Unit 7: Topic 4 - Economy in the Interwar Period Flashcards
Great Depression and its Causes
The Great Depression was a worldwide economic downturn, beginning in 1929 and ending in 1939. It was the most prolonged and severe economic turmoil in the industrial world. Following the stock market crash of 1929, there was a significant decrease in agricultural production and demand for raw materials. Not to mention, there was a collapse in world trade due to Smoot-Hawley tariffs, a collapse in money supply, and numerous bank failures and panics. Ultimately, all these economic mishaps would lead the Western world into the Great Depression.
Great Depression Impact on Trade
International trading is crucial to most countries. However, with the US economy and stock markets in such a disaster, American investors withdrew their money from European markets. And to keep money within America, the government raised tariffs on goods imported from other countries. Due to the increased price of tariffs, during the depression, imports became largely unaffordable, so World trade dropped.
John Maynard Keynes
John Maynard Keynes was an English economist, also known as the founder of Keynesian economics. He rejected the laissez-faire ideal and concluded that the government should intervene and could improve the economy. During the Great Depression, he suggested governments use deficit spending (spending more than the government takes in) to stimulate economic activities. By cutting taxes and increasing spending, the governments spurred economic growth.
Franklin Delano Roosevelt
Franklin Delano Roosevelt was the 32th president of the United States, who also directed the federal government during the Great Depression to implement his New Deal domestic agenda.
New Deal
Franklin Delano Roosevelt’s New Deal was a program, which strived to bring the country relief, recovery, and reform: relief for citizens who were suffering, including the poor, the unemployed, farmers, and minorities; recovery from the nation’s depression through government use of deficit spending; and reform to change government’s policies in hopes of avoiding such another disaster.
Joseph Stalin
Joseph Stalin assumed leadership over the Soviet Union after Lenin’s death in 1924. He was widely known as the man who turned the Soviet Union from a backward country into a world superpower at unimaginable human cost.
New Economic Plan (NEP)
The New Economic Plan was an economic policy of the Soviet Union proposed by Vladimir Lenin. Under his New Economic Plan, Lenin reintroduced private trade, allowing farmers to sell their product in small scale and employ people to work for them. However, this came to an end when Lenin died.
Five-Year Plan
The Five-Year Plan was a list of economic goals created by Joseph Stalin to transform the Soviet Union into an industrial power. First, Stalin collectivized agriculture, and under this scheme, privately-owned farms were often forcibly consolidated by the government into collective, state-owned farms. As a result of this plan, heavy industries grew as there were plenty of factory jobs available, and cost of living was low.
Politburo
The supreme policy-making body of the Communist Party of the Soviet Union, which Stalin took control of.
Kolkhoz
A group of peasants who freely joined together to farm a certain portion of land.
Social and Economic Effects of Five-Year Plan (Positive)
- Workers had job security and a stable income
- Workers had limited freedom to move between jobs (state restricted rights of citizens to private property)
- Higher standard of living in cities but still low compared to other countries
- More people moved into cities
- All private commercial and industrial enterprises were joint state (private enterprises)
Social and Economic Effects of Five-Year Plan (Negative)
Farmers of Kazakhstan (Kolkhoz) opposed forced collectivization and protested, while Stalin raised quotas, meaning peasants would not be able to eat the grains they produced and would psychologically break them. Peasants considered those unwilling to give up their grains to the state to be breaking Soviet law, which caused the famine. The famine eliminated opposition against Stalin’s rule (in this case, the farmers and peasants), resulting in approximately the death of six-seven million peasants.
USSR (Union of Soviet Socialist Republics)
The Union of Soviet Socialist Republics (also known just as the Soviet Union) was a transcontinental country that first declared itself socialist and built towards a communist society. This single-party communist state consisted of 15 Soviet socialist republics.
Gulags
Labor camps that Stalin created for his political opponents. Many died in them.
