interwar years: usamrdelara.weebly.com/.../4/8/0/7/48074203/interwar_-_usa.pdf · 2019-09-18 ·...
TRANSCRIPT
Interwar Years: USAThe Good and The Bad Times
The Good Times
In the United States:
Following WWI the United States entered a period of isolation.
Why did this happen?
This era of isolation became known as ‘The Roaring 20s.’
A time that saw dramatic changes emphasizing the period's social, artistic, and cultural dynamism.
Several inventions and discoveries, unprecedented industrial growth and accelerated consumer demand and aspirations, and significant changes in lifestyle.
1920’s
The 1920s
‘The Roaring Twenties’ is viewed as an era of
great economic prosperity driven by the
introduction of a wide array of new consumer
goods.
The North American and US economy transitioned
from a wartime economy to a peacetime
economy; the economy boomed!
It’s industry aligned to mass production and its
society pushed headfirst into consumerism.
Despite the wealth of many, millions of people
lived below the poverty line of US $2,000 per
year per family.
Brought cheap mass-produced vehicles (US
and Canada)
By 1927, Henry Ford had sold 15 million
Model Ts. Only about 300,000 vehicles
were registered in 1918 in all of Canada,
but by 1929, there were 1.9 million.
The auto industry's effects were
widespread, contributing to such disparate
economic pursuits as gas stations, motels,
and the oil industry.
Radios were affordable and revolutionary.
It was used for entertainment and
marketing.
The 1920s
In 1922, the Fordney-McCumber tariff (we’ll get to
this later) was passed. Allowed American businesses
to flourish by protecting them from foreign
competition.
Republican government favoured a laissez-faire
(hands off) approach. Income tax was cut, especially
the higher rate (from 73 to 25%)
The Revenue Acts of 1921, 1924, and 1926 led to
further and further cuts.
By 1924, the top tax rate fell to 46 percent (income over
$500,000). The top rate was just 25 percent (income over
$100,000) from 1925 to 1928, and then fell to 24 percent in
1929…..what are the consequences of this?
The 1920s
The tax cuts allowed the U.S.
economy to grow rapidly during the
mid- and late-1920s. W
Between 1922 and 1929, real gross
national product grew at an annual
average rate of 4.7 percent.
The unemployment rate fell from 6.7
percent to 3.2 percent.
The 1920s
By 1922 - 1928, the average income reported on tax returns of those earning more than $100,000 increased 15 percent, (the number of taxpayers in that group almost quadrupled).
During the same period, the number of taxpayers earning between $10,000 and $100,000 increased 84 percent, while the number reporting income of less than $10,000 fell.
What does all of this mean?
The 1920s
The booming economy and widespread advertising, led to a shift in consumer attitudes. This encouraged greater spending through credit. This also extended to the stock market.
Lets talk about lending…….
A structural weakness in the US economy was the limited reserves of small and medium sized regional banking companies
The 1920s
Tariffs
Fordney McCumber
The Fordney McCumber tariff was created in 1922 with the idea of insulating American industry. Allowing it to grow while limiting outside competition.
Congress displayed a pro-business attitude in passing the tariff and in promoting foreign trade through providing huge loans to the postwar Allied governments who returned the favor by buying American goods and by cracking down on strikes
In the end, the tariff law raised the average American tariff rate to 38 percent.
Hawley Smoot
When the Stock Market crashed the Americans sought to protect industry and develop on own in a bid to recover.
The Hawley-Smoot tariff was passed on June 17, 1930, that raised U.S. tariffs on over 20,000 imported goods to record levels.
In the United States 1,028 economists signed a petition against this legislation, and after it was passed, many countries retaliated with their own increased tariffs on U.S. goods, and American exports and imports plunged by more than half.
Can you see a problem developing here?
…BACK TO POLITICS…
Wilson’s Internationalism
Despite Wilson’s national campaign to gain support, the Democrat Wilson and his ideas of internationalism, fell to the Republican dominated Congress (Senate led by Henry Cabot Lodge) and their ideas of nationalism and isolationism.
Wilson’s national campaign led to ill health and a debilitating stroke in 1919- this weakened the campaign to gain internationalist support at home.
A very clear split emerged in the U.S that led to them not ratifying the Treaty of Versailles and subsequently joining the League of Nations.
Wilson’s Internationalism
The U.S showed the world very clearly that they had no intention of joining ‘world affairs’ following WWI.
Of the major nations involved they probably got away with the least amount of domestic consequences.
When the U.S. did not ratify the Treaty of Versailles, and subsequently did not join the League, the prospect of them leading the world disappeared.
The U.S. would focus heavily on their own domestic development
Wilson’s Internationalism
When the U.S. turned inward they adopted a policy of ‘isolationism’. This isolationism spawned from a nationalist mentality that drove the gov’t to think that Europe’s problems were not global problems, therefore there was no reason to be a part of them.
Unprecedented growth would carry the U.S. into the ‘roaring 20s’
Wilson’s Internationalism
The U.S. did get involved internationally-we have seen that they signed on to the Washington Conference, the Dawes Plan, and later the Kellogg-Briand Pact.
The world relied on their economy because it was so strong despite high tariffs.
In order to protect domestic industry the U.S. put in place the Fordney-McCumber tariff in 1922 and the Hawley-Smoot tariff in 1930.
US Do Not Join
Tariffs made it difficult to trade with the U.S and for countries that were suffering from WWI and in debt to the Americans life became hard.
Many countries responded in kind by raising tariffs on certain goods.
Despite the policies, stability found a way across the global economy for the latter part of the 20s. Only when the stock market crashed did things turn upside down.
The Bad Times
Stock Market Crash
It started on October 24 ("Black Thursday") and continued through October 29, 1929 ("Black Tuesday"), when share prices on the New York Stock Exchange (NYSE) collapsed
Reasons for the Collapse
The rising share prices encouraged more people to invest, as they hoped the shares would rise further, thus fueling further rises, and creating an economic bubble.
On October 24, 1929, speculation ended and panic selling set in. 12,894,650 shares were traded in the space of one day, as people desperately tried to dispose of their shares before they became worthless.
Reason for the Collapse
The banks which had lent heavily to fund share buying
found themselves saddled with debt, which caused
many banks to go bankrupt.
While millions of people lost their savings, businesses
lost their credit lines and customers, and were forced
to close, which caused massive unemployment.
The Smoot-Hawley Tariff Act applied tariffs to more
than 3,200 products.
The tariff rates were very high—averaging 60%.
Other countries responded by enacting their own tariffs
against U.S. goods in retaliation
The Great Depression
The Great Depression was a worldwide
economic downturn which started in 1929
Unemployment and homelessness soared.
Construction virtually halted in many
countries. Farmers and rural areas suffered
as prices for crops fell by 40-60%.
Many economists at the time argued that
the sharp decline in international trade
after 1930 helped to worsen the
depression, especially for countries
dependent on foreign trade.
The Great Depression
Most historians and economists assign
the American Smoot-Hawley Tariff Act
of 1930 part of the blame for
worsening the depression by reducing
international trade and causing
retaliation.
Foreign trade was a small part of
overall economic activity in the
United States; it was a much larger
factor in most other countries. The
average rate of duties on imports for
1921-1925 was 25.9% but under the
new tariff it jumped to 50% in 1931-
1935.