Depression Flashcards
Sykes-Picot Agreement 1916
-Britain awarded lions share of defeated Turkish lands
-Britain set up Arab gov in Iraq and Trans-Jordan
(didn’t want to spend the money on troops and officials to rule directly over new territories-except Palestine)
Balfour Declaration 1917
-Create a national homeland for Jews
Why concerned with Middle East?
- Oil
- Protection of trade routes
- British determined to secure control of area: Suez canal, Red sea, Persian Gulf : vital for traffic to and from India
Treaty of Sevres
- Anatolia (Turkish heartland) divided to french, Italian , American spheres
- Turkish straits made an international zone under control of league
- Changed Turkish borders , bringing its capital in range of Greek artillery
Mustafa Kemal (Ataturk)
- Turkish leader
- Kemal + nationalists set up breakaway gov in Ankara (heart of Anatolia)
- Led to turkey-Greek battles until Turkey reached British garrison guarding Turkish straits
- rather than risk battle British promised to revise Treaty of Sevres in Turkey’s favour
Treaty of Lausanne
- Turkey free of all troops
- straits in Turkish control but demilitarized
- no restrictions on Turkish armed forces
- Greeks living in turkey, Turks living in Greece sent home
Reza Khan
- With support of army, led rebellion to overthrow Persian gov,which had accepted presence of Russian +British troops
- Russians withdrew from North, British left Persian Gulf
- Reza became shah (Monarch)
- Persia-Iran
- Industrial growth, all things to Western standards
Egypt
- Zaghlul=leader of nationalist party (Wafd)
- Grant Egypt semi-independence
- form of parliamentary democracy
- British officials reduced
Saudi Arabia
- Exception to European dominance of Arab lands
- very rich , westernized
Montagu- Chelmsford reforms (India)
-Dyarchy formed
Dyarchy (India)
- 2 levels of responsibility
- Indian ministers responsible for programs of health,education,agriculture in each of 11 provinces
- British kept control of finance and forces of law and order (army,police,courts)
Amritsar(India)
- Troops opened fire on a mob
- Anti-British campaign ended in disorder
- Brits overacted killed many
Congress party
- Leader=Mohandas Gandhi
- Hindu-dominated nationalist organization
- Preached non-violent resistance by disobeying British Laws ,refusing to pay taxes to occupying powers
- Pacifism=Non-violent Resistance
- Jawaharlal Nehru: right-hand man of Gandhi
- Both believed Muslims +Hindus could share an Independent India
Untouchables
- Lowest of Hindu social groups
- Gandhi called them Harijans (Children of God)
Muslim League
- Hindu extremists not consider sharing power with Muslims in future
- worried about threat of Hindu domination, campaigned for two independent India
- Leader=Mohammed Ali Jinnah
India Act 1935
- Indians full control of provisional gov : British +Indians share control of central gov
- Pakistan= separate state based on Muslim homelands of Purijab
Mercantilism
-Britain took raw materials, manufactured it into products , sold it in those same colonies for huge profit
American gov system
-“No taxation without representation”
Checks and Balances:
Limited power of any one level of gov
Constitution
- sets up rights of individuals and society
- create structure of gov
- process of rules to make rules
Legislative:
-Makes laws
House of rep,senate(elected),congress
Executive:
-Carries out laws
Pres(elected),cabinet (appointed)
-Most power
Judicial:
-Upholds law
Supreme court(appointed), cant be fired until 75 yrs
Democrat vs Republican
Democrat:
- Liberal in thought
- Believe in more gov
- Rules to protect
Republican:
-Pro military
-Pro independence
less gov
less rules
Manifest Destiny (USA)
- Newly formed US had God-given right to continent
- Gave her sea to sea nation
Moral superiority(USA)
- Viewed Europeans as warmongers, not learned to solve disputes
- Isolationist
Immigration Act (USA)
- Literacy test for immigrants
- barred door to newcomers form Asia
- Stricter exclusion of undesirables
- led by trade union movement
Share croppers
-Poor farmers,rent land
Calvin Coolidge
- pres USA
- “What was good for business was good for America”
- vice president of Harding, took over when he died
- high tariffs=protectionism
Herbert Hoover (usa)
- Depression during his term
- didn’t do anything to alleviate depression
- believed direct gov action would endanger “American way of life”
- Hoovervilles=communities of tar-paper shacks
Ku Klux Klan (KKK)
- racial superiority of white people
- Anti-communism
- non-English immigrants don’t belong
- violent , abusive
Prohibition
- Women’s Christian Temperance Union (WCTU)
- Bullies of KKK + other campaigners all blamed on alcohol
- Speakeasies= Secret places that sold forbidden alcohol, also controlled gambling + prostitution
- Increase in Gansterism- organized crime
- enormous illegal trade of alcohol
Mass Production Revolution
- Assembly line made many products,less expensive
- Buying on Installments=Borrowing money and repaying with monthly payments
- Age of auto
- Economy was dependent on petroleum
- Growth of cities
Buying on Margin
- Buying stocks with 10% down payment
- Purchaser hope value of stock would increase , so could sell at a profit before borrowed portion was due
- Led to Over-speculation=buy stuff hoping value would increase
- When people couldn’t pay back loans , created bankruptcy
4 keys to a sound economy
- Jobs/Unemployment
- Circulation of money
- Credit buying
- Housing starts
- Confidence in system
Tariffs
-Duties (money) colllected on goods coming intoa country
Fordney-McCumber Act 1922
- Raised American customs duties on imported goods
- Economic equivalent of refusing to join league
Smoot-Hawley Bill 1930
-Further increasing tariffs
Autarky
- Economic self-sufficiency
- Self- sufficient in areas of food production, basic manufacturing, defense
Laissez Faire
- “leave done”
- minimum interference of gov in trade and indusrty
Revenue
- money taken in by gov
- taxes +customs duties
Expenditures
-Money spent by gov
Budget
- Planning how you spend your money
- expenses vs revenue
- tells us where gov priorities are
Deficit Financing
-Budget that shows expenditures larger than revenue
-borrow to pay bills
Deficit: difference between E and R, Represents borrowed money for that year
Currency
-Actual money used in particular country
-used to be determined by gold country possessed
Now determined by:
Productivity of country
Size of national debt
Interest rates
Relative value compared to other currencies
Supply and Demand
- Determines prices
- Available,not in high demand=cheap
- High demand,not available=expensive
Balanced Budget
-Expenditures + Revenue are equal
Overhead
-Cost of running business (rent,product,employees)
Economy of Scale
-Cheaper when buy in volume
Disposable Income
-Extra money after expenses are paid for
Inflation
- Prices of goods go up , wages don’t
- disposable income goes down
Deflation=depression
- goods cheap
- no circulation
- money in hands of few
Principle
-Money you owe
Interest Rate
-Used by gov to control inflation
Causes of Depression
Overproduction:
- Industrial capacity expanded beyond ability of consumers to consume
-Europe’s farms blown up, other places produce more
-Europe’s farms start producing (less demand)
abundance of food (prices goes down)
-Factories close, companies sell from inventory, unemployment increases which further reduces demand
Stock Market Crash 1929
- Black Tuesday Oct 29
- excessive investment in stock market meant less money available for foreign loans
- Other countries less able to borrow money from U.S
- Crash indicated faults with current system :excessive speculation and buying on margin
- collapse of wall street dried up flow of American money which many nations depended on
Economic Nationalism and Tariffs
- Began in US, other countries did same hoping to protect their own industries
- made problem worse by restricting trade further
- short term fix
- stops circulation of money
International Debt After WWI
- USA lent money to foreign nations who depended on their ability to sell products to USA to repay loans
- USA led tariff (protectionist) movement, reducing trade, lost ability to pay loans
- Rich guy goes down-no one to help everyone else
Consequences of Depression
Unemployment
- Countries didn’t have safety nets like unemployment insurance or welfare
- no circulation of money- businesses go down
- standard of living decrease
- draining from system if not contributing
Banking Failures
- Business + farms who owed money to banks went bankrupt , so banks went bankrupt too
- hurt depositors(savers) who lost all their money
- confidence in system blown
- Democrats come in and brought in rules for banks
Political consequences
Germany
-Dictators like Hitler , who promised a better Germany (revolution)
Britain
- no revolution
- parliamentary democracy long established
- had proved capable of ruling and expanding empire , winning war, improving general quality of life, setting up primitive ‘welfare state’ to care for needy
Japan
- Imperial expansion (war)
- Jobs in army
Change in role of gov (USA)
-first response cut and save
-role of gov in economy +everyday lives of Americans grew
-Laissez faire dead
Managed economy through:
Tax policy-increasing/decreasing taxes
Monetary policy-raising/lowering interest rates
Fiscal policy-increasing/decreasing gov
expenditures
Control value of national currency
Attempts at Remedy
- Increasing tariffs (short term gain, long term pain)
- general belt tightening (cut spending)
- Britain brought pound of gold standard and let value sink which would make her good =s cheaper, others followed suit
John Meynard Keynes
- British economist proposed radical solutions
- gov should spend way pout of depression
- lack of cash circulation making depression worse
- gov should borrow money, to be repaid in future, spend it on huge employment projects of value
- deficit financing
- Borrow money, create jobs,circulation of money, pat debt
- USA, Japan, Germany
Adam Smith
- Gov should pay little to no role in economy
- cut and save
- slower recovery
- unemployment (no circulation of money)
Franklin Delano Roosevelt
- USA came to power
- Introduced 100 days, New deal, alphabetical agencies etc
100 days (USA)
- Roosevelt burst of activity - making laws, voting on money for new gov programs, setting up new agencies ‘alphabetical agencies’
- promised to implement New Deal
New Deal (USA)
- Get Americans back into workforce
- Closed all banks for 5-6 days (Emergency Banking Act) brought in new rules
- Extended gov aid to stronger banks and arranged re-organization of rest
- Economy Acts-slash some gov expenditure
- People allowed to write to Roosevelt, no calls were to be cut off in White House
- End of prohibition (Beer Act)
Fireside Chats
- First real use of radio for mass political purposes
- once a week Roosevelt spoke live to American people, assuring that things would get better
- told them to trust system again (banks)
- people +gov must work together
Alphabetical Agencies
- Agriculture, help farmers
- Welfare state
- Create jobs
- Improved working conditions, eliminate child labor
Okies
- Small tenant farmers
- fled with belongings west to California, men of suburban area band together to ‘defend’ themselves
- thought okies were dirty , ignorant, theives
Committee for Industrial Organisation (CIO)
- Formation of single unions for each major industry
- meant to bring pressure on employers for higher
USA foreign policy
Fear of Entanglement
- didn’t want to become guarantor of mess European agreements
Only participation:
- Washington Naval Conference
- Kellogg-Briand Pact ,denouncing war
- Reparation relations
Soviet Recongnition
- Viewed soviet communists as godless enemies
- Red scare spread across America, thought soviets behind every worker strike
- Americans formally recognized USSR based on promise from Stalin that communist propaganda not aimed at USA.
The Neutrality Acts
-Congress authorized president in event of war, to place an embargo on both belligerents
Cash and Carry
-Britain could purchase materials from “arsenal of democracy”, but only on a cash basis
Lend Lease Act
- Authorized America President to give credit to any country whose defense is vital to defense of USA
- Most aid meant for Britian
Pearl Harbour
-Final act which brought US out of isolationism.
