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1. 7.1: Causes of the Great Depression
2. 1. Crisis in the Farm Sector New inventions (mechanized
cotton picker, tractor) corresponded with new demand from Europe
for food Farms began to overproduce Caused a drop in prices farmers
produce more to make the same profitmore overproduction, etc.
Farmers couldnt pay back loans they had taken out during World War
I Foreclosures, Dust Storms, Environmental Devastation
3. 2. Uneven Distribution of Wealth The wealthy prospered
during the 1920s A middle class emerged, but was very small In
1929, the top 5% of America owned 33% of the wealth Wealthy have
proportionally less demand for durable goods appliances, cars
4. 3. Industrial Overproduction 1920s Businesses assumed they
would be able to sell everything they produced New technologies of
the 1920s (like the assembly line) allowed production on an
unprecedented scale Consumers could not keep up with production
Warehouses began to pile up with inventory. Businesses fired
workers to slow down production.
5. 4. Trade Tariffs Tariff is a tax on imports (imports are
goods that enter the country). During the 1920s, America had high
tariffsEurope retaliated with high tariffs Meant that
overproduction of American goods could not be sold to Europe
6. 5. Speculation For the first time, ordinary middle class
Americans began investing in the Stock Market This created a bubble
where people assumed it would grow forever Investors began taking
out short-term loans to invest in the Stock Market Called buying on
margin
7. 6. The Crash The bubble burst in late October 1929 Black
Tuesday October 29, 1929 Stock prices dropped rapidly Investors
began to liquidate (sell) their stocks while they still could In
September of 1929, the Dow Jones was at 381. By July 1932, it had
fallen to 41. Billions of dollars in assets evaporated. People that
had bought on margin couldnt pay their loans back. Banks
8. 7. Depositor Panic As people defaulted (couldnt pay back) on
their loans, banks reserves became depleted Nervous depositors
scrambled to the bank to withdraw their funds before the Banks
reserves ran out This panic caused banks reserves to run out.
9. 8. Business Response Businesses needed loans to continue to
expand. Banks had no more money to lend. Businesses continue to
accumulate inventory until they layoff workers More unemployment
means even less people can buy more unemployment less people
to
10. 9. Hoovers Stubbornness Hoover subscribed to the economic
theories of his day: Protectionism, Laissez Faire, and Fiscal
Discipline Believed that the reason for the depression was that too
much money was leaving the country Congress Raised tariffs
(Smoot-Hawley Tariff) Made it more difficult for businesses to sell
abroad, creating more unemployment Hoover also felt it necessary to
cut spending and raise taxes to make up for the deficit caused by
the depression
11. 10. The Federal Reserve The difference between the Great
Depression (1929- 1939) and the Great Recession (2008-present) was
the actions of the Federal Reserve Some economists blame the entire
Great Depression on mismanagement by the Federal Reserve Instead of
expanding the money supply during the banking crisis, the federal
reserve drastically decreased it. Banks not given emergency loans
Interest Rate policies contributed to the deflation
12. 7.2b:The New Deal
13. Analogy: America is sick, Roosevelt is the doctor Relief:
aspirin, Tylenol, ibuprofen, pain killers, Nyquil Help people in
need immediately Recovery: cast on a broken leg, cholesterol
medication Fixing a specific problem Reform: nutritional change,
diet, exercise Long-term change to everyday life
14. The Successes
15. CCC, PWA, CWA, WPA All had one goal: Give people jobs. Why
give people jobs and not money? CCC (young men) plant trees, make
trails, clean the environment PWA/CWA States employ people to build
schools and libraries WPA (biggest jobs program in American
history) Built airports, roads, public buildings, sewage systems,
electricity systems. Painted Murals, collected histories, put on
plays
16. Wagner Act (National Labor Relations Act) Finally gave
unions the legal right to exist and protections from attacks by
businessmen. Made it illegal for anyone to prevent union
organization. Created an arbitration panel that helped to fairly
settle collective bargaining disputes. Fair Labor Standards Act
Established first national minimum wage laws, maximum hour laws,
and workplace safety laws.
17. Social Security Began as a grassroots movement (from
California) to give seniors a stable income. Had 3 components 1.
Fixed income for retired people over 65 2. Unemployment payments 3.
Welfare for those with children (AFDC) and the disabled. AFDC: Aid
to Families with Dependent Children Paid for with a separate
payroll tax.
18. The Failures
19. AAA Agricultural Adjustment Act Purpose was to help farmers
Paid farmers to not grow food. Resulted in food shortages,
unemployment, and worked against the purpose of the rest of the New
Deal
20. NRA (NIRA) National Recovery Administration (National
Industrial Recovery Act) Failure in multiple ways: Based on the
assumption that the cause of the Great Depression was too much
competition, resulting in dropping prices Attempted to limit
competition by creating regulated oligopolies Each industry created
a set of competition standards, creating cartels.
21. NRA Continued Difficult to administer Not clear that it had
any economic benefit Constitutionality illegal Supreme Court rules
it unconstitutional in 1935
22. Canada and Brazil 7.3-7.4
23. III. Canada
24. Economic Differences Canada relied much more on commodity
(raw materials) export than the US Lumber Oil Metals Canada was
going through a wheat and lumber (newspapers) boom in the
1910s-1920s. Canadas depression was as severe as the United States,
even though it began in the United States. Canada had its own
currency, but did not have a Central Bank (Federal Reserve)
25. Political Differences--Parliament
26. Parties Liberal and Conservative Parties Many smaller
parties Cooperative Commonwealth Federation (New Democratic
Party)---Labor Party Progressive Party---Middle Class Reformers
United Farmers of Alberta---Farmer Party Bloc Populaire---Quebecois
Party
27. Other Differences Party Leadership lasts much longer
because there are no term limits. Quebec: Ethno-linguistic
differences are bigger division than any other political division.
Canada did not have a Constitution. Instead, they had a British law
that set up a legal system similar to a Constitution.
28. William Lyon MACKENZIE KING
29. Mackenzie King (Liberal party) Some similarities to FDR.
Built a liberal coalition with progressives during the Depression
Was leader during Great Depression and World War II. Considered by
many to be Canadas most successful politician (served as Prime
Minister for 22 Years) Some Differences Never pursued the radical
reforms of FDR Was President when the Depression hit (some
similarities to Hoover) Never fully brought labor support into the
Party
30. Mackenzie Kings Response to the Depression Like Hoover,
King and the Liberals were blamed for the Depression. Claimed that
British North America Act limited how he could react (left public
relief to the provinces and then didnt fund the provinces claiming
too much debt).
31. Overall Ideology As a liberal, King favored small
government to support economic and social freedom. He wanted to
keep the Canadian governments response to the Depression
limited.
32. Richard Bedford (R.B.) BENNETT (1930-1935)
33. 1930 Election King called elections in 1930, but lost to
Bennett and the Conservative Party. Like Roosevelt, Bennett
promised a series of unspecified reforms to fix Canada. Like
Roosevelt, Bennett called his reform program the New Deal, after
1933. Unlike Roosevelt, Bennett stuck to his Conservative beliefs
and did not implement a lot of reforms.
34. Bennetts Response Increased Tariffs (made things
worse---see Hawley-Smoot Tariff in the U.S.) Provided funds for
public welfare system to the unemployed and the destitute. Created
a work camp program very similar to Roosevelts CCC. Participants
were called the Royal Twenty Centers. (This was partially done to
prevent unemployed from calling for more radical change).
35. Other Reforms Canadian Wheat Board: Somewhat similar to
AAA, but more helpful to poor farmers. Bank of Canada: Created a
Central Bank Farmers Creditors Arrangement Act: Allowed farmers to
restructure their debt.
36. Bennetts Ideology As a conservative, Bennett wanted to try
to maintain the status quo. His reforms were an attempt to provide
as little change as possible to a problem that might require
significant change.
37. King Comes Back! In 1935, King and the Liberal Party won
with the slogan King or Chaos. Leading up to the election, Bennett
had promised more sweeping changes (including minimum wages,
unemployment benefits, and other progressive reforms.) King
attacked the New Deal as being too expensive.
38. Kings 2nd Fix Instead of promoting more reforms, King
passed on Bennetts laws to the courts. The Supreme Court of Canada
ruled most of the New Deal unconstitutional. Canadas economy
overall did recover faster than the U.S. It also entered World War
II earlier (1939 under the UK).
39. Relief, Recovery, Reform Programs Summarized Similar to
Hoover Save the banks, let the states take care of their own.
Remove Tariffs Tariffs Work camps (Royal Twenty Centers) Canadian
Wheat Board Central Bank Farmers Creditors Arrangement King
Bennett
40. Other Social Changes Hockey! Hockey became the national
pastime during the 1930s (on radio broadcasts). MapleLeafs vs.
Canadians became symbolic rivalry between English-Speaking and
French- Speaking Canada
41. Historiography Traditionalist: King and Bennett embraced
far-reaching political and economic change in order to move the
nation out of the Depression and did so effectively. Revisionist
King and Bennetts reforms were remarkably limited and relied on
political repression. Conservative King and Bennetts economic
success in getting Canada out of the Depression shows the
market-oriented conservative action is the best remedy to a
Depression.
42. Practice Questions How serious was the impact of the
Depression on the Canadian economy and society? Why did the
Canadian federal governments of the 1930s introduce so little
social and economic legislation to deal with the problems of the
Depression? Assess the view that the response of the Canadian
governments in the 1930s to the problems of the Depression was
limited. Assess the view that neither Mackenzie King or Bennett
offered the Canadian people a coherent policy to tackle the
problems they faced in the 1930s.
43. IV. Brazil and Vargas
44. Economic Past Brazil, like most Latin America, is and was a
much less developed country. During the 16th-18th centuries, Sugar
was the focus of the economy. Brazil was the last country in the
Western Hemisphere to abolish slavery (1880s) In the mid-19th
century, the focus moved to coffee (industry exports out of Sao
Paulo).
45. Political Differences Like most Latin American countries,
Brazil historically was run by rich landowning oligarchs. Brazils
central government was weak even by Latin American standards up
until the Great Depression. Had once had a relatively strong
central government under a Brazilian monarchy (Pedro I and Pedro
II).
46. Political Parties Today, Brazil has tons of political
parties. Leading up to the 1930s, the biggest divide wasnt
political, it was geographical: Paulistanos (people from Sao
Paulo)--Coffee Mineiros (people from Minais Gerais Minerals, and
cattle In both areas, oligarchs (landowners) ran the parties.
47. Getulio Vargas
48. Vargas and Roosevelt Similarities to FDR Radically changed
role of government Was President during Depression and World War II
Appealed to lower class for support. Adopted Corporatist framework
to fix the economy (as was done in Roosevelts NRA). Differences
with Roosevelt Not Democratically elected Did not tolerate dissent
Authoritarian Dictator Did not create social welfare state Focused
more on reforming the economy than relieving it.
49. 1930 Coup #1 When the Depression hit Brazil, Washington
Luis was the president. Luis followed the conservative response of
Hoover. Luis also represented Sao Paulo and many around the country
were upset that so much power was resting there. In 1930, unrest
across the country led to rebellion. The military scrambled to find
a leader that would avoid full-scale revolution, but would also
please the masses. This leader was Getulio Vargas.
50. The Estado Novo (Coup #2) During his leadership, there were
several attempts to remove him from power from both the left and
right. A failed coup in 1937 gave Vargas the justification to
suspend the Constitution entirely and rule Brazil as a dictator.
After 1937, Vargas would call his plans to revive Brazil socially
and economically the Estado Novo. (New State) His policies mirrored
those of Mussolini, Franco, and
51. Vargas Economic Reforms (Trade Policy) Vargas economic
goals met with his political goal of reducing the power of Sao
Paulo. Vargas pursued Diversification through ISI (Import
Substitution Industrialization) In other words, tariffs would be
placed on specific goods that Vargas wanted Brazil to make
(airplanes, steel, etc.) Incentives would be given to
infant-industries to produce these goods for Brazilian
consumers.
52. Quote If you were to ask me what is the program of the
Estado Novo, I would tell you that its program is to crisccross the
nation with railroads, highways, and airlines; to increase
production; to provide for the laborerto expand exports; to prepare
the armed forces so that they are always ready; to organize public
opinion so that there is, body and soul, one Brazilian
thought.
53. Vargas Economic Policy (Domestic Coffee) To deal
specifically with Coffee, Vargas created the National Department of
Coffee. Reduced coffee tree planting ordered. Coffee planters in
Brazil would be forced in a cartel wherein they would have the
amount that they could sell on the market reduced in exchange for
higher prices. The goal was to make Coffee exports more profitable
for the country and reduce the countrys reliance on those exports.
Critics would point out that this increased unemployment in the
Coffee sector.
54. Vargas Economic Policy (Unions---O Pai do Povo) Rather than
limit the power of unions, Vargas aimed to appeal to and co-opt
them (Co-opt means to control by including). Unions were given the
legal right to exist, but all workers had to join state-sponsored
unions. Employers were also forced to join large industry
organizations The state became the arbitror of industrial relations
in labor disputes. This model was first developed by Mussolini and
is called Corporatism.
55. Quote The Estado Novo does not recognize the rights of the
individual against the collective. Individuals do not have rights;
they have duties. Rights belong to the collective.
56. Vargas Racial Policy Vargas promoted the idea that racial
distinctions were contrary to the unified vision of the Estado
Novo. All discussions of racism were banned. Eugenicists were
arrested. Brazilians were taught nobody was one race, but all
Brazilians were a mixture of races (usually White, Black, and
Indian). A racial class system still existed in many ways, but he
indoctrinated Brazilians to believe in a color-blind society.
57. Vargas Denouement Vargas finally held elections in 1945 and
lost them to Gaspar Dutra. In 1951, Vargas ran again and won. In
1954, after an attempted assassination of one of Vargas rivals
(Carlos Lacerda) was traced back to Vargas, the military asked
Vargas to resign. Instead, Vargas committed suicide.
58. Suicide Note I was a slave to the Brazilian people, and
today I am freeing myself for eternal life. But this people, whose
slaves I was, will no longer be slave to anyone. My sacrifices will
forever remain forever in their souls and my blood will always be
the price for their ransom. I fought against the exploitation of
BrazilI have fought with my whole heartNow I offer you my death. I
fear nothing. Serenely I take my first step towards eternity and
leave life to enter history.
59. Social Impact: Soccer
60. Overall Ideology of Vargas Populism Base reforms on the
perceived desires of the people. Modernize Brazil into an economic
world power. Strengthen the nation.
61. Programs ISI (restrict imports to encourage eventual
exports) Diversification (move away from cash-crops) Corporatism
(Simplify the running of the country by putting people into
organizations that would represent their interests).
62. Historiography Vargas Traditionalist: Policies were too
radical and led to his demise. Revisionist: During the 1960s-1980s
period, he was seen as a precursor to the military dictatorship
that then consumed the country. Post-Revisionist: After 1985,
historians have given him a kinder look, focusing on his merits as
an effective and charismatic politician compared to the brutality
of the militarys generals. Race Degler: Sees Brazils embrace of
Vargas racial policy as evidence of its inherent muliticulturalism.
Hanchard (Orpheus in Power): Vargas policy removed discussions of
racial inequalities, but not racism from Brazilian society.
63. 7.5: Depression effect on Minorities
64. V. Effect of Depression on Minorities Minority Groups:
Women, Mexican-Americans, African-Americans, Native Americans
65. A. Women 1930s saw the end of the 1920s Flapper ideal. New
job opportunities available to women in the 1920s vanished in the
30s. Depression became stress on family life. Rise in divorces.
Husbands became insecure about losing their breadwinner
status.
66. B. Mexican-Americans Mexican-Americans that were
economically encouraged to come to America and California suffered
the reverse when the Depression hit. White migrants from the
Midwest pushed out Mexican agricultural workers in California and
in the Southwest.
67. C. African-Americans Blacks that experienced new
opportunities in the 1920s saw those opportunities vanish in the
1920s. Despite voting for Roosevelt, not much in the New Deal
helped African-Americans. AAA did not help sharecroppers. Early
work programs were run through the states so often discriminated
against African-Americans. Later national organizations (WPA, CCC)
actively sought to employ African-Americans. NAACP charged that
Social Security discriminated against African- Americans.
68. D. Native Americans John Collier oversaw radical changes in
the treatment of Native Americans through the Bureau of Indian
Affairs Indian Reorganization Act undid the Dawes Act (which had
made assimilation and individualism the goal of Federal Indian
policy). Native American cultural practices were collected,
breaking up of communal lands was halted, and power was returned to
tribal councils. Orthodox: Radical shift in policy for the benefit
of Native Americans.
69. Historiography Orthodox (Degler) New Deal transformed the
lives of minorities, which is why they overwhelmingly voted for
Roosevelt. Revisionist (Bernstein) New Deal failed to deliver its
promise to its minority constitutients. Its limited reforms
purposely or unpurposely left out minority groups.
70. VI. Effect of Depression on Arts, Literature, and Film
71. Art: Community Murals Government supported mural projects
through the WPA. Murals reflected a type of populist art---from the
people, by the people. Emphasized work, community, and
realism.
72. Literature: Novelist focused on the realistic deprivations
caused by the Depression Plight of Migrant Workers (John
SteinbeckGrapes of Wrath, etc.) Racism (Richard WrightNative Son)
Southern Backwardness and Poverty (William FaulknerAs I Lay Dying,
etc.) Comic Books (Superman) with escapist fantasies also became
popular.
73. Film: Escapism and Realism Three different types of film
became prevalent: Gangster Movies: Glorified the rebel
individualist. Escapist Movies: Made people forget the burdens of
their own life. (The Thin Man, The Wizard of Oz) Realist Movies:
Showed people living through the Depression and overcoming lifes
obstacles. (Grapes of Wrath, Im a Fugitive From a Chain Gang.)