The Great Depression in the Americas, 1920s to 1940s

Global Context: The Great Depression

• Dominated the global economy from 1929 to the late 1930s.

• Economic recovery from World War I was dependent on US credit and proved illusory.

• Different responses globally:

  • Germany: Autocratic extremism and militarism.

  • Italy: Dictatorship seeking self-sufficiency through violent expansionism.

  • Japan: Used its army to create the Greater East Asia Co-Prosperity Sphere.

• Tariff walls sprang up, shrinking markets and potentially worsening the situation.

• Left a lasting mark on a generation.

• Underlying causes dated back to the end of World War I and the economic/social chaos that followed.

• The onset of war in the late 1930s led to the end of the economic depression for most countries.

• The political consequences were more far-reaching than the economic ones.

Timeline of Key Events

• 1919: Versailles settlement, end of World War I

• 1921: Warren Harding takes office in the USA

• 1923: Calvin Coolidge takes office in the USA; William Lyon Mackenzie King takes office in Canada

• 1929: Herbert Hoover takes office in the USA; Wall Street Crash

• 1930: RB Bennett takes office in Canada; Getúlio Vargas becomes president of Brazil; Smoot-Hawley Tariff Act in the USA

• 1933: Franklin Delano Roosevelt takes office in the USA; New Deal begins; On-to-Ottawa Trek and Regina Riots

• 1935: William Lyon Mackenzie King takes office in Canada

• 1937: Declaration of the Estado Novo in Brazil; Marco Polo Bridge incident, onset of war in Asia

• 1939: German invasion of Poland, start of World War II in Europe; Canada declares war on Germany

• 1941: Japanese bombing of Pearl Harbor, US entrance into war against Axis powers

Conceptual Understanding: Key Questions

• How did the consumer culture in the USA contribute to the onset of the Great Depression?

• To what extent was the Wall Street Crash a cause of depression in Latin America?

• How did the prosperity of the 1920s help create the problems of the Great Depression in Canada?

Key Concepts

• Causes

• Consequences

3.1 The Great Depression: Political and Economic Causes in the Americas from the 1920s and 1930s

Latin America

• Conditions rooted in the economic policies of late 19th-century political leaders.

• Early post-independence period: largely self-sufficient, agriculturally based units (latifundias) mirroring feudal systems.

• Industrialization in the USA and Europe increased the value of Latin American commodities.

• Industrialized countries focused on production, becoming dependent on exports to feed urban populations.

• The United Kingdom established strong trade relations, importing food (beef, wheat) from Argentina.

• Growing market for tropical fruits produced on US-owned plantations in Central America (Standard and United Fruit Company).

• Demand for Latin American minerals (Chilean copper, nitrates) for European industrialization.

• latifundias: A large estate or ranch in ancient Rome, or more recently in Spain and Latin America, where peasants or slaves work.

• Limited development in Latin American industries

  • Local entrepreneurs created textile factories, construction facilities, food-processing, and beverage industries, but they were a small part of the national economy

  • Dependent on imports for finished goods, setting up an export-import dynamic

  • Elites encouraged foreign investment rather than nurturing a local industrial sector

  • Example: Mexico's científicos advocated for incentives for foreign investors

  • US investors bought land for mining and railway construction, with the majority of profits returning to the USA

• The United Kingdom was the largest trading partner for most of Latin America in 1913, followed by the USA, France, and Germany.

• Latin America benefited during World War I; weaknesses began to show after the war due to slow European recovery.

• Wealth generated by the export–import model began to fade, and most Latin American imports had reached their peak values even before the Crash.

• Supply of Latin American goods began to outstrip demand before the Great Depression, signaling early warning signs.

• Economies were susceptible to overseas policy decisions.

• Argentina's maximum wheat price: May 1927

• Cuban sugar: March 1928

• Brazilian coffee: March 1929

• The Great Depression exacerbated existing issues rather than creating them.

Canada

*Political Fragmentation

• The Conscription Crisis of 1917 divided English-speaking and French-speaking Canada and created a rift in traditional party politics

• Laurier's Liberals were torn into pro- and anti-conscriptionist factions

• Borden's Union government could not outlast the war due to its single-issue foundation

• New leaders were needed after Laurier's death and Borden's retirement

• Liberals chose William Lyon MacKenzie King to unite the party and country

• Conservatives chose Arthur Meighen, who had developed wartime legislation, for their leadership role

• The early 1920s saw a surge in the popularity of non-traditional parties

  • Thomas Crerar formed the National Progressive Party, addressing western prairie alienation

  • United Farmers of Ontario and Alberta formed governments in their respective provinces

• Progressives were divided between moderate cooperation with established parties and radical change

• JS Woodsworth advocated for tax reform, unemployment insurance, and old-age pensions

• The Maritime Rights Movement argued for greater subsidies and tariffs for their industries

  • Voters turned to Conservatives in the 1925 federal election after Liberal MPs couldn't deliver on demands

• King and the Liberals won the election due to strong support elsewhere

• Fractured political landscape introduced regulation of industry, financial support for farmers, social security, and new political parties, resurfacing in the 1930s *Canadian Prime Ministers, 1920–48

  • Arthur Meighen (1920–21)

  • William Lyon Mackenzie King (1921–26)

  • Arthur Meighen (1926)

  • William Lyon Mackenzie King (1926–30)

  • RB Bennett (1930–35)

  • William Lyon Mackenzie King (1935–48)

Economic Fragility

• The roots of the Great Depression can be traced to the economic changes that followed the armistice of 1918

• The war had damaged most major industrial economies except the USA, which become a creditor nation

• Canada experienced a post-war slump but benefited from the economic boom in the USA

• Surging demand for consumer goods created demand for minerals such as zinc and copper, supplied by the Canadian mining industry

• Exploration opened new mining areas in the Canadian Shield, controlled by US investors

• Pulp and paper became vital new exports due to US demand, leading US companies to establish branch plants in Canada

• Automobile production stimulated the Canadian economy, with major US carmakers having plants in Canada

• The growing car culture sparked the construction of paved roads

• The agricultural sector recovered from a post-war slump in the late 1920s with a bumper crop in 1928

• Global competition in wheat production increased, leading to lower prices

• Pulp, paper, and mining production began to outstrip demand by 1928

• Tertiary industries such as railroads felt the effect of declining trade volume

• The short boom of the 1920s seemed to be coming to an end due to:

  • Increased tariffs, leading to a decline in trade

  • Supply exceeding demand, causing a decline in world prices for commodities

  • Overdependence on staple products and the US economy

  • Heavy debt burden carried by governments and individuals

• Canadian Shield: An exposed area of rock that covers much of central and northern Canada.

• Branch plants: Factories operating in Canada but owned by non-Canadian companies.

The USA

• The 1920s are characterized as years of prosperity, but it was uneven

• Most of the world fell into a post-war slump, but the USA saw continued economic expansion

• The USA became a creditor nation and was receiving loan payments

• Assembly-line technology made goods cheaper and more available, stimulating demand

• Government policies freed businesses from taxation and regulation, allowing profits to increase

• The 1920 census showed a demographic shift to urban dwellers *Presidential Policies:

  • 1921: Republican Warren Harding took office, advocating non-interventionist economic policies

  • Goals of government were prosperity, peace, efficiency, and growth

  • Andrew Mellon, Secretary of the Treasury from 1921 to 1932, implemented fiscal policies that decreased tax rates on individuals and corporations

  • The top marginal rate was reduced from 73% in 1921 to 25% in 1925

  • The corporate tax rate was reduced from 65% to 50%
    *Economic Effects

  • Mellon's policies reduced the national debt from $24 billion$ to $16 billion$

  • Businessmen were appointed to serve on the commissions that regulated business

  • There was little oversight of the banking industry, despite the creation of the Federal Reserve System in 1913

  • Interest rates declined and the stock market escalated, as investors could borrow on the margin

  • The Fordney–McCumber Tariff Act of 1922 raised tariffs above pre-war levels

  • In 1928, Hoover ran on a platform of higher tariffs to protect farmers
    *Social and Political Shifts

  • Sociopolitical shifts brought suffrage to women (Nineteenth Amendment, 1920) and Native Americans (Indian Citizenship Law, 1924)

  • There was a renewed phase of xenophobia, leading to immigration quotas and the expansion of the Ku Klux Klan (KKK)
    *Economic Contradictions

  • Most Americans saw an increase in their purchasing power due to the technological revolution and increased wages

  • New goods were seen as necessities, and demand for durable goods increased, as did industrial productivity

  • Unemployment averaged 3.7% and inflation 1%, leading to a construction boom

  • There was a great disparity between rich and poor, with over 60% of the population below the poverty level

    • The richest 1% controlled 40% of the wealth, and their disposable income increased 75%, while the average increase for the remaining 99% was 9%

    • 80% of Americans had no savings

  • Farm incomes declined steadily due to overproduction, and the price of farmland fell by over 50%

    • The average family income was $750, but for farm families it was only $273

  • The government eventually responded to the plight of farmers, as the US identity was built on the idea of the family farm

  • Small businesses were squeezed out by corporate policies, leading to mergers and the replacement of local businesses by chain stores

  • The lack of regulatory authority made it easy to purchase stocks, leading to falsely high stock prices in 1929

    • An investor needed only 10% of the purchase price to complete the transaction

Herbert Hoover

• Herbert Hoover was elected president in 1928, running on a platform of assisting farmers

• The Agricultural Market Act was implemented in 1929, creating the Federal Farm Board with $500 million$ for low-interest loans

• Prices were rising, small investors sought easy money, and demand among consumers rose

• There were signs of economic troubles: farm prices dropped and car sales declined

• Stock prices doubled over the summer months, purchases funded by increased debt

• High Market Confidence

The Wall Street Crash and the Onset of the Great Depression in the USA

• Stocks began to fall, and the market took wild swings through the rest of the month

• On 24 October, the market crashed, but large banks announced that funds would be made available for purchasing stocks

• On 29 October, Black Tuesday, the market crashed

• The Crash alone did not lead directly to the Great Depression

• Factors that, when combined, most likely caused the Great Depression:

  • Wall Street Crash: Stockholders lost more than $40 billion$

  • Farm overproduction: Farm incomes dropped, and the price of farmland fell

    • Agriculture was in a depression from 1920–1939

    • The average annual income for an American family was $750$, but for farm families it was only $273$

    • The problems in the agricultural sector had a large impact since 30% of Americans still lived on farms

  • Reduction in purchasing: Individuals limited their purchasing of durable goods, leading to less production and a reduced workforce

  • Unequal distribution of wealth: The wealthiest 1% owned between 33% and 40% of wealth in the USA

  • Government policies that limited regulation in key industries: Bank deposits were uninsured, and banks were unwilling to create new loans

    • Between 1929 and 1933, 10,763 of the 24,970 commercial banks in the USA failed

Herbert Hoover’s Responses to the depression, 1929–32

*Portrayed as a villain in the story of the Great Depression
*Lack of government assistance to the vulnerable in society
*emphasis was placed on the creation of Hoovervilles and hobos
*Self-made man who believed that Americans were responsible for their own well-being and prosperity
*well known as a humanitarian, responsible for the assistance the USA provided to Europe at the end of the Great War.

• Unlike other politicians of the time, he held only administrative posts, and the presidency was his first elected position.

• profounding US economic growth
  *a key component of Hoover’s campaign promises in 1928 was the continuation of Coolidge’s policies government

• Crash the market was correcting late 1920s

Initial Policies

*Consistent with economic theories of the time
*Governments aimed to reduce debt, tighten money supply, and protect domestic production
*Most countries raised taxes and lowered expenditures
*Federal Reserve continued to take money out of the economy
*Did not recognize that devastated communities did not have the resources to save themselves.
*While he did not feel that the federal government should assist individuals, he did see this as the role of individual states.
Unfortunately, the states that were the worst off were unable to provide assistance to their struggling populations.

The rural states had been losing income in the 1920s and this trend only worsened.
The situation was exacerbated by the onset of what came to be known as the Dust Bowl.
A drought began in 1930 that would continue throughout the decade, affecting most of North America, but the central plains region in particular.
Years of farming practices, including removal of native grasses and replacing them with seasonal crops, deep ploughing and failure to rotate crops to replace nutrients, made the area vulnerable to any rainless period.
*As the drought wore on, crops failed, and farm animals were brought to the slaughterhouse in a desperate attempt to make some money.
Approximately 100 million acres
*Great Plains region of the USA.As a result of land misuse, erosion and years of drought, the ecological disaster known as the Dust Bowl lasted through the 1930s, resulting in farmland becoming useless and hundreds of thousands of people becoming homeless.

Legislators

*Reacted to economic distress by trying to protect the home market from foreign goods.
*The Congress passed the Smoot-Hawley tariff in June 1930.
Smoot-Hawley, signed by Hoover, established a high protective tariff.
*As many as 887 existing tariffs were increased and the number of commodities subject to import duties rose to 3218.
*The farming industry collapsed, rural banks failed in record numbers and hundreds of thousands of customers lost their savings.
Combating the Situation:
Monetary assistance to troubled banks, but the government lacked funds
Established the Reconstruction Finance Corporation (RFC), an independent agency that granted loans to banks and railroads
Programmes to provide credit to farmers and buy excess crops, but these efforts failed.

Government Finance

Hoover: federal spending increased by over 50% between 1929 and 1932, the largest increase in federal spending during peacetime
*Restrict the flow of money
Restructured Revenue Act of 1932 doubled income
*Federal Reserve contracted the US supply of money by one-third

Detrimental Policies

*US economy worsened:
*Production in US factories, mines and utilities fell
*Automobile production, which in 1929 reached reached 5 million vehicles
*Consumer prices declined
*Wages declined
*Stock prices collapsed
*Unemployment
Most Americans agreed that Hoover needed to act to ameliorate the effects of the Depression. Hoover implemented policies to his views: Agricultural Market Act createdthe Federal Farm Board
distributed $2 billion to states for them to spend as they saw fit, Reconstruction Finance Corporation was created to make loans and assist theailing economy
The general public turned against Hoover.

bonus army

Two thousand veterans, and the US army General Douglas MacArthur onJuly 28, dispatched troops where troops attacked the veterans.
Hoover was not a politician and did little to work on his image
HisUnwillingness to provide relief made him seem uncaring.
He received 15 million votes to Roosevelt’s 22 million. The era of Republican dominance of politics ended, The Hoover Dam, Large recovery projects
Southern Nevada was in need of power and there was also a need to irrigate and control floodingof the Colorado River, so the construction ofa large dam was seen as an important step to help the expanding southwest.Constructing a dam, engineeringhad to divert to water catchment, Las Vegas Nevada
Dam construction employed over 5000 employees at a given time and 21 000 worked on it during itsconstruction At the time, it was the tallest dam in the world at 221 metres and the largest producer of hydroelectric power.
There was a tradition of naming dams after presidents, and the dam was named for President Hoover, the dam remained the Hoover Dam.

Franklin D Roosevelt’s Response to the Great Depression

Roosevelt’s policies were not much different from those of Hoover’s. The difference was that of scope, a conservative platform which called for a federal 25% reduction in spending.
He wanted to balance federal budgets
Removed government from areas
belonged more appropriately to private enterprise, and an end to the extravagance’
Franklin D Roosevelt (FDR) was intellectual
Sworn
Inaugural Claiming: “This Nation asks For action, and Action Now’

First New Deal, 1933–34

*Proclaiming banking holiday
Emergency banking; give federal power reserve, renewed banking system.
economy: the Emergency Baking Act
A second bill, the Economy Act, followed
New law attempt to balance the budget by cutting salaries and reducing pensions.
cutting government spending as the opposite of a stimulus
There was legislation the first week: Build confidence after declines

President Initiatives

Radio Address; Build Support For initiatives
Glass-Steagall Banking Reform Act
Money = The fuel stock
Significant amount of the money that fuelled the stock market speculation of the late 1920s came from banks.
*Prohibit
Improve the competitiveness of American goods
agricultural Adjustment to agency, to assistance the industry, minimum wage, weekly hours and restore competiveness tothe business, and help economic to recover
Economic recovery, through workers and industries investor
Famous Symbol
A sticker that cooperating business place in their front window many companies agreed to all of The NRA rule
Federal emergency over Agency
Harry Hopkins end the great depression an, and the 2nd war, and FERA found to state and local government
Jobs: Jobs included building roads, and repairing schools; 1.3 Billion trees
To provide releif and employment
The tennessee Valley Authority, created power and controll, This project to help control and create electric cities where every person had access to electric power.

Important Goals

Stabilize economic system-Prevent Extremism and rebellion, reorganizes the USA could recover, he implemented social equality
Member of army appeared at the House for the Bonus Army but their request was denied

Second New Deal, 1935–36

Congressional Elections where the house more Radically house and senate
Allocated public work that provide for employment
A Considerable amount of this money = Major employers
The idea was to pay workers than the rate an incentive , to move into the wright
Workers, earn.The idea thewpa a major that build the country was given by his company
also used in the Rural Electrification
Administration (REA)
Public service for electric was good idea for electricity by the government Rural areas New deal for electricy
Told artists musicians to preserve art and federal funding from the world, So they can be able to access it all.
The (NYA) which, (SSA) and which the Wagner
1354 billion by the government: government by the wpr and ssa and given the Wagner labor laws
The Rural Electrification act modernizes rural areas
60% of The vote
Social security act workers right direct government assistance
Election that provided education between the 16 ad 25 where some were hired unlike ccc, so all were employed living under local projects
Balance, 60 vote with state and government
tection for those who not employed in the irst government
American from the American tradition.
Provide not direct or flat paid rate, and provided for the lower classes and African, american from. By 1936

Legal Challenges to the New Deal

A the laws were found unconstitutional
NRA was unconstitutional; Court Case and jurisdiction; With This Ruling
He felt what Decisions and the public were more important.This bill proposed, mandory rediment by 70 expansion courts
It Was seen as a political road to represent by his power , with strong democratic congress.
On The other hand , congress had fear of roosevelt so congress chose loss Economic.
Popular were amedable for social security, that was popular amongst voters, and helped them with future

The Dust Bowl and The Farmers and the Radicals

Destituet formers, 35 million of land, 2.4 Million 30% unemployment to CA.
American southwest as people were called illegal
Radical attempt to allay through restemented:
Farmers in need, 30 million from 1719,
Arizona Maryland Ohio Wisconsin
1b of trees due to erosion in 50yrs but a heavy displacement of top soil
1937; A program established
This were controversial for the new communities, that was seen too socialistic
1935: Administration: headed by Tugwell. Providing assistance for over 4000 families. Established camp where they temporary housed for clean conditions
All the rain stopped and it was the Dust Bowl Era, that needed help

Third New deal, 1937-39 41

Lost Momentum After courts, to address this balance only was given for per per 10% the act:1938 = wage standards of working workers
New Deal = 80% and more money investment.GDP has improved 1 Billion- to 13
But started recession, where some jobs reduced, or taken away.
There was the money act by roosevelt administration and economic issues.The recession lead the key market and banking issues but there the GDP did reach its pre grear depression levels.
7th, december: New deal was shut down

Historical perspective on New Deal Policies

Economy Recovered/Prevent Events/Water Down Social Security ,Art/Schools ,Historian
Economic stimulus/Reform' or 'restore prosperity' and called it 'conservative'
During Great Depression/3-10 federal Government/GNP doubled in Receipts/Expenditure
Keynes; Traditional and The People had a role by william.H Zinn with A People's History of the United States
Conventional History that was great because it saved small organization where government
Critics : Upton Sinclair/Huey Long ; to redistributed Long -50 min / and Olsen that lead program in 19290ss =53/ and he created programs for the state to take back his town
Then the New Deal policy was called a failure due to all for the society
4 people who saw the effect over politicians

King and the Crash of 1929

Economics that brought the depression , not first to happen to Canada
The world was economic hurt in 1873
Great Depression that would hit the Canada and more difficult.the severity and scope
drought; between 1929 and 1933 -unmatched cost
significant. in some cases the to build value during 1920
Rural and Prices
Efforts effects. for The fact to show that the depression
Provincial or Canada was like USA economic disaster; The government policies - Canada and USA. They did have already have started
eligible before - after stock crashed spread after markets in The World . Italy; France + Germany
Praire Province that were effect doubly by economic ecological disaster that happen
The family farms lost all, and they went to cities.
Urban: More: Complex: Some workers get fired and The low classes were able to see improvements in society with people going through the depression, was by locals
Canada was built. to call people to the national wealth and losing land on farmlands and it changed the demographics with lost jobs
Social impacts = Marriages were postponed birth were declined to due the self aware.People lashed for immigrants this hurt and change english speakings
Responses / Canada - Canadian . American could do about it
The british north America act, but refused to increase sub dies.

R B Bennet -Action and relief- Increased tariffs 50\ Allocate 20 bill, work camps for unemployed for people in need,
Federal provincial - direct relief/Cities Tried By Mees the need. As The cities cost were ballooning = Bankruptcy
Bennet also wanted to protect Canada. For farmers
The federal level, measures
Canadian wheat - marketing border - prairie farmers to help structure for loans, prairie economic/ the market, provide shelter, prairie farmers
Canada’s1s Central banks / monitor policy, and body economic policy
seemed and asked aid.his approach towards that economic issues was consistent with his belief systems towards the Free - enterprise
But the Prime shocked many of them for the crickets the radical and aggressive approach
This package come to knowns Bennet’s New Seal:
Keynes; compare 25 the policy towards the previous government actions

Election in 1935 VS BENET : King or CHAO’s but the problems the were the 1930.
King, not , however was to do anything in Bennett’s system and to avoid cutting back he, the 40
They did need by the government on the economic recession and the traditional issues of the state
The 1944 election Douglas was president and one 4 year.
1=Social credit with others for the individual with Power- but minister or Alberta and the 1932
In The short, society spending worth with cash and credits and 25 dollars from citizens; In any people employment.
With 35 in elect to Alberta’s elections
Financials and this will impact payment for his system the delay
are the soccers bring the scheme, The farmers in debt to the bank.
Political from 35-61: Alberta where people wanted help due to the war
Source with the regina and social credits to compare the credits and benefits on issues
Unions national brought in 36 government a number with the general government conservative that conservative regime that championd
along The Ottawa and was against everything
enough , was passed to to stop those government by using the cominterm
Then the government created with the police, army, etc the crisis that had the issues on 1935 canada.100 Trekers. But he got to the place a RCMP Depot and many were arrested and broken up
Pricniples - tradtions