History, Chapter 1 : The Wall Street Crash and its impact :

Date of the beginning of the crisis

October 1929.

What is the name of this New Crisis?

The Great Depression.

Date of the end of the crisis?è

September 1939.

What were the multiple stages of the crisis?

1) Global recession 2) Social consequences 3) Political consequences

What does “recession” mean?

decline in the annual production of most countries.

When was the American economy striving?

1920\.

Why was it stiving?

– US banks had been loaning billions of dollars to the European countries at war è benefits/interests. – US industry: cars, boats, steel, weapons, modern industry (FORD, GM.) – Mass consumption society: supermarkets.

US banks and citizens were encouraged to contribute to the country’s prosperity by…

Buying shares.

How do shares work?

buy a part of a company and earn the benefits at the end of the year.

How does speculation work?

they sell shares when their prices are higher to benefit from the difference.

When did stagnation begin in the USA?

October 1929.

When was the date of the Wall Street Crash?

Thursday 24th of October 1929.

What happened that day?

Thousands of share owners tried to sell as much shares as possible because they were anticipating a severe decline in the values of shares. However, with no buyers in front of them, they reduced the prices, creating a general panic that conducted to the stock market crash.

Who were the first victims of this crash?

The banks.

Why? What were the consequences?

They were the biggest share owners, they lost the savings and were no longer able to loan money. It led to the decline of consumption and decline in production. Rise in unemployment.

What is recession?

negative growth, period of depression.

In 1933, unemployment in the USA climaxed at…

25pour cent.

List of industrial cities are…

Boston, Chicago, Detroit.

Their level of unemployment climaxed at…

50 pour cent.

What were the consequences for many industrial workers?

lost their jobs, then their homes, and some workers has to sell their lands to pay their credits.

What was the name of slums in the USA?

Hoovervilles.

The government encouraged food producers…

to destroy their own productions instead of selling it al low cost in order to make prices increases.

What were the consequences for people?

They suffered from hunger.

Who was Herbert Hoover?

American President.

When was he elected?

1928\.

Why was he popular?

He was rich and had spent the whole WW1 supporting humanitarian organizations.

What was his party?

The Republicans.

What was his stance economic interventionism?

He was a liberal and did not believe in state intervention. “The invisible hands of the market will make things rise.”

What was the only measure he took?

Smoot-Hawley Tariff Act.

What did it do?

worsens the issue and slows down economic exchanges. It created a global issue.

Who was elected in 1932?

Franklin Delano Roosevelt.

What was his party?

Democrat.

What does he put in place?

An interventionist policy to put an end to the Great Depression.

What’s the name of the Deal he put in place?

The New Deal.

What did it consist of?

He decides to use the federal budget (defense, political institution, and justice) to build whatever he could: highways, bridges, railways, dams, tunnels etc. The goal was to give unskilled workers work and to American companies.

What is the national industrial recovery act?

it allowed companies to agree on prices to stop economic competitions in order to increase their benefits and resume investing è in favour of the companies.

What is the agricultural adjustment act?

aimed at stabilizing and increasing agricultural goods in order to save producers.

What is the social security act and its date?

Created unemployment and retirement pensions, in 1935.

What is the Works Progress Administration and its date?

Federal agency that contributed to create jobs and good distribution, 1933.

Date of the end of Roosevelt’s presidency?

1936\.

What were the results of his mandate?

The crisis was not solved, unemployment was still high and the US GDP was way under to what is was before, the crisis but the social crisis was improving.

When was he re-elected again?

1940, 1944.

What was his position internationally speaking?

very traditional and conservative because he is isolationist.

Since when did the USA has been isolationist?

1812\.

What Act was declared in 1935, 1936, and 1937?

The US Neutrality Act forced the USA to claim their neutrality.

What was the Neutrality Act of 1935? è

It forbade the selling of weapons to countries at war, because the USA were aware of rising tensions between China and Japan.

What was the Neutrality Act of 1936?

It forbade the loan of money to countries at war.

What was the Neutrality Act of 1937?

Same but for civil wars (Spanish war at this time.)

Why was the economy of developed countries interconnected in the 20s?

European banks had been relying on American banks during the War to rebuild the country.

What did US banks decide to do?

They decide to sell European shares, triggering the fall of European shares.

In what cities did crashes take place? è

London, Amsterdam, Paris.

Between 1928 and 1932…

the industrial production of France reduced by 20 pour cents. The industrial production of Canada was reduced by 30 pour cents. The industrial production of Germany was reduced by 50 pour cents.

What were the strategies adopted by European countries to face the crisis?

They devaluated the currency (stimulate exportation but increases the price importation and encourage people to consume national goods.) They adopted protectionist measures, that raised taxes on importation.  

Did these measures help?

NO.

What happened?

International trade declined everywhere which reduced further demands, production, and GDP. Currencies became unstable because countries were constantly changing the value of money because of inflation and the speculators speculated on the currencies’ values. Trade agreements and the going negotiations between European countries were either frozen or completely violated by these protectionist measures.

What were the multiple consequences of the crisis? è

unemployment, social reforms were inefficient, and poverty.

What was the importance of unemployment?

In 1933 :

\-          25pour cent, in FRANCE.

\-          23 pour cent, in UK.

\-          31 pour cent, in NORWAY.

\-          40 pour cent, in GERMANY.

To whom did poor people turn to in these times of crisis?

Their families, charities, trade unions, and political associations.

What type of political associations?

right-wing parties, far-right, the NAZIS, the FASCISTS.

What did poverty create?

Strikes, marches, protests, political consequences, slums.

In Germany, who benefited from poverty?

Communists (they tried to topple the government in the 1920s è The SPARTAKISTS (Greek slave.) This party became one of the most popular in the Parliament even before the crisis.) Far-right parties benefited from the economic crisis and from the fear of the communists (the NSDAP developed in the 20s and won the election in 1932.)

When did the NSDAP win the elections?

1932\.

Which country became a dictatorship after the crisis and when?

Brazil, in 1939, Getulio Vargas became president after a coup and he remained in charge in 1945.

What was the name given to right-wing parties in France?

Les Ligues.

Which was the most famous “Ligue” in France?

Les Croix de Feu.

What were the characteristics of the Ligues?

Catholics, royalists, violent.

Left-winged parties reacted in France by…

creating the Front Populaire.

Who were apart of the Front Populaire

The Communists, the SFIO (Section française de l’Internationale Ouvrière), the Parti Radical.

Why were European countries reluctant to question their economic system?

The end of the XIX and the beginning of the XX century: “la Belle époque” (1886-1914) and the time just after WW1 named Les Années Folles.

What did economists recommend at the time?

they proposed very few intervention measures most of them recommended waiting and doing nothing.

Who is the economist who proposed an interventionist system?

John Maynard Keynes.

Where was he from?

British.

What system did he propose?

KEUNESIANISM; tempered liberalism, liberal economy: wages, and prices are not fixed by the state BUT permanent state intervention to prevent and solve a crisis and to reduce economic and social inequalities.

How did these interventionist measures start?

Taxation, then budgets to reduce poverty that would include retirement pensions, unemployment pensions, the state budget for education and health and a control by the state of some strategic sectors through the creation of state monopolies such as energy, transport and sometimes banking.

The ranking of left-wing parties

Communism, KEYNESIANISM, Interventionism, and liberalism.

What did the Front Populaire create?

the first paid vacation, 2 weeks every year, increase in wages.

Some countries went further in the economic measures…

some of them opted for controlled and planed economies such as the German Nazis that nationalised most of the strategic sectors : chemical, energy, transports.

What were the Nazis two objectives?

\- put an amend to the crisis. – prepare to war to come such as Italy, Russia.

What did the Nazis manage to do?

reduce and stabilize the economy, reduce unemployment thanks to massive public work plans such as the creation of the first network of highways that created a lot of jobs.

What were the Nazis other project?

the rearmament of the country.