1920-30’s
The 1920’s and 30’s
• For the most part the 1920’s were a time of vast prosperity in most of Europe and North America
• The 1920’s saw many changes to the way people lived
• The Prohibition movement led to the ban of alcohol in the United States
• From 1920-33 Americans turned to bootleggers like Al Capone to get their alcohol
• Capone and other gangsters ruled many of the major American cities
American Economy
• The 1920’s saw a massive shift in the economy of the United States
• Henry Ford introduced the assembly line and the Model T was the first mass produced automobile
• The assembly line helped Ford and other companies like Firestone, General Motors and Oldsmobile become massively successful
• The US economy was thriving, the automobile age was ushered in, people began to use credit to purchase goods
German Economy
• In Germany the economy was not faring so well
• The harsh conditions imposed by the Treaty of Versailles left Germany crippled
• Inflation soared as the country struggled to repay reparations to France
• The cost of bread and other house hold goods sky rocketed
The Stock Market Crash
• The prosperity of the American Economy came to a crashing to a halt on October 29th of 1929
• The New York Stock Exchange lost over half of its value in one day
• It crashed due to two main reasons:
1. Over Speculation- Too many people were playing the stocks, too much was being bought and sold too quickly
2. Buying on Margin-
• Investors were able to buy stocks only putting down 10% of the cost
• They would then turn around and sell the stock for a quick profit
Great Depression
• The Stock Market Crash did not solely cause the Great Depression but it did signal the start of this era.
• The causes were;
1. Overproduction- The industrial capacity had exceeded the ability of the consumer to buy goods
2. The Stock Market
• over speculation limited available money
3. Protectionism- The US raised tariffs to protect their industries, other countries had no choice but to follow
4. International Debt from the First World War
• The allies had borrowed heavily to finance the war effort and needed to sell their products to U.S. markets to pay the money back
5. Uneven Distribution of Wealth
• 8% of the population of the United States controlled 45% of the countries wealth
• While 60% of the countries population received only 2.5% of the countries income
• This imbalance meant that many families were living near the poverty line
• They were affected most by the Depression
Consequences of the Great Depression
• The economy of the United States was devastated which impacted economies all over the world
• There were several main consequences of the Depression;
1. Unemployment• It ran at about 25% in most industrialized
countries• There were no safety nets in place such as E.I or
welfare
• People had to rely on charity to get by and often that was not enough
• Soup lineups became common place
2. Banking Failures
• As businesses and farms went bankrupt so to went the banks
• This hurt those who lost their life savings
• It also destroyed consumer confidence
3. Changing Role of Government
• The Government took a hands off approach known as Laissez-Faire Economics
• They did not get involved feeling that it was the responsibility of the citizen to help themselves
• In the early 1930’s they were faced with little choice to get involved in the economy
Herbert Hoover
• Hoover was American President from 1928-1932
• Hoover was a wealthy mining engineer and had little apathy for those who were suffering during the depression
• He didn’t want to endanger the American way of life which was based on Free Enterprise
• He used catchy slogans such as a “car in every garage” to try and get the economy going
• This failed miserably and by early 1930 the number of unemployed in the United States was around 20 million and continuing to grow
• The Homeless and unemployed lived in communities of shacks called “Hoovervilles”
Franklin Delano Roosevelt
• Franklin Delano Roosevelt and his Democrats were swept into power in 1932
• He was to dominate American politics for the next thirteen years and is seen as one of the greatest presidents in history
• Roosevelt tried a different path to get the United States out of the Depression
• During the election campaign Roosevelt promised improvement in his first 100 days
• He wanted to tackle all immediate problems
The New Deal
• Roosevelt introduced his New Deal as a way to deal with many of the problems in America
• The New Deal was an attempt to jumpstart the economy of the United States
• He told the people of these programs through his Fireside Chats
• He was the first President to use the media as a tool
• Part of the program was the Alphabet Agencies they included:
1. Civilian Conservation Corps CCC
• Created work planting trees, employed 2.5 million people over the course of the program
2. Works Progress Administration WPA
• Financed public
Works projects
3. National Recovery Administration NRA
• Reformed labour conditions
4. Tennessee Valley Authority
• Massive public works project to build seven hydro electrical dams along the Tennessee River
5. Agricultural Adjustment Administration AAA
• Created subsidies for farmers
• Roosevelt received some resistance from the Supreme Court
• He threatened to replace all of them and they caved in
• He created the Social Security Act in 1935 with the Second New Deal
• Roosevelt's reforms helped but the U.S. didn’t come out of the depression until the start of the second world war