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1920-30’s The 1920’s and 30’s • For the most part the 1920’s were a time of vast prosperity in most of Europe and North America • The 1920’s saw many changes to the way people lived • The Prohibition movement led to the ban of alcohol in the United States • From 1920-33 Americans turned to bootleggers like Al Capone to get their alcohol • Capone and other gangsters ruled many of the major American cities American Economy • The 1920’s saw a massive shift in the economy of the United States • Henry Ford introduced the assembly line and the Model T was the first mass produced automobile • The assembly line helped Ford and other companies like Firestone, General Motors and Oldsmobile become massively successful • The US economy was thriving, the automobile age was ushered in, people began to use credit to purchase goods German Economy • In Germany the economy was not faring so well • The harsh conditions imposed by the Treaty of Versailles left Germany crippled • Inflation soared as the country struggled to repay reparations to France • The cost of bread and other house hold goods sky rocketed The Stock Market Crash • The prosperity of the American Economy came to a crashing to a halt on October 29th of 1929 • The New York Stock Exchange lost over half of its value in one day • It crashed due to two main reasons: 1. Over Speculation- Too many people were playing the stocks, too much was being bought and sold too quickly 2. Buying on Margin• Investors were able to buy stocks only putting down 10% of the cost • They would then turn around and sell the stock for a quick profit Great Depression • The Stock Market Crash did not solely cause the Great Depression but it did signal the start of this era. • The causes were; 1. Overproduction- The industrial capacity had exceeded the ability of the consumer to buy goods 2. The Stock Market • over speculation limited available money 3. ProtectionismThe US raised tariffs to protect their industries, other countries had no choice but to follow 4. International Debt from the First World War • The allies had borrowed heavily to finance the war effort and needed to sell their products to U.S. markets to pay the money back 5. Uneven Distribution of Wealth • 8% of the population of the United States controlled 45% of the countries wealth • While 60% of the countries population received only 2.5% of the countries income • This imbalance meant that many families were living near the poverty line • They were affected most by the Depression Consequences of the Great Depression • The economy of the United States was devastated which impacted economies all over the world • There were several main consequences of the Depression; 1. Unemployment • It ran at about 25% in most industrialized countries • There were no safety nets in place such as E.I or welfare • People had to rely on charity to get by and often that was not enough • Soup lineups became common place 2. Banking Failures • As businesses and farms went bankrupt so to went the banks • This hurt those who lost their life savings • It also destroyed consumer confidence 3. Changing Role of Government • The Government took a hands off approach known as Laissez-Faire Economics • They did not get involved feeling that it was the responsibility of the citizen to help themselves • In the early 1930’s they were faced with little choice to get involved in the economy Herbert Hoover • Hoover was American President from 1928-1932 • Hoover was a wealthy mining engineer and had little apathy for those who were suffering during the depression • He didn’t want to endanger the American way of life which was based on Free Enterprise • He used catchy slogans such as a “car in every garage” to try and get the economy going • This failed miserably and by early 1930 the number of unemployed in the United States was around 20 million and continuing to grow • The Homeless and unemployed lived in communities of shacks called “Hoovervilles” Franklin Delano Roosevelt • Franklin Delano Roosevelt and his Democrats were swept into power in 1932 • He was to dominate American politics for the next thirteen years and is seen as one of the greatest presidents in history • Roosevelt tried a different path to get the United States out of the Depression • During the election campaign Roosevelt promised improvement in his first 100 days • He wanted to tackle all immediate problems The New Deal • Roosevelt introduced his New Deal as a way to deal with many of the problems in America • The New Deal was an attempt to jumpstart the economy of the United States • He told the people of these programs through his Fireside Chats • He was the first President to use the media as a tool • Part of the program was the Alphabet Agencies they included: 1. Civilian Conservation Corps CCC • Created work planting trees, employed 2.5 million people over the course of the program 2. Works Progress Administration WPA • Financed public Works projects 3. • 4. • National Recovery Administration NRA Reformed labour conditions Tennessee Valley Authority Massive public works project to build seven hydro electrical dams along the Tennessee River 5. Agricultural Adjustment Administration AAA • Created subsidies for farmers • Roosevelt received some resistance from the Supreme Court • He threatened to replace all of them and they caved in • He created the Social Security Act in 1935 with the Second New Deal • Roosevelt's reforms helped but the U.S. didn’t come out of the depression until the start of the second world war