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