality fell by 1/3
                                        2. Political
                                          1. 1940 election – Roosevelt won 27-22 million votes, lost traditional support for sending US boys to war
                                            1. Using the atomic bomb showed power, but did lead to cold war
                                              1. Roosevelt gained a world-scale personality
                                                1. Support for Democrats increased
                                                  1. America shown as a ‘superpower’
                                                    1. War demand brought pressure of presidential activity. War Power Act allowed unprecedented authority to lead the US into war, increasing power
                                          2. Economic
                                            1. Became largely based on consumer goods
                                              1. In 1947, despite only possessing 7% of the world’s population, the US produced half the world’s manufactured goods
                                                1. 43% of world’s electricity
                                                  1. 62% of world’s oil
                                                    1. 1945 = 69,000 cars on road, 1955 = 7.9 million
                                                      1. In 1952, Americans spent $255 million on chewing gum and $23 million on mouthwash, showing Americans once again had disposable income
                                          3. McCarthyism
                                            1. Was McCarthyism successful?
                                              1. Factor 1: Yes (McCarthy himself)
                                                1. Although he had no evidence, many listened and believed him
                                                  1. Became most popular man in the USA in the beginning
                                                    1. Gained a variety of support e.g. from Christian fundamentalists
                                                2. Factor 2: Yes (Examples of McCarthyism)
                                                  1. One school librarian in Indiana banned books about Robin Hood because she said in robing the rich and giving to the poor his story promoted Communism
                                                    1. Many books including classics were re-examined for subversive content
                                                  2. Factor 3: No (McCarthy himself)
                                                    1. Appeared on TV drunk
                                                      1. Had hardly any evidence to support his claims
                                                        1. Mocked people favoured by the US e.g. George Marshall (Marshall Aid)
                                                    2. Factor 4: No (Opposition)
                                                      1. Children mocked him at school
                                                        1. President Eisenhower criticised his investigation of the army
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