Politics and The Great Depression Chapter 15.2 Politics and The Great Depression

Post War America America came out of WWI in much better shape than Great Britain and France. U.S. had few casualties compared to the others, and no combat took place near America. Economy remained strong.

Two New Constitutional Amendments 18th Amendment – Prohibition; made it illegal to produce, transport, or sell alcoholic beverages. 19th Amendment – Women’s Suffrage

The United States during the 20s. Warren G. Harding Elected president in 1920 He promised the U.S. a “return to normalcy.” War had changed the world too much.

Warren Harding’s Return to Normalcy Platform Anti-Communist – raids carried out and suspected communist arrested Anti-Immigrant – rise in xenophobia (fear and hatred of foreigners); laws passed that limited the amount of immigrants entering the country. Pro-Isolationist – US kept out of the League of Nations and out of European affairs Pro-Nativism – Rise in racism and increase in ethnic violence

Isolationism Lots of Americans favored isolationism – freedom from international affairs.

Failure of the League of Nations New congress failed to pass the Treaty of Versailles, which prevented the U.S. from becoming part of the League of Nations. Many Americans viewed this a path to get us back involved in another meaningless European War (similar to WWI)

The Red Scare Americans also feared the effects of communism in the U.S. Red Scare: 1919 - early 1920s, America tried to get rid of communist elements inside the country. Stricter laws passed on immigration.

The Kellogg-Briand Pact (1928) Treaty that denounced war as a means of settling international disputes. Many nations signed it, but it had little effect. No one to enforce the pact League of Nations was put in charge of carrying out the agreement but had no armed forces. Japan increasingly militaristic

Return to Normalcy

The Great Depression Period of economic slowdown after the stock market crashed in October 1929. Strong economy in the 1920s fell due to consumers buying on credit and being unable to pay, falling farm prices and depression in Europe.

The Great Depression October 1929, banks called in many loans that were owed and many were unable to pay. Stock prices tumbled, people lost millions. By 1933, 13 million people were without jobs, 1/4 of nations workforce.

The Great Depression Real output (GDP) fell 29% from 1929 to 1933. Unemployment increased to 25% of labor force. Some 7000 banks failed.

Banking Panics Bank depositors lost confidence  bank runs Banks lost gold, currency and other reserve assets Loss of reserves caused banks to reduce loans and deposits (causing money stock to fall) Contracting money stock reduced spending Reduced spending led to lay-offs (increased unemployment), falling prices and lower output.

The Great Depression

Effects Across The World Because of war debts and dependence on American loans and investments, Germany and Austria were particularly hard hit. The Banks in Austria and Germany began to fail In Latin America and Asia, farmers and urban workers were laid off as trade ceased between countries

Franklin D. Roosevelt (FDR) 1933, voters elected Democrat Franklin D. Roosevelt President because of his promise to fix the depression. Promised a “new deal” for the people.

The New Deal Government economic programs designed to provide relief and employment to Americans. Relief- Immediate action taken to halt the economies deterioration. Recovery - Temporary programs to restart the flow of consumer demand. Reform - Permanent programs to avoid another depression and insure citizens against economic disasters. Under Roosevelt, America began to have an interest in foreign affairs again. Focus was on limiting weapons and outlawing war.

Postwar Britain WWI hurt Britain financially. Before, Britain lent money, by the end, it owed money, mainly to U.S. Britain lost much of its overseas trading influence. Japan and US filled the gap. Depression set in Britain involving strikes.

Postwar France Faced high unemployment and severe economic problems after WWI. Also much rebuilding. Extreme groups threatened stability of the country, communists, socialists and fascists.

Coalition Governments; Political Standstill Many of these groups formed coalition governments – Government were no one political party controls a majority of the government and is forced to share power with another rival party. Coalition governments in France, Germany, and Britain cause little to get done during the 1920s.

Postwar Germany Weimar Republic (1919-1933) – government established after German surrender in WWI. Former general Paul von Hindenburg named president. Government failed due to economic conditions (Owed $35 billion) and unpopularity.

Hyperinflation Hyperinflation set in to worsen economic conditions. German money was worthless 1914 – four mark = one dollar 1923: four trillion marks = one dollar. Economic conditions later eased, but discontent with the government was already there. Stage set for a revolution.

Germany and Italy after WWI After WWI, because of social unrest and economic depression, totalitarian governments were able to come into power in Germany and Italy.