economy in the interwar period
TRANSCRIPT
ECONOMY IN THE INTERWAR PERIOD
PEDRO FLORES. IES SAN JUAN BAUTISTA. 4º ESO
AFTER WWI
• HUMAN AND MATERIAL LOSSES.
• DESTRUCTION OF NATIONAL ECONOMIES
• HUGE FINANTIAL COSTS
• MONETARY POLICIES = INFLATION
ECONOMIC CONSEQUENCES OF WWI
ECONOMIC CONSEQUENCES OF THE PEACE TREATIES
• WAR REPARATIONS TO THE LOSER COUNTRIES.
• THE END OF PLURINATIONAL EMPIRES AND THEIR ECONOMIES.
• GERMANY LOST INDUSTRIAL AND MINING REGIONS.
ECONOMIC CONSEQUENCES OF WWI
EFFECTS ON INTERNATIONAL ECONOMY
• TRADE IMBALANCE BETWEEN INDUSTRIALISED AND NON-INDUSTRIALISED COUNTRIES.
• DISORGANIZATION OF THE INTERNATIONAL MONETARY SYSTEM.
• END OF THE GOLD STANDAR = INFLATION.
ECONOMIC CONSEQUENCES OF WWI
• UNITED STATES BECAME THE ECONOMIC LEADING POWER = FIRST FINANTIAL, INDUSTRIAL AND TRADING POWER.
• THE DOLLAR IS THE MAIN INTERNATIONAL CURRENCY.
• EUROPE LOST ECONOMIC AND FINANTIAL POWER.
DECLINE OF EUROPE AND RISE OF USA
Sharing of the world production of goods (%).
Gold reserves in the main industrial countries (1=1.000.000.000 dollars).
1919 – 1920 = BRIEF ECONOMIC RECOVERY
ECONOMIC CRISIS AFTER WWI
EUROPEAN RECONSTRUCTION AND CHEAP LOANS.
ECONOMIC GROWTH AND DEBT INCREASE = HIGH PRICES (INFLATION).
USA STOPPED BORROWING LOANS = RECESION.
Demonstration of unemployed workers in London (1921).
THE INFLATIONIST PROBLEM
• USA AND GB STOPPED INVESTING PUBLIC FUNDS = CRISIS.
• GERMANY WAS AFFECTED BY HYPERINFLATION. BECAUSE IT HAD TO PAY WAR REPARATIONS, THE STATE ISSUED HUGE QUANTITIES OF MONEY.
• GERMANY COULD NOT PAY = FRENCH OCCUPATION OF THE RUHR (1923).
ECONOMIC CRISIS AFTER WWI
German children playing with money (German marks).
EFFECTS ON INTERNATIONAL ECONOMY
GENOA CONFERENCE (1922) = BACK TO THE GOLD STANDARD.
THE ECONOMIC RECOVERY (1921-1925)
DAWES PLAN
HELP THE GERMAN ECONOMY:- Reduce the war reparation.- American loans.- New currency
(REICHSMARCK).
WORLD ECONOMY DEPENDS ON THE INVESTMENTS OF USA.
Reichsmarck
THE ROARING TWENTIES IN USA
• NEW INDUSTRIES = Automobile, electricity, electrical appliances, chemic industry…
THE ROARING TWENTIES
• NEW ENERGY SOURCES = electricy and oil.
• MASS PRODUCTION = mecanisation, taylorism, fordism.
• MASS CONSUMPTION = advertising, hire-purchase.
Ford factory in Detroit.
FROM PROSPERITY TO DEPRESSION
THE ‘29 CRASH AND THE GREAT DEPRESSION
Prosperity Depression
CAUSES OF THE 1929 CRASH
• CRISIS IN TRADITIONAL SECTORS (textile, coal, iron) AND AGRICULTURE.
• DROP IN PURCHASING POWER AND ABUSE IN THE USE OF LOANS.
• HOWEVER, NEW YORK STOCK MARKET CONTINUED TO GROW.
THE ‘29 CRASH AND THE GREAT DEPRESSION
SHARES ARE MORE EXPENSIVE THAN THE BUSSINESS PROFIT = SPECULATIVE BUBBLE.
CAUSES OF THE 1929 CRASHINVESTORS STARTED TO SELL THEIR SHARES IN SPRING 1929
THE ‘29 CRASH AND THE GREAT DEPRESSION
24th OCTOBER. BLACK THURSDAY
DECREASE OF THE SHARES’ PRICES
PANIC!
29th OCTOBER. BLACK TUESDAY
Soon a much hotter business than show business attracted my attention, and the attention of the country. It was a little thing called the stock market. (…). For example, if you bought eighty thousand dollar’s worth of stock, you only had to put up twenty thousand dollars in cash. The balance you would owe to the broker. It was like stealing money. (…) Up and up the market soared. (…) The most astonishing thing about the ’29 market was that no one ever sold a stock. The public just kept buying. (…). The plumber, the iceman, the butcher, the baker, all of them panting to get rich, were tossing their puny salaries – and in many cases, their life’s savings – into Wall Street. (…). One special day, the market began wavering. A few of the more nervous customers got the jitters and began to unload. (…). At first the selling was orderly, but soon fright kicked judgement out of the way and everyone began tossing their securities into the bull ring (…) and the brokers began dumping securities for whatever they would bring. (…). Then, one spectacular Tuesday, Wall Street threw in the towel and collapsed. The towel was an appropriate gesture, for by this time the whole country was crying.
Groucho Marx. Groucho and me. 1981.
STOCK MARKET CRASH
THE GREAT DEPRESSIONTHE ‘29 CRASH AND THE GREAT DEPRESSION
PEOPLE LOST THEIR SAVINGS
Reduction of consumption, loans and investments
PEOPLE WANTED TO WITHDRAW THEIR SAVINGS FROM BANKS
BANKS HAD TO CLOSE AND WENT BANKRUPT
INDUSTRIAL CRISIS (50% less production) UNEMPLOYMENT AND POVERTY
Shanty town in Seattle in 1937
Immigrant camp in California in 1937
THE GREAT DEPRESSIONTHE ‘29 CRASH AND THE GREAT DEPRESSION
FROM USA THE CRISIS EXTENDED TO EUROPE
THE SPREAD OF THE CRISISTHE ‘29 CRASH AND THE GREAT DEPRESSION
INTERNATIONAL TRADE INTERNATIONAL FINANCES
PROTECTIONIST POLICY (SMOOT-HAWLEY LAW 1930)
REPATRIATION OF CAPITALS (end of investments in Europe)
Finantial Committee of the American Senate. It passed the Smoot-Hawley Law.
BUSSINESS CLOSINGS
SOCIAL CONSEQUENCESTHE ‘29 CRASH AND THE GREAT DEPRESSION
UNEMPLOYMENT
It affected workers, peasants and middle class.
POLITICAL RADICALISATION
REVOLUTIONARY MOVEMENTS (COMMUNISM) AND EXTREME RIGHT MOVEMENTS.
Hunger March in London in 1932.
SOCIAL CONSEQUENCESTHE ‘29 CRASH AND THE GREAT DEPRESSION
German unemployed workers waiting for their dish of soup in 1930
TRADITIONAL THEORIES
PROPOSALS FOR EUROPETHE ‘29 CRASH AND THE GREAT DEPRESSION
DEFLATIONATY POLICIES (reduce prices to increase consumption)
PROTECTIONISM
INTERNATIONAL CONFERENCE OF LONDON (1933)
Try to fight together the crisis
NO AGREEMENTS
NEW MEASURES based on KEYNES
THE NEW DEALTHE ‘29 CRASH AND THE GREAT DEPRESSION
ROOSEVELT (1933) = NEW DEAL
• RESTRUCTURING THE BANKING SYSTEM.• CONTROL THE STOCK MARKET.• PUBLIC INVESTMENT.• REDUCE AGRARIAN PRODUCTION.• SOCIAL IMPROVEMENTS.• BEGINNING OF THE WELFARE STATE.
Advertising campaign supporting the New Deal.
GREAT BRITAIN
SOLUTIONS IN EUROPETHE ‘29 CRASH AND THE GREAT DEPRESSION
FRANCE
GERMANY
PROTECTIONISM AND TRADE WITH ITS COLONIES
SOCIAL POLICIES OF THE POPULAR FRONT’S GOVERNEMNT (Socialists and communists).
STATAL INTERVENTION = ARMS INDUSTRY
Arms industry in Germany.