Aftermath of War – 1930s & the Great Depression

• Economic prosperity came from:1. WWI production2. Inventions (TV, Radio, Movies,

Car)3. Mass production4. Stock Market

Economic Prosperity

• Americans were purchasing many things on credit and through installment plans

• Stock market was rising from investments within the country and international investors

• Europe was experiencing economic hardship through war reparations and debts

WWI finances

• Britain and France borrowed money through loans from American investors

• After WWI, foreign countries had to pay back the money they owed

• Interest rates inflated which caused more money to come into the U.S. and less money to go into the international market

• Countries suffered from war repayments and debts

Factors to Great Depression

• Agricultural overproduction• Agricultural surplus• Underconsumption• Stock Market Crash• International debts• High Tariffs

Agricultural Overproduction

• The invention of the gasoline powered tractor allowed for more production from crop fields

• Farmers no longer had to rely on horses and plows to till the soil

• This caused a surplus of agricultural products

Agricultural Surplus

• Farmers had an abundance of products• They invested a lot of money into their capital• Through their investments they were able to

acquire the money to use towards making more product

• The problem is the product was not being sold enough

• Less money comes into the farm. Farmer does not have enough money to pay their investments back

Underconsumption

• Early 1920s involved mass production and consumption of products through new inventions

• People were buying on installment plans and borrowed money

• They ran out of money to pay back debts or credits

• They were unable to buy more product

Speculation

• Many people were investing in the stock market• They were vaguely aware of the European economic

crisis that was occurring• Stocks were being sold at a higher price than the

company profits• When word got out about the European economic

situation, many people became wary about the economic situation their country was in

• They decided to sell their stocks and the stock market fell

Stock Market Crash

• “Black Tuesday” October 29th 1929• Stock Market crashes • Stockholders lost over $40 billion • Unemployment soared, over 4 million

unemployed• Many people put their money in the bank and

everyone who did lost their life savings• 16,410,030 shares were sold

Problem to Economic Catastrophe

• Inflation caused prices to drop due to agricultural surplus

• Government bought surplus• In order to compensate for purchases, tariffs were

passed• Rest of the world was experiencing financial hardship

from war debt• Tariffs widened the trade gap and complicated

economic ties• U.S. lost $$$$

International Issues

• Militaristic and Imperialistic Japan invades China (Manchurian Incident)

• Japs aware of economic depression• Open Door policy closed

New President, New Change

• Franklin Delano Roosevelt elected as president• “Hundred Days” – first hundred days of his

administration consisted of his passing programs

• New Deal programs – federal legislations designed to provide 3 r’s for economy

3 R’s: Relief, Reform, Recovery

• Relief: Short-term goals (2 years)• Reform: Long-term goals, permanent changes • Recovery: Long-term goals, permanent

changes

• New Deal programs: “Alphabet Soup”

New Deal programs

• ND programs provided temporary relief for a permanent economic situation

• What was the real solution to getting America out of the Great Depression?

• Same way U.S. prospered economically in the 1920’s

• WAR PRODUCTION