Paper 3 - The Great Depression

The Great Depression

• worst economic crash in modern day history

• began with the Wall Street Crash in 1929

• severe economic contraction from 1929-1933

• economic stress led to the rise of fascism in Europe

Economic Weakness

• overproduction

• underconsumption

• Weak banking system

• international problems

Overproduction

• More agricultural and industrial products then consumers could buy

• falling prices, lay-offs, reduced purchasing power

Underconsumption

• unevenly distributed wealth

• workers couldn’t afford to buy their own goods

Weak Banking System

• lots of unregulated banks

• no deposit insurance, panic withdrawals, bank failures

International Struggles

• after WWI, Europe was dependant upon American loans. When credit dried up, so did the international economy

• Protectionism (Smoot-Hawley Tariff) led to an increase in GLOBAL tariffs, further harming economic economy

Agricultural Excess

• steep overproduction

• farmers in debt

Effects on America

• GDP fell 30%

• huge amiunts of unemployment

• bank failures (no deposit insurance)

Effects on Canada

• exports dropped

• Prairie Dust Bowl

• unemployment surged

• On-to-Ottawa campaign

On-to-Ottawa (1935)

• campaign led by men from BC

• protested against the federal government

• set out to demand fair wages, fair hours, much like the NRA did

• contributed to unemployment insurance reform

Affect on Latam

• collapse of export economies

• rise of authoritarianism

• CASE STUDY: Brazil

Hoover’s Approach

• believed in “rugged individualism”

• thought the government shouldn’t intervene

• was ineffective and lost 1932 election

FDR Approach

• believed the government had to intervene

• New Deal 1933-1935

• Relief, Recovery, Reform

Relief

• Civilian Conservation Corps

• public work program for young men

• conservation and infrastructure projects

Recovery

• National Recovery Agency

• aimed to establish better working conditions across the country

• wages, hours, trade practices

• “only buy the blue eagle”

Reform

• federal deposit insurance corporation

• Deposits over 500o must be insured

• still in place!

• prevented the mass of bank failures from panic withdrawals

Successes of the New Deal

• reduced unemployment

• restored faith in the government

• increased interventionism in America

Failures of the New Deal

• thought by revisionist historians to have been too interventionist

• threat to free markets

• major increase to national debt

Ending of the Great Depression

• mobilization of troops for WWII

• massive amount of government spending

Traditional View

• caused by the Wall Street Crash

• fixed by the New Deal

Keynesian View

• caused by a lack of demand

• solved by government spending

Revisionist View

• government and New Deal were unhelpful

• Hoover and Roosevelt prolonged the difficulty

• high wages and price control didn’t allow the economy to recover on its own

• pro-capitalist

Brazilian Economy

• heavily dependant on exports

• coffee was 70% of that, and it was controlled by the elite

• lack of diversification

Brazil in 1929

• coffee prices plumetted, sending economy into disarray

• government brought in price supports to keep stability

• similar to interventionism seen in America

Affects of Great Depression

• Brazilian Revolution of 1930

• oligarhcic systems collapsed

• Getulio Vargas came to power

Guetulio Vargas

• ended the ruling elite

• increased domestic production (i.e. steel industry)

• controlled wages and labour like NRA

• later shifted to authoritarianism

Traditional Perspective on Brazil

• Great Depression collapsed the oligarchy

• Vargas was the moderniser

Revisionist

• industrialization had already begun

• Vargas hugely exaggerated

Dependency

• Brazil was trapped in the global economy

• Depression exposed that weakness

Brazil summary

the great depression decimated the brazilian economy and led to the increase in domestic production through the regime of guetulio vargas, although the extent of his influence is debated