1. 1. 7.1: Causes of the Great Depression
2. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 12. 7.2b:The New Deal
13. 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. 14. The Successes
15. 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. 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. 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. 18. The Failures
19. 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. 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. 21. NRA Continued Difficult to administer Not clear that it had any economic benefit Constitutionality illegal Supreme Court rules it unconstitutional in 1935
22. 22. Canada and Brazil 7.3-7.4
23. 23. III. Canada
24. 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. 25. Political Differences--Parliament
26. 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. 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. 28. William Lyon MACKENZIE KING
29. 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. 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. 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. 32. Richard Bedford (R.B.) BENNETT (1930-1935)
33. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 43. IV. Brazil and Vargas
44. 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. 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. 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. 47. Getulio Vargas
48. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 59. Social Impact: Soccer
60. 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. 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. 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. 63. 7.5: Depression effect on Minorities
64. 64. V. Effect of Depression on Minorities Minority Groups: Women, Mexican-Americans, African-Americans, Native Americans
65. 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. 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. 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. 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. 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. 70. VI. Effect of Depression on Arts, Literature, and Film
71. 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. 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. 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.)