The document provides background on the causes of the Great Depression. It identifies 10 key factors: 1) Crisis in the farm sector due to overproduction and falling prices; 2) Uneven distribution of wealth concentrated among the wealthy; 3) Industrial overproduction as businesses produced more than consumers could buy; 4) Trade tariffs that restricted international trade; 5) Speculation in the stock market that created an unsustainable bubble; 6) The stock market crash of 1929 that wiped out billions in assets; 7) Depositor panics as banks ran out of reserves; 8) Businesses cut production in response, worsening unemployment; 9) President Hoover's stubborn adherence to laissez-faire policies despite the worsening crisis;

2. 7.1: Causes of the Great
Depression

3. 1. Crisis in the Farm Sector
 New inventions (mechanized cotton
picker, tractor) corresponded with new
demand from Europe for food
 Farms began to overproduce
 Caused a drop in prices farmers
produce more to make the same
profitmore overproduction, etc.
 Farmers couldn’t pay back loans they
had taken out during World War I
 Foreclosures, Dust Storms,
Environmental Devastation

4. 2. Uneven Distribution of Wealth
 The wealthy prospered during the
1920s
 A middle class emerged, but was
very small
 In 1929, the top 5% of America
owned 33% of the wealth
 Wealthy have proportionally less
demand for “durable” goods 
appliances, cars

5. 3. Industrial Overproduction
 1920s Businesses assumed they would be able to sell
everything they produced
 New technologies of the 1920s (like the assembly line)
allowed production on an unprecedented scale
 Consumers could not keep up with production
 Warehouses began to pile up with inventory.
 Businesses fired workers to slow down production.

6. 4. Trade Tariffs
 Tariff is a tax on imports (imports are goods that
enter the country).
 During the 1920s, America had high
tariffsEurope retaliated with high tariffs
 Meant that overproduction of American goods
could not be sold to Europe

7. 5. Speculation
 For the first time, ordinary
middle class Americans began
investing in the Stock Market
 This created a bubble where
people assumed it would grow
forever
 Investors began taking out
short-term loans to invest in the
Stock Market
 Called “buying on margin”

8. 6. The Crash
 The bubble burst in late October 1929
 “Black Tuesday” October 29, 1929
 Stock prices dropped rapidly
 Investors began to liquidate (sell) their
stocks while they still could
 In September of 1929, the Dow Jones
was at 381. By July 1932, it had fallen
to 41.
 Billions of dollars in assets
evaporated.
 People that had bought on margin
couldn’t pay their loans back. Banks

9. 7. Depositor Panic
 As people defaulted (couldn’t pay
back) on their loans, banks’
reserves became depleted
 Nervous depositors scrambled to
the bank to withdraw their funds
before the Bank’s reserves ran out
 This panic caused banks’ reserves
to run out.

10. 8. Business Response
 Businesses needed loans to
continue to expand. Banks had no
more money to lend.
 Businesses continue to
accumulate inventory until they
layoff workers
 More unemployment means even
less people can buy more
unemployment less people to

11. 9. Hoover’s Stubbornness
 Hoover subscribed to the economic theories of
his day: Protectionism, Laissez Faire, and Fiscal
Discipline
 Believed that the reason for the depression was
that too much money was leaving the country
 Congress Raised tariffs (Smoot-Hawley Tariff)
 Made it more difficult for businesses to sell abroad,
creating more unemployment
 Hoover also felt it necessary to cut spending and
raise taxes to make up for the deficit caused by
the depression

12. 10. The Federal Reserve
 The difference between the Great Depression (1929-
1939) and the Great Recession (2008-present) was
the actions of the Federal Reserve
 Some economists blame the entire Great Depression
on mismanagement by the Federal Reserve
 Instead of expanding the money supply during the
banking crisis, the federal reserve drastically
decreased it.
 Banks not given emergency loans
 Interest Rate policies contributed to the deflation

14. 7.2b:The New Deal

15. Analogy: America is sick, Roosevelt
is the doctor
 Relief: aspirin, Tylenol,
ibuprofen, pain killers,
Nyquil
 Help people in need
immediately
 Recovery: cast on a
broken leg, cholesterol
medication
 Fixing a specific problem
 Reform: nutritional
change, diet, exercise
 Long-term change to
everyday life

16. The Successes

17. CCC, PWA, CWA, WPA
 All had one goal: Give people jobs.
 Why give people jobs and not money?
 CCC (young men) plant trees, make trails,
clean the environment
 PWA/CWA States employ people to build
schools and libraries
 WPA (biggest jobs program in American
history)
 Built airports, roads, public buildings, sewage
systems, electricity systems.
 Painted Murals, collected histories, put on
plays

18. Wagner Act (National Labor
Relations Act) Finally gave unions the legal right to exist
and protections from attacks by
businessmen.
 Made it illegal for anyone to prevent union
organization.
 Created an arbitration panel that helped to
fairly settle collective bargaining disputes.
 Fair Labor Standards Act Established first
national minimum wage laws, maximum hour
laws, and workplace safety laws.

19. Social Security
 Began as a grassroots movement (from
California) to give seniors a stable income.
 Had 3 components
 1. Fixed income for retired people over 65
 2. Unemployment payments
 3. Welfare for those with children (AFDC) and
the disabled.
 AFDC: Aid to Families with Dependent Children
 Paid for with a separate “payroll tax.”

22. The Failures

23. AAA
 Agricultural Adjustment Act
 Purpose was to help farmers
 Paid farmers to not grow food.
 Resulted in food shortages, unemployment, and
worked against the purpose of the rest of the New
Deal

24. NRA (NIRA)
 National Recovery Administration (National Industrial
Recovery Act)
 Failure in multiple ways:
 Based on the assumption that the cause of the Great
Depression was too much competition, resulting in
dropping prices
 Attempted to limit competition by creating regulated
oligopolies
 Each industry created a set of competition standards,
creating cartels.

25. NRA Continued
 Difficult to administer
 Not clear that it had any economic benefit
 Constitutionality illegal
 Supreme Court rules it unconstitutional in 1935

26. Canada and Brazil 7.3-7.4

27. III. Canada

28. Economic Differences
 Canada relied much more on commodity (raw materials)
export than the US
 Lumber
 Oil
 Metals
 Canada was going through a wheat and lumber
(newspapers) boom in the 1910s-1920s.
 Canada’s depression was as severe as the United States’,
even though it began in the United States.
 Canada had its own currency, but did not have a Central
Bank (Federal Reserve)

29. Political Differences--Parliament

30. Parties
 Liberal and Conservative Parties
 Many smaller parties
 Cooperative Commonwealth Federation (New
Democratic Party)---Labor Party
 Progressive Party---Middle Class Reformers
 United Farmers of Alberta---Farmer Party
 Bloc Populaire---Quebecois Party

31. Other Differences
 Party Leadership lasts much longer because
there are no term limits.
 Quebec: Ethno-linguistic differences are bigger
division than any other political division.
 Canada did not have a Constitution. Instead, they
had a British law that set up a legal system similar
to a Constitution.

32. William Lyon MACKENZIE KING

33. Mackenzie King
(Liberal party)
 Some similarities to FDR.
 Built a liberal coalition with progressives during the
Depression
 Was leader during Great Depression and World War II.
 Considered by many to be Canada’s most successful
politician (served as Prime Minister for 22 Years)
 Some Differences
 Never pursued the radical reforms of FDR
 Was President when the Depression hit (some similarities
to Hoover)
 Never fully brought labor support into the Party

34. Mackenzie King’s Response to the
Depression
 Like Hoover, King and the Liberals were blamed
for the Depression.
 Claimed that British North America Act limited
how he could react (left public relief to the
provinces and then didn’t fund the provinces
claiming too much debt).

35. Overall Ideology
 As a “liberal,” King favored small government to
support economic and social freedom.
 He wanted to keep the Canadian government’s
response to the Depression limited.

36. Richard Bedford (R.B.) BENNETT
(1930-1935)

37. 1930 Election
 King called elections in 1930, but lost to Bennett and
the Conservative Party.
 Like Roosevelt, Bennett promised a series of
unspecified reforms to fix Canada.
 Like Roosevelt, Bennett called his reform program the
“New Deal,” after 1933.
 Unlike Roosevelt, Bennett stuck to his Conservative
beliefs and did not implement a lot of reforms.

38. Bennett’s Response
 Increased Tariffs (made things worse---see
Hawley-Smoot Tariff in the U.S.)
 Provided funds for public welfare system to the
unemployed and the destitute.
 Created a “work camp” program very similar to
Roosevelt’s CCC. Participants were called the
“Royal Twenty Centers.” (This was partially done
to prevent unemployed from calling for more
radical change).

39. Other Reforms
 Canadian Wheat Board: Somewhat similar to
AAA, but more helpful to poor farmers.
 Bank of Canada: Created a Central Bank
 Farmer’s Creditors Arrangement Act: Allowed
farmers to restructure their debt.

40. Bennett’s Ideology
 As a conservative, Bennett wanted to try to
maintain the status quo. His reforms were an
attempt to provide as little change as possible to
a problem that might require significant change.

41. King Comes Back!
 In 1935, King and the Liberal Party won with the
slogan “King or Chaos.”
 Leading up to the election, Bennett had promised
more sweeping changes (including minimum
wages, unemployment benefits, and other
progressive reforms.)
 King attacked the New Deal as being too
expensive.

42. King’s 2nd “Fix”
 Instead of promoting more reforms, King passed
on Bennett’s laws to the courts.
 The Supreme Court of Canada ruled most of the
New Deal unconstitutional.
 Canada’s economy overall did recover faster than
the U.S.
 It also entered World War II earlier (1939 under
the UK).

43. Relief, Recovery, Reform Programs
Summarized
 Similar to Hoover—
Save the banks, let
the states take care of
their own.
 Remove Tariffs
 Tariffs
 Work camps (“Royal
Twenty Centers)
 Canadian Wheat
Board
 Central Bank
 Farmer’s Creditors
Arrangement
King Bennett

44. Other Social Changes
 Hockey!
 Hockey became the national
pastime during the 1930s (on
radio broadcasts).
 MapleLeafs vs. Canadians
became symbolic rivalry between
English-Speaking and French-
Speaking Canada

45. Historiography
 Traditionalist:
 King and Bennett embraced far-reaching political and
economic change in order to move the nation out of the
Depression and did so effectively.
 Revisionist
 King and Bennett’s reforms were remarkably limited and
relied on political repression.
 Conservative
 King and Bennett’s economic success in getting Canada
out of the Depression shows the market-oriented
conservative action is the best remedy to a Depression.

46. Practice Questions
 How serious was the impact of the Depression on the Canadian
economy and society?
 Why did the Canadian federal governments of the 1930s
introduce so little social and economic legislation to deal with
the problems of the Depression?
 Assess the view that the response of the Canadian
governments in the 1930s to the problems of the Depression
was limited.
 Assess the view that neither Mackenzie King or Bennett offered
the Canadian people a coherent policy to tackle the problems
they faced in the 1930s.

47. IV. Brazil and Vargas

48. Economic Past
 Brazil, like most Latin America, is and was a much less
developed country.
 During the 16th-18th centuries, Sugar was the focus of the
economy.
 Brazil was the last country in the Western Hemisphere to
abolish slavery (1880s)
 In the mid-19th century, the focus moved to coffee (industry
exports out of Sao Paulo).

49. Political Differences
 Like most Latin American countries, Brazil
historically was run by rich landowning oligarchs.
 Brazil’s central government was weak even by
Latin American standards up until the Great
Depression.
 Had once had a relatively strong central
government under a Brazilian monarchy (Pedro I
and Pedro II).

50. Political Parties
 Today, Brazil has tons of political parties.
 Leading up to the 1930s, the biggest divide
wasn’t political, it was geographical:
 Paulistanos (people from Sao Paulo)--Coffee
 Mineiros (people from Minais Gerais—
Minerals, and cattle
 In both areas, oligarchs (landowners) ran the
parties.

51. Getulio Vargas

52. Vargas and Roosevelt
 Similarities to FDR
 Radically changed role of government
 Was President during Depression and World War II
 Appealed to lower class for support.
 Adopted Corporatist framework to fix the economy (as
was done in Roosevelt’s NRA).
 Differences with Roosevelt
 Not Democratically elected
 Did not tolerate dissent  Authoritarian Dictator
 Did not create social welfare state
 Focused more on reforming the economy than relieving
it.

53. 1930 Coup #1
 When the Depression hit Brazil, Washington Luis was the
president.
 Luis followed the conservative response of Hoover.
 Luis also represented Sao Paulo and many around the
country were upset that so much power was resting there.
 In 1930, unrest across the country led to rebellion.
 The military scrambled to find a leader that would avoid
full-scale revolution, but would also please the masses.
 This leader was Getulio Vargas.

54. The “Estado Novo” (Coup #2)
 During his leadership, there were several attempts
to remove him from power from both the left and
right.
 A failed coup in 1937 gave Vargas the justification to
suspend the Constitution entirely and rule Brazil as
a dictator.
 After 1937, Vargas would call his plans to revive
Brazil socially and economically the “Estado Novo.”
(New State)
 His policies mirrored those of Mussolini, Franco, and

55. Vargas Economic Reforms (Trade
Policy)
 Vargas’ economic goals met with his political goal
of reducing the power of Sao Paulo.
 Vargas pursued Diversification through ISI (Import
Substitution Industrialization)
 In other words, tariffs would be placed on specific
goods that Vargas wanted Brazil to make
(airplanes, steel, etc.)
 Incentives would be given to infant-industries to
produce these goods for Brazilian consumers.

56. Quote
 “If you were to ask me what is the program of the
Estado Novo, I would tell you that its program is
to crisccross the nation with railroads, highways,
and airlines; to increase production; to provide for
the laborer…to expand exports; to prepare the
armed forces so that they are always ready; to
organize public opinion so that there is, body and
soul, one Brazilian thought.

57. Vargas Economic Policy (Domestic
Coffee)
 To deal specifically with Coffee, Vargas created the National
Department of Coffee.
 Reduced coffee tree planting ordered.
 Coffee planters in Brazil would be forced in a ‘cartel’ wherein
they would have the amount that they could sell on the
market reduced in exchange for higher prices.
 The goal was to make Coffee exports more profitable for the
country and reduce the country’s reliance on those exports.
 Critics would point out that this increased unemployment in
the Coffee sector.

58. Vargas Economic Policy (Unions---”O
Pai do Povo”)
 Rather than limit the power of unions, Vargas aimed to appeal to
and co-opt them
 (Co-opt means to control by including).
 Unions were given the legal right to exist, but all workers had to
join state-sponsored unions.
 Employers were also forced to join large industry organizations
 The state became the arbitror of industrial relations in labor
disputes.
 This model was first developed by Mussolini and is called
“Corporatism.”

59. Quote
 “The Estado Novo does not recognize the rights
of the individual against the collective. Individuals
do not have rights; they have duties. Rights
belong to the collective.

60. Vargas Racial Policy
 Vargas promoted the idea that racial distinctions
were contrary to the unified vision of the Estado
Novo.
 All discussions of racism were banned. Eugenicists
were arrested. Brazilians were taught nobody was
one race, but all Brazilians were a mixture of races
(usually White, Black, and Indian).
 A racial class system still existed in many ways, but
he indoctrinated Brazilians to believe in a color-blind
society.

61. Vargas Denouement
 Vargas finally held elections in 1945 and lost
them to Gaspar Dutra.
 In 1951, Vargas ran again and won.
 In 1954, after an attempted assassination of one
of Vargas’ rivals (Carlos Lacerda) was traced
back to Vargas, the military asked Vargas to
resign.
 Instead, Vargas committed suicide.

62. Suicide Note
 I was a slave to the Brazilian people, and today I
am freeing myself for eternal life. But this people,
whose slaves I was, will no longer be slave to
anyone. My sacrifices will forever remain forever
in their souls and my blood will always be the
price for their ransom. I fought against the
exploitation of Brazil…I have fought with my
whole heart…Now I offer you my death. I fear
nothing. Serenely I take my first step towards
eternity and leave life to enter history.

63. Social Impact: Soccer

64. Overall Ideology of Vargas
 Populism—
 Base reforms on the perceived desires of the
people.
 Modernize Brazil into an economic world power.
 Strengthen the nation.

65. Programs
 ISI (restrict imports to encourage eventual
exports)
 Diversification (move away from cash-crops)
 Corporatism (Simplify the running of the country
by putting people into organizations that would
represent their interests).

66. Historiography
 Vargas
 Traditionalist: Policies were too radical and led to his demise.
 Revisionist: During the 1960s-1980s period, he was seen as
a precursor to the military dictatorship that then consumed
the country.
 Post-Revisionist: After 1985, historians have given him a
kinder look, focusing on his merits as an effective and
charismatic politician compared to the brutality of the
military’s generals.
 Race
 Degler: Sees Brazil’s embrace of Vargas’ racial policy as
evidence of its inherent muliticulturalism.
 Hanchard (Orpheus in Power): Vargas’ policy removed
discussions of racial inequalities, but not racism from
Brazilian society.

68. 7.5: Depression effect on Minorities

69. V. Effect of Depression on Minorities
 Minority Groups: Women, Mexican-Americans,
African-Americans, Native Americans

70. A. Women
 1930s saw the end of the 1920s Flapper ideal.
 New job opportunities available to women in the 1920s
vanished in the 30s.
 Depression became stress on family life. Rise in
divorces.
 Husbands became insecure about losing their
breadwinner status.

71. B. Mexican-Americans
 Mexican-Americans that were economically
encouraged to come to America and California
suffered the reverse when the Depression hit.
 White migrants from the Midwest pushed out
Mexican agricultural workers in California and in
the Southwest.

72. C. African-Americans
 Blacks that experienced new opportunities in the 1920s saw those
opportunities vanish in the 1920s.
 Despite voting for Roosevelt, not much in the New Deal helped
African-Americans.
 AAA did not help sharecroppers.
 Early work programs were run through the states so often
discriminated against African-Americans.
 Later national organizations (WPA, CCC) actively sought to employ
African-Americans.
 NAACP charged that Social Security discriminated against African-
Americans.

73. D. Native Americans
 John Collier oversaw radical changes in the treatment of
Native Americans through the Bureau of Indian Affairs
 Indian Reorganization Act undid the Dawes Act (which had
made assimilation and individualism the goal of Federal
Indian policy).
 Native American cultural practices were collected, breaking
up of communal lands was halted, and power was returned to
tribal councils.
 Orthodox: Radical shift in policy for the benefit of Native
Americans.

74. Historiography
 Orthodox (Degler)
 New Deal transformed the lives of minorities, which
is why they overwhelmingly voted for Roosevelt.
 Revisionist (Bernstein)
 New Deal failed to deliver its promise to its minority
constitutients. Its limited reforms purposely or
unpurposely left out minority groups.

75. VI. Effect of Depression on Arts,
Literature, and Film

76. Art: Community Murals
 Government supported mural projects through
the WPA.
 Murals reflected a type of populist art---from the
people, by the people.
 Emphasized work, community, and realism.

78. Literature:
 Novelist focused on the realistic deprivations
caused by the Depression
 Plight of Migrant Workers (John Steinbeck—Grapes
of Wrath, etc.)
 Racism (Richard Wright—Native Son)
 Southern Backwardness and Poverty (William
Faulkner—As I Lay Dying, etc.)
 Comic Books (Superman) with escapist fantasies
also became popular.

79. Film: Escapism and Realism
 Three different types of film became prevalent:
 Gangster Movies: Glorified the rebel individualist.
 Escapist Movies: Made people forget the burdens
of their own life. (The Thin Man, The Wizard of
Oz)
 Realist Movies: Showed people living through the
Depression and overcoming life’s obstacles.
(“Grapes of Wrath,” “I’m a Fugitive From a Chain
Gang.”)