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The Great Depression
Transcript of The Great Depression
In the US people acquired debts constantly.
In Europe, due to WW1 countries were heavily indebted and their currencies were fragile.
Flowing capitals. (Money entered the US easily but left easily as well.
There were large credits for Stock Market investors.
Because of the War, Europe stopped producing and the United States took advantage of that
situation to cultivate new lands. When Europe recovered from the War there was over production
of wheat and the price...what happened to the price?
What happened to the price of land as well?
Farmers sold or just left their lands and migrated to the cities.
This situation happened as well with cotton, sugar, etc.
Textile, metallurgist, coal and railroad industries were also affected due to competition from Europe. The rest of the industries was affected as well since purchasing power had decreased.
STOCK MARKET CRASH
October 29, 1929.
A catastrophic fall in the Stock Market started that day and continued for several years. NY.
Companies stopped making money, everyone wanted to sell their stocks, no one wanted to buy them. Price decreased even more.
After the Stock Market crisis came the Financial crisis...(banks)
People ran to the banks to withdraw the few money they had left... banks only gave away what they had (because they had provided lots of loans) when they did not have more money they closed and declared bankruptcy.
Businesses stop selling, merchandise was just sit at the warehouses.
People stopped paying their debts...
Prices dropped even harder...
Most people were unemployed...
Hoover was the president of the US at that time and he chose ECONOMIC LIBERALISM as his shield... (what does this mean?)
He basically left the market regulated itself and the strongest to survive...
policy of austerity..
decrease in credits....
INTERNATIONAL CONSEQUENCES OF THE GD
International trade was the most affected.
There were protests against MacDonald program. (Laborist), so there is formed a coalition government.
Crisis affected GB relations to their Commonwealth countries, and the Statute of Westminster was made (1931). This statute recognized equality between Commonwealth members and GB.
Although crisis was not as deep as in other countries, it was really long in France. .
Countries such as Mexico, Brazil and Chile were the most affected.
The most important consequence was Import´s substitution...
Presidential elections in 1932.
Hoover failed dealing with the crisis.
Roosevelt was the democrat candidate and proposed the New Deal based on Keynes economic theory.
New Deal meant increasing purchasing power of citizens disregarding the budget deficit of the state.
Keynes explained that governments should intervene.
The New Deal worked in spite of the most privileged classes (who were told to pay more taxes) refused.
Roosevelt won again the elections of 1936 and continued with the New Deal policy.
By 1937 production levels of 1929 had been reached. The hardest part of the crisis was over.
INCREASING PUBLIC SPENDING... it is like an injection to reactivate the economy.
What were the consequences of WW1 for the United States?
Therefore, the 20s were a time of growth.
"American Way of Life"
Doors closed to migration. People were afraid of communism.
NO to the League of Nations.
Rebirth of the Ku Kux Clan (secret organization: ultra nationalist, and racist.)
Puritan policies like: "Prohibition" in 1918. Mafia, traffic, violence.
Surgimiento de políticas puritanas
The great depression
Franklin Roosevelt and the "New Deal"