Effects of GD in Canada - Review• Instead of bellwork today, we are going to review

the causes/effects of the GD in Canada.• Get out your packet and be ready to discuss!• Also……

– Analyze the role of religion in the Great depression

– Compare Canadian vs. US culture during the GD.

The Great Depression in Latin America

A case study of Brazil & Argentina

LA Economy prior to Great Depression• Agriculturally-based• After industrialization, LA commodities became more

valuable– Europe and US focused on production & manufacturing = needed to

import goods for their growing populations– Created an export economy in LA– Beef, wheat, tropical fruits, minerals (copper), and natural resources

• Strong trade relations form – 2/3 of investment & trade came from UK, US, Fr, & Germany

LA Economy prior to Great Depression• Since they focused on exports, LA countries were slow to

develop their own industries.• For finished goods, LA relied on imports• Set up a system of dual reliance on the export-import trade: LA

depended on export of resources for income, but also relied on foreign imports for industrial goods.

• During WWI, European economic problems caused a decline in export-import trade– supply > demand– Exports reached peak value in 1927

Onset of the GD in Latin America• Initial effects of the Depression were similar to US and

Canada• ↓ demand of LA goods = ↓ flow of capital• ↓ value of currency• ↓ employment• ↓ foreign investment• LA countries in debt to foreign banks• Due to foreign tariffs, LA goods become unaffordable• The difference???

– Gov. intervention in LA economy became the norm– Huge political effects = military takeovers & coup d'états

Three main solutions1. Government regulation

– Goal was to stabilize economy by setting prices & levels of production

2. Import Substitution Industrialization (ISI)– Goal was to encourage the creation of homegrown industries

to replace LA dependence on foreign goods3. Keep international markets open

– Trade agreements with industrialized countries• Rapid Recovery

– Mining/agriculture were not hit as hard – Close relationship between gov. & banks– Social/racial hierarchies strengthened by economy

Case study: Brazil vs. Argentina• To make an effective

comparison of two countries with striking similarities and also significant differences, we will now focus on Brazil and Argentina

Brazil: The Coffee Economy• Coffee exports were the source of 70% of Brazil’s

revenue • In order to prevent overproduction and maintain

profits, the São Paulo Institute for Permanent Defense of Coffee implemented valorization in 1925.– To keep coffee prices high, the institute purchased and

withheld coffee from the world market

• Manufactured goods came from overseas, so most profits from exports (coffee) were spent on imports = outflow of capital; no profits

Failure of the Coffee Industry• Brazil’s foreign debt was $900 million

– $175 million/year, paid by coffee exports

• 1929 - ↓ coffee prices, ↓ demand • Other LA countries increase coffee output coffee surplus

Failure of valorization and coffee economy• Foreign lenders ↓ credit to Brazil• Brazilian banks ↓ credit to coffee farmers • Instead of intervention in the coffee industry, President

Washington Luis focused on developing industry

President Washington Luis

Effects of the Crash• 40% decline in sales• ↓ Imports & trade• People became resentful of President Luis, who saw the

decline as temporary and was unwilling to aide• Presidential election of 1930:• Getúlio Vargas vs. Julio Prestes (handpicked successor

of Luis)• Prestes won and immediately extended credit to state of

São Paulo instead of paying debts, buying coffee surplus & stabilizing prices

1930 Election

Vargas vs.Prestes

Effects of the Crash• Most Brazilian rural workers were

landless laborers that planters could no longer afford to pay

• Migration to cities• Increased unemployment• Uprisings

– Already deep-seated political issues, but economic crisis made it worse

Vargas comes to power• In October 1930, Vargas led

a number of revolts, overthrew Prestes, and was installed as provisional president.

• Ruled from 1930-1945; 1951-1954

• Political dominance and charismatic personality created political stability and allowed for a change in economic policies

• “Father of the poor”

Vargas’ Policies• Economic nationalism• Support the coffee industry while attempting to wean Brazil off

it’s dependence on this crop– ↓ tree planting, ↓surplus so demand increases

• Diversify the economy (livestock & cotton)• Import Substitution Industrialization (ISI)

– Replace foreign imports with domestic production of industrialized goods• National Corporations created – steel, iron, aircraft, railroads,

road construction – Government reserved the right to intervene in all corporations

• Constitution of 1934: nationalization of mines, mineral deposits, sources of energy, and industries essential to economic/military defense of the country

Review• List three problems with the Brazilian economy

prior to the Great Depression. • What did the Great Depressions in Brazil, U.S.,

and Canada have in common?• How did Vargas come to power?• List five policies implemented by Vargas.• Why do you think Vargas was effective?

Getulio Vargas

Vargas’ Policies• “This program is to crisscross the

nation with railroads, highways, and airlines; to increase production; to provide for the laborer and to encourage agricultural credit; to expand exports; to prepare the armed forces so that they are always ready to face any eventuality; to organize public opinion so that there is, body and soul, one Brazilian thought.”

• Vargas speech; 1938

• “The State does not recognize the rights of the individual against the collective. Individuals do not have rights; they have duties. Rights belong to the collective!”

Success of Vargas’ Policies• Due to ISI, industrial output grew by 6%• Creation of 44,000 new plants • Creation of 944,000 new jobs• New industries helped diversify economy• Economic growth was not spread evenly – most of Brazil’s

population (40 million) was still dependent upon cash crops• Five states employed 75% of factory workers and owned

80% of all wealth

End of Vargas’ rule• After attempted communist overthrow in 1937, he created the

Estado Novo which gave him authoritarian powers• Recognized threat of labor unions, so puts them all under

government control• Minimum wage & maximum work week• Not supported by wealthy elites• Post-WWII, Vargas tried to impose greater economic

nationalism, but revolts spread (people demanded democracy)• After an assassination attempt, the military tried to force Vargas

to resign• Instead, Vargas committed suicide in 1954

• Each drop of my blood will be an immortal flame in your conscience and will uphold the sacred will to resist. To hatred I reply with pardon, and to those who think they have defeated me, I reply with my victory. I was a slave to the Brazilian people, and today I am freeing myself for eternal life. But this people, whose slave I was, will no longer be slave to anyone. My sacrifice will remain forever in their souls and my blood will be the price for their ransom. I fought against the exploitation of Brazil. I fought against the exploitation of her people. I have fought with my whole heart. Hatred, infamy and slander have not conquered my spirit. I have given you my life. Now I offer you my death. I fear nothing. Serenely, I take my first step towards eternity and leave life to enter history.

• Vargas, suicide note; August 24, 1954

Review• Successes and Failures of Vargas

• Compare/Contrast with U.S.

• Compare/Contrast with Canada

Argentina: from Democracy to Dictatorship• Between 1860-1930, Argentina’s annual growth was 6.3%

– Strongest in South America

• Income came from export of beef & wheat

• Economic system was based on foreign investment (UK)

– Most meat exported to UK, and imported British coal and oil

– British investors built and owned bus/railways

• Period of modernization that created new local industries and social changes that threatened the traditional landowning Creole elites

Argentina’s Economy• Far more diversified than Brazil• Other industries developed from agricultural sector: food

processing, meat packing, flour milling and leather tanning• Gradually became a domestic economy

– ↓ foreign investments• After their first democratic elections in 1916, Hipolito Yrigoyen

was elected• He wanted to decrease dependence on British oil so created

state-run oil company (Fiscal Petroleum Fields – YPF)• In the 1920’s, Argentina had one of the largest amounts of cars

per capita.

Political/Economic Effects of the Crash• Immediate effect on demand for exports• Due to tariffs, value in cash crops ↓ 43%• High unemployment• People blamed Radicals for the economy• In September 1930, Yrigoyen was overthrown and a military

junta was established• In 1932, General Agustin Justo became president• Relied on the Concordancia – coalition of anti-Yrigoyen

Radicals, Conservatives & socialists who maintained power through electoral fraud and corruption.

Rule of the Concordancia• Implemented policies not meant to change the economy, but to

increase traditional areas of interest and income – livestock and agriculture

• Established agricultural regulatory boards• Restore positive trade with the UK

– Roca-Runciman Pact: British markets for Argentinean goods would be preserved if Argentina promised to give preference to British manufactured goods

• Import Substitution Industrialization– Helped create jobs & new industries

• Public works projects: centered on developing infrastructure – highways, railroads

Economic Recovery• Due to protection of exports and ISI, Argentina recovered

relatively quickly.• Accelerated industry • Decreased dependence on England• Radicalization of the working class• Renewed military intervention in government affairs• In 1943, another military coup, led by United Officers Group

(GOU), established another military dictatorship– Dictatorships ruled until the 1980’s

Political Changes in Latin America• Economic effects are often overshadowed by the political

changes• Although countries recovered relatively quickly, it was under

newly-established military dictatorships that controlled the economy

• Agricultural products continued to dominate• ISI used by Brazil and Argentina became a model for

developing countries to escape from economic dependence on the Western, industrialized economies

• New urban elite emerged with ISI – social inequalities continued• Political systems shifted towards authoritarianism, and from this

point forward, military leadership was dominant in the region.

Review• Compare/Contrast with Brazil• For the test, be able to compare & contrast countries

within the region, with regards to….– Economic growth/unsound economy– Causes of the Great Depression– Effects of the Great Depression (culture, social, political,

economic, religious)– Government responses to the GD

(policies/plan/effectiveness of Hoover, FDR, Mackenzie King, Bennett, Vargas, Concordancia)