Rise of Dictatorships and Beginnings of WWII

1. Rise of Dictatorships and Beginnings of WWII American Made, World‐Wide Effects of the Great Depression

2. GD in Europe • https://www.youtube.com/watch?v=nyPEUgjmnVE • https://www.youtube.com/watch?v=sn1cBjCVK9I

3. Causes: Why Did Dictatorships Rise? • Extreme situations call for extreme governments • People are afraid of disorder • Sometimes, people will trade ‘order’ for ‘personal freedom’ • Sometimes, people are taught to believe that their ‘ethnicity’ is superior to other ethnicities in the world. • Sometimes, dire economical conditions , hunger, poverty force people to trade civil freedoms for authoritarian rule when a given government takes care of the people.

4. Long-Term Causes of the Great Depression • WWI led to war-induced inflation • 1920-1921 Brief Recession • Structural problems with agriculture (farmers couldn’t repay debts they took out for machinery) • Dependent economies (non-core nations) fell into trouble • Poor government leadership including protectionism

5. Image versus Reality: the crash of October 1929 leads to Great DepressionThe Great Depression: “Boom or Bust”

6. Great Depression‐ World Wide • By early 1930s, effects of American ‘crash’ felt world‐wide : Impact Economic and Political • international commerce dropped more than 60% - 70 % by early 1930s • ‐ shipping itself devastated: shipyards (building), docks (loading, unloading) declined – many shut‐down • ‐ Hit America, Britain – Europe in general

7. Great Depression‐ World Wide • Economic: • ‐ trade tariffs erected (began with US – others followed in retaliation): prices rose PROTECTIONSIM • ‐ manufacturing: lost markets (goods too expensive for consumers) • ‐ unemployment: over 30% in many countries (more than US itself 25%) • ‐ inflation: money lost value – contributed to declining markets, drop in personal income (where there was still ‘income’)

8. Great Depression – World Wide • Industrialized countries [not limited to Europe]: • ‐ heavy‐hit by tariffs: affected price of raw materials as well as manufactured exports • ‐ ‘industry substitution’ (replacing imported goods with domestic products) not realistic given shrinking domestic consumer markets (unemployment, inflation) • ‐ industry shut‐downs created massive unemployment (e.g. 3 million Britain, 6 million Germany)

9. Great Depression – World Wide • Resource‐based Countries: • ‐agriculture: crop prices world‐wide fell by more than 60% • ‐ market for ‘cash crops’ Africa, Latin America, Asia [e.g. coffee, tea, cocao, cotton, silk. . . ] quickly dried up • ‐ food crops [e.g. grains, fruits] still in demand but prices plummeted local markets • ‐ Minerals, forest products: tied to industry‐‐ lost markets everywhere where industry collapsed

10. Great Depression – World Wide • Political • ‐ degree of economic upheaval ensured political reactions • ‐ isolationism of US continued: Roosevelt elected 1932 on basis of ‘New Deal’ • ‐ range of work‐generating programs to stimulate economy • ‐ addressing overall lack of confidence in ‘capitalism’: New Deal said to have ‘saved it’ • ‐ many wondered if it should be saved

11. Great Depression – World Wide • Communism: • ‐ fear that ‘Soviet Model’ [“Stalinism and Soviet Modernization”–] would prove attractive • ‐ Communists everywhere (including US) offering ‘alternative vision’ • ‐ political reactions often severe (e.g. Germany, Britain, South Africa)

12. Great Depression – World Wide • “Nationalism”: • ‐ many countries in Europe, Asia, Africa, Latin America) turned to extreme ‘nationalism’ • ‐ Dictatorships (e.g. Brazil), racist, single‐ party ‘democracies’ (e.g. South Africa, Germany, Italy ) • ‐ military governments (e.g. Japan) ‐ anti‐colonialist agitation (Africa) • ‐ ‘western democracies’ all saw change in Government (e.g. US, Britain), beginnings of ‘welfare state’

13. Great Depression – World Wide • Recovery: • ‐ some regions began recovery by mid‐1930s but most did not see return to ‘normal’ economy until after World War II • ‐ Crash, Depression created conditions conducive to conflict (in West and East): WWII can be seen as outcome • ‐ War itself reflected inter‐war years, increasing global economic dependency– exacerbated by rise Colonialism (Africa, Middle East)

14. Great Depression – World Wide • World War II itself became major means of recovery for industrialized regions (US, parts of Latin America, South Africa, Japan) • ‐ impact even more widespread than World War I because of domino effect of Great Depression • ‐ fair to characterize era as one of ‘changing world order’ whose legacies shaped rest of 20th century

15. Great Depression – Latin America • Economy in Latin America: overwhelmingly dependent on exports in 1920s • ‐ ‘trade dependent’ economies: small industrial sectors (e.g. Brazilian coffee, Cuban sugar, Argentinean wheat) • ‐ left them highly vulnerable to changing conditions in world market for commodities • ‐ between 1929‐1931: value agricultural, mineral exports fell by two‐thirds

16. Great Depression – Latin America • major markets: US and Great Britain • ‐ imposition of tariffs by both had immediate negative impact • ‐ complicated system of removing their economies from Gold standard led to falling value many currencies • ‐ Latin American countries forced to renege( back out on) debt payments to US • ‐ in some instances, led to new US financing – increasing dependency: vicious cycle

17. Great Depression – Britain • Case Study: Britain • ‐ struggling in post WWI years, though less in debt than many other countries • ‐ as World trade slumped, prices fell , tariffis rose and credit dried up, value of British exports halved • ‐ industrial areas (especially in North) plunged into poverty • ‐ by 1930, unemployment had more than doubled to 20 per cent

18. Great Depression – Britain • Public spending cut, taxes raised (to reduce deficit): • ‐ depressed economy, cost even more jobs • ‐ 1931 pound devalued by 25 per cent to help exporters, start economic recovery. • ‐ Through the 1930s, poverty and unemployment blighted large areas of Wales northern England (coal producing regions) • ‐ 1933 Glasgow (Scotland) 30% unemployment

19. Great Depression – Britain • PM, Ramsey MacDonald , continued till 1931 with a heavy economic burden of mass unemployment • Forced to borrow from US as the government tried to help the unemployed • The R. MacDonald Labour Party government fell to be replaced by the coalition government • The strong coalition government adopted several strong economic measures

20. GB actions to stimulate the Economy • Ended its use of the Gold standard in September 1931 , making its products cheaper to importing countries • Established the system of imperial preference • Made lending rates cheaper to stimulate construction of homes

21. GB actions to stimulate the Economy • Trade Barrier • A government policy to restrict trade with other countries usually by placing high taxes on foreign imports so that domestoc goods can be sold more cheaply • Imperial Preference • A system of commerce created by lowering import taxes between areas of an empire , while increasing taxes on imports from countries outside of Empire.

22. Migration • Both France and GB had exported their surplus population to North America as well as southern Asia and to Oceania to deal with the Depression • Many left to settle in the League of nations mandated countries

23. The United States • Election of Warren Harding in 1920 opens an era of U.S. withdrawal from most European affairs. • Americans are angry that most European nations are not repaying their war debts. • U.S. politics is dominated by prohibition and and rising power of Wall Street. • Farmers are having a very hard time.

24. The Dawes Plan

25. Disarmament The U.S. used its financial power to persuade Britain, Japan and others to reduce the size of their navies – the 1922 Naval Limitations agreement will remain in force for over 10 years.

26. Political Effects • The Great depression brought political crises to several countries, often leading to coalition governments that were relatively unstable. • Other countries saw long- established governments voted out in preference for an alternative. • Political parties and governments throughout the world feared violence and the spread of communism ideology, which seemed to go hand in hand to many observers.

27. Strong Economy Between 1922 and 1928 the U.S. gross national product, or total value of all goods and services, rose 40 percent. Though farmers and some other workers didn’t benefit, the overall economy performed well, especially for automakers and those who made auto parts. Overall unemployment remained low, averaging around five percent between 1923 and 1929. Union membership slowed as employers expanded welfare capitalism programs, or employee benefits. This feeling of prosperity encouraged workers to buy new products and enjoy leisure activities such as movies. Strong Stock Market The stock market, where people buy stocks, or shares, in companies, performed very well in the 1920s, with stock values sharply increasing each month. The value of stocks traded quadrupled over nine years. The steep rise in stock prices made people think the market would never drop, and more ordinary Americans bought stocks than ever before. The number of shares traded rose from 318 million in 1920 to over 1 billion in 1929. Business leaders said everyone could get rich from stocks. US:TheAppearance of Prosperity

28. Many Americans thought the prosperity of the 1920s proved the triumph of American business, and public confidence in government was high. • Presidents Harding and Coolidge both favored policies that helped business, and both were very popular, easily winning elections. • When Coolidge didn’t run for reelection in 1928, the Republicans easily chose Herbert Hoover. • Hoover had been on Harding and Coolidge’s cabinets, had overseen America’s food production during World War I, and had an outstanding reputation as a business-like administrator. • Hoover’s opponent was New York governor Al Smith, an outgoing politician with a strong Brooklyn accent, whose support came mostly from cities. • Smith was the first Catholic to run for president. He faced prejudice because of his religion, and because of his opposition to Prohibition. • Hoover easily won the election, but the race clearly demonstrated the conflicts dividing the nation in that era. High Hopes Faith in business and government The election of 1928

29. Economic Weaknesses • While many Americans enjoyed good fortune in the 1920s, many serious problems bubbled underneath the surface. • One problem in the American economy was the uneven distribution of wealth during the 1920s. • The wealthiest one percent of the population’s income grew 75 percent, but the average worker saw under a 10 percent gain. • For most Americans, rising prices swallowed up any increase in salary. • Coal miners and farmers were very hard hit, but by 1929 over 70 percent of U.S. families had too low an income for a good standard of living. • Four out of every five families couldn’t save any money during the so-called boom years. • Credit allowed Americans to buy expensive goods, but by the end of the decade many people reached their credit limits, and purchases slowed. • Warehouses became filled with goods no one could afford to buy.

30. Impact on Individuals Though some thought the market would rally, countless individual investors were ruined. Margin buyers were hit the hardest, because brokers demanded they pay back the money they had been loaned. To repay the loans, investors were forced to sell their stocks for far less than they had paid, and some lost their entire savings making up the difference. In the end, many investors owed enormous amounts of money to their brokers, with no stocks or savings left to pay their debts. Effects on Banks The crash triggered a banking crisis, as frightened depositors rushed to withdraw their money, draining the bank of funds. Many banks themselves had invested directly or indirectly in the stock market by buying companies’ stocks or by lending brokers money to loan to investors on margin. When investors couldn’t repay margins, banks lost money, too. These failures drove many banks out of business. Effects of the Crash

31. The Stock Market Crashes • The steady growth of the early 1920s gave way to astounding gains at the end of the decade until its September 3, 1929, peak. • Many people were beginning to see trouble as consumer purchasing fell and rumors of a collapse circulated. • On Thursday, October 24, 1929, some nervous investors began selling their stocks and others followed, creating a huge sell-off with no buyers. • Stock prices plunged, triggering an even greater panic to sell. • Toward the end of the day, leading bankers joined together to buy stocks and prevent a further collapse, which stopping the panic through Friday. • But the next Monday the market sank again, and Black Tuesday, October 29, was the worst day, affecting stocks of even solid companies. • The damage was widespread and catastrophic. In a few short days the market had dropped in value by about $16 billion, nearly one half of its pre-crash value.

32. Impact on Europe • The fragile economies of Europe were still struggling from World War I. They had borrowed a great deal of money from American banks that the banks now wanted back. • With U.S. buying power down, foreign businesses were less able to export their products and were forced to fire workers. • Governments tried to protect themselves by passing high tariffs, making foreign goods expensive. Impact on Business • The crash crushed businesses, because banks couldn’t lend money. • Consumers also cut back their spending on everything but essentials, and companies were forced to lay off workers when demand decreased. • Unemployed workers had even less money to make purchases, and the cycle continued. • In the year after the crash, American wages dropped by $4 billion and nearly 3 million people lost their jobs. The decline in world trade in the 1930s created misery around the world and contributed to the nation’s slide into the Great Depression. More Effects of the Crash

33. Investors increasingly used credit to buy stocks as the market rose. The Federal Reserve • The board of the Federal Reserve, the nation’s central bank, worried about the nation’s interest in stock and decided to make it harder for brokers to offer margin loans to investors. • Their move was successful, until money came from a new source: American corporations who were willing to give brokers money for margin loans. • Buying continued to rise. Buying on Margin • Investors were buying on margin, or buying stocks with loans from stockbrokers, intending to pay brokers back when they sold the stock. • As the market rose, brokers required less margin, or investors’ money, for stocks and gave bigger loans to investors. • Buying on margin was risky, because fallen stocks left investors in debt with no money. • If stocks fell, brokers could ask for their loans back, which was called a margin call. Credit and the Stock Market

34. Impact on Europe • The fragile economies of Europe were still struggling from World War I. They had borrowed a great deal of money from American banks that the banks now wanted back. • With U.S. buying power down, foreign businesses were less able to export their products and were forced to fire workers. • Governments tried to protect themselves by passing high tariffs, making foreign goods expensive. Impact on Business • The crash crushed businesses, because banks couldn’t lend money. • Consumers also cut back their spending on everything but essentials, and companies were forced to lay off workers when demand decreased. • Unemployed workers had even less money to make purchases, and the cycle continued. • In the year after the crash, American wages dropped by $4 billion and nearly 3 million people lost their jobs. The decline in world trade in the 1930s created misery around the world and contributed to the nation’s slide into the Great Depression. More Effects of the Crash

35. The true measure of the Great Depression’s disaster lies in how it affected the American people. Hoboes • Hoboes were mostly men, but included teens and women. • Boarding trains was hard and illegal, and railroads hired guards to chase hoboes away. • Finding food was a constant challenge, because people had little to spare and rarely shared with hoboes. • Hoboes developed a system of sign language to warn of possible dangers or opportunities. Hoovervilles • Thousand applied for a handful of jobs, and job loss resulted in poverty for most Americans. • To survive, people begged door to door, relied on soup kitchens and bread lines. Some went hungry. • Some who lost their homes lived in shantytowns, or Hoovervilles, named after President Hoover who many blamed for the Great Depression. The Human Impact of the Great Depression

36. The Emotional Impact of the Depression • The Great Depression’s worst blow might have been to the minds and spirits of the American people. • Though many shared the same fate, the unemployed often felt that they failed as people. • Accepting handouts deeply troubled many proud Americans. Their shame and despair was reflected in the high suicide rates of the time. • Anger was another common emotion, because many felt the nation had failed the hardworking citizens who had helped build it.

37. Hoover’s Philosophy • Herbert Hoover came to the presidency with a core set of beliefs he had formed over a long career in business and government service. • He had served in the Harding and Coolidge administrations and shared many of their ideas about government’s role in business, favoring as little government intervention as possible. • Hoover believed unnecessary government threatened prosperity and the spirit of the American people. • A key part of this spirit was something he called “rugged individualism.” Hoover didn’t reject government oversight or regulation of certain businesses or think businesses should do exactly as they pleased, but he thought it was important not to destroy people’s belief in their own responsibility and power.

38. From 1929 to 1932, President Hoover was criticized for not doing more to end the depression Tens of thousands of businesses failed and unemployment rose to 25% The American banking system collapsed Hoover initially relied on rugged individualism but offered relief checks and job programs, but it was seen as too little, too late

39. By the election of 1932, Hoover ran for re-election but Americans wanted hope and strong leadership Democratic candidate Franklin Roosevelt defeated Hoover and won the presidency

40. In his inaugural address, FDR inspired hope, declaring “the only thing we have to fear is fear itself” When Roosevelt was inaugurated as president, unemployment was at an all-time high “Let me assert my firm belief that the only thing we have to fear is fear itself; nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance.”

41. When FDR became president be promised decisive gov’t action to fight the depression FDR believed the gov’t should use deficit spending (spending that causes debt) to stimulate the economy

42. In his first 100 days in office, FDR and Congress passed a broad platform of legislation to attack the depression called the “New Deal”

43. FDR’s first action was to address the bank crisis By 1933, 25,000 banks had failed and the USA was in a complete financial collapse FDR declared a four-day “bank holiday”: all banks were closed and inspected by federal regulators to determine which banks were healthy… …Only healthy banks could reopen after the bank holiday

44. The New Deal focused on the three “Rs”

45. U.S. • Franklin Roosevelt’s New Deal offered more direct aid to citizens, put people back to work on infrastructure projects and established systems like Social Security • As a result, the U.S. did not experience extreme political movements

46. Military Programmes • Rearmament were politically impossible as governments could not invest into battleships or warships • Italy and Germany would take advantage of the situation by starting to rebuild their military arsenal

47. France • France was different from UK as UK had to import all the raw materials where in France, the majority was employed in agriculture and France had a vast amount of natural resources. It was self-sufficient in food production. • Imperial preference was used similarly to Uk where France created a large trade network with its colonies.( exclusive trade zone) • Created a strong army conscription to occupy the youngsters • No mass unemployment as the government sent back all foreign workers ( only half a million unemployed comparatively to US and UK ) • The government was unstable. Coalition government

49. Effects of the Crash • Social ills led to questioning liberal democracy as a form of government • many citizens didn't have experience with democracy so there were frequent changes in government • This led to weak governments and a slow rise in totalitarian leadership • Soviet Union largely untouched because it was cut off from the global market • Japan severely affected because of dependence on exports and low demand for main export of silk (down 50%) • L. America- led to new state involvement in economy

50. Responses in Western Europe • First reaction- close and protect, cut down spending-exacerbated situation • Political polarization, as liberal governments appear too weak to solve problems • Parliamentary system became ineffective or overturned • Government help in Scandanavian countries