<ul><li>In a capitalist economy, fluctuations of different lengths and severity are to be expected. But the Great Depression was world wide, and a shock to most economists. </li></ul><ul><li>Before WWI, saw the greatest migration to the U.S. in history. Some 15 million came to seek jobs and a better life. In the next 15yrs. It was down to 51/2 million, then in the 30s and 40s the flow of people almost stopped, and the world economy was in a slump. Some say it was because the U.S. was becoming self-sufficient and not dependent on world trade. Others believe it was because each country tried to do it’s best to protect it’s own economy against threats form outside interests. </li></ul>
<ul><li>Private savings dried up completely and so did money for business. During the 1920’s unemployment was high in Europe and the U.S. When the N.Y. stock market crashed in 1929, it looked like the collapse of capitalist world economy. This recession in U.S. economy spread to the other industrial heartland, Germany. Production of food and raw materials around the world declined drastically. Farmers tried to compensate falling prices by growing more crops, which only made things worse, prices fell further. In Brazil, coffee growers took to burning coffee in their steam engines instead of coal. </li></ul><ul><li>The only country who succeeded in eliminating unemployment was Nazi Germany between !933-38. </li></ul>
<ul><li>Social security and long term unemployment benefits were virtually non-existent in the U.S., and Britain, Canada, Scandinavia and the U.S. abandoned the gold standard, (regarded as the foundation of stable international exchange). And Belgium, the Dutch and France, did the same with the bullion. And Great Britain abandoned free trade, which had been central to their economy since the 1840s. </li></ul><ul><li>A consequence to the slump in the economy the U.S. passed the Social Security Act in 1935. </li></ul><ul><li>During this time the Soviet Union prospered, their industrial production tripled and they had no unemployment. How could this happen? Political and economic planning, the Soviet’s had a 5 year plan. </li></ul>
<ul><li>At the 1919 Versailles peace conference, vast undefined payments were imposed on Germany making her solely responsible for WWI, and these fines were to be reparations for the cost of the war. France’s object was to keep Germany week and unable to wage war. A price was fixed at 132 billion gold marks, which was a known fantasy. This forced Germany into heavy borrowing from the U.S. The whole arrangement made both Germany and Europe sensitive to the U.S. market, and with the crash in 1929, the hole house of cards came crashing down. </li></ul>
<ul><li>Some believe the market crashed because the U.S. being the leader in world trade, was mostly self reliant and didn’t need other countries to sustain. Others say it was the failure of the world economy to generate enough demand for a lasting expansion. People were more interested in putting food on the table than buying a new Ford. </li></ul>
Roosevelt and Hitler: New Deal and Nazi Reactions to the Depression <ul><li>The Great Depression affected most of the world in 1933, and the hardest hit was the U.S. and Germany. Around 15 million were unemployed in the states and 6 million in Germany. </li></ul><ul><li>Roosevelt and Hitler both took the head office of their countries early that year. Roosevelt had a prominent upbringing, the best schools and a wealthy family. He was governor of N.Y. for two terms. His understanding of economics was limited, but the White House was ready for a change. </li></ul><ul><li>Hitler had a modest upbringing, he was a poor student and lazy. He dropped out of school at 14, and drifted around Vienna for a few years cultivating his anti-Semitic ideas. He served as a corporal in WWI and later became part of the National Socialist Party, a violent group. </li></ul>
<ul><li>Both men were appealing to their social and economic opposites, Roosevelt to industrial workers, farmers, and the unemployed, and Hitler to shopkeepers and peasants, and later to industrialists, landowners, and the military. Both exerted a great influence on their people. Roosevelt had concern for his people, he was charming, confident, and had an easy way about him that was appealing to most Americans. Hitler resented the rich, was ruthlessly determined, his speeches verged on hysteria and his aura of greatness, seemed to hypnotize his people. Both men were masters on the radio, Roosevelt had his “fireside chat” and Hitler raged in his speeches, and both put unemployment at the top of their lists. The Nazi’s offered subsidies and tax rebates to companies who hired new workers. They started a public works program that included, railroad, navigation, construction, and building of the autobahn. </li></ul>
<ul><li>Americas work program, while smaller was impressive. Congress set up a $3.3 billion dollar program which put more than 4 million people to work, and set aside funds for the unemployed. Later came the WPA and the PWA, which put more millions to work on public construction projects. The Nazi’s spent little on arms before 1935, while the U.S. spent $842 million on arms in the same period. Both men started work camps for the youth’s, and had interests in improving the physical fitness of their young men as potential soldiers, in case of a national emergency. </li></ul><ul><li>In Germany, the head money men demanded an authoritarian solution that would eliminate the influence of organized labor and increase their own control over the economy. In the U.S. big business interests had no problem with the existing order, but called the suspension of the antitrust laws in order to end competitive price cutting. </li></ul>
<ul><li>The Nazi’ created a complex system of 13 estates governing all branches of industry. These estates were cartels and the whole system was controlled by the minister of economics. In the U.S. a system of self-governing industrial codes was established under the National Recovery Administration (NRA) that was in the same pattern. Each industry was to draft it’s own code, but when it bogged down, a blanket code called “ the President’s Re-employment Agreement” was drafted. This code dealt with price fixing, and set a minimum wage and maximum hours of work, and gave workers the right to form unions and bargain collectively. </li></ul><ul><li>In 1936 both governments were abandoning corporatism and taking a more anti-big-business stance. The U.S. Supreme Court ruled the NRA unconstitutional, and the Wagner Labor Relations Act was passed. This was more effective, and gave workers more union rights. The Public Utility Holding Co. Act, made pyramiding of control of gas and electric corp. illegal and gave the government power to regulate utility rates. The Social Security Act of 1935, provided for old age and unemployment insurance. </li></ul><ul><li>In Germany, the Nazi’s limited the size of corporate dividends, they operated steel, auto, and other facilities and raised taxes on private and corporate enterprises, freedom of management decision making was ended. </li></ul>
<ul><li>In 1936 the Nazi’s started preparing for war. They put strict controls on imports so they could conserve foreign trade needed to buy raw materials for war munitions. This put most industries under Nazi control. They started making synthetic oil, rubber, and vehicles. Hitler disbanded the unions, and forced all workers into the German Labor Front under Nazi rule. It was under Hitler that the Volkswagen bug was built, they called it” the people’s car”’. </li></ul><ul><li>The New Deal and the Nazi’s both sought to organize commercial agriculture to increase farm income. The purpose was to raise prices and farm income through subsidies. Both Roosevelt and Hitler idealized rural life and the virtues of life on the farm. Hitler called the German farmers “the foundation and life source of the state” </li></ul><ul><li>Under the Resettlement Administration, Roosevelt wanted to move people from the city to farms, but this produced only slight results. The Nazi’s tried the same thing, with limited results. </li></ul>
<ul><li>Both the Nazi’s and the New Deal tried to influence public opinion. The Nazi’s used parades, banners , rallies, and propaganda. The New Deal had it’s slogan “We Do Our Part”, and the NRA had their Blue Eagle symbol. Roosevelt said at one of his fireside chats, that the Blue Eagle was a “bright badge" in the cause for freedom. The two regimes also called for personal leadership more forceful than normal times. Hitler and the Nazi’s were impressed with Roosevelt's New Deal. Some of the Presidents speeches were translated into German and reviewed by the Nazi’s. </li></ul><ul><li>Both regimes justified constitutional changes are necessary for improvement of economic conditions in times of depression. Hitler wanted unquestioning obedience to one’s leader, and Roosevelt was more flexible, and was willing to experiment with new ideas. </li></ul><ul><li>Although the two systems had some similar programs to fight poverty, the Nazi’s used threatening force to get their way, and in the end neither could maintain prosperity without war. </li></ul>
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