THEME 1: democracie en danger

« THEME 1: Democracy in danger = The Crisis of Capitalism, the threat of Totalitarianism and the Road to World War Two (1930-1945) CHAP 1 : The Wall Street Crash and its Impact I) THE ORIGINS : from an American crisis to a global crisis A) The American origins of the crisis of 1929 The 20s is a period of change and economic prosperity in the USA called the “Roaring twenties". The country had a lot of money due to the repayment of European countries debts after WWI. Life improve for the majority of americans The country is a huge industrial nation The nation total wealth more than doubled between 1920 and 1929 + GNP ( Gross National Products) expended by 40% between 1921 and 1929 LONG TERMS REASONS Overproduction in agriculture and industry Overuse of credits → used to invest → increase in investment in the stock market Too many small and insatiable banks SHORT-TERM TRIGGERS OF COLLAPSE From September 1929 , the stock market starts to slow down The Black Thursday October 24th 1929, 13 millions of shares are sold without finding buyers → the stock market starts to crumble The crisis of 1929 leads to the GREAT DEPRESSION, an economic slowdown and a impoverishment of societies People who bought their shore with credits cannot refund banks anymore → they are ruined Banks and companies bankruptcy A drop in industrial production 50% between 1929 and 1932 Mass unemployment 8,7% in 1930 → 38% in 1933 The collapse in agriculture prices forced small farmers to seek employment elsewhere B) A worldwide crisis : CAUSES: After the crash, American banks decided to repatriate their capital they invested abroad (banks have been lending money after WWI for reconstruction, especially in Germany the crisis spread to Europe.

European economies highly depend on US aid. ⇒ USA stops raw materials imports, protectionism (South America is particularly hit such as Brazil with coffee) + Economic nationalism. Protectionism : policy of protecting industries against foreign competition by means of tariffs, import quotas. Economic nationalism : an ideology where governments assume that their role is to intervene in the economy as the best way to protect a country’s economy by operating in a free market economy, under the economic liberalism ideology CONSEQUENCES : - banks went bankrupt (Austria, Germany and Great Britain were bit hard) - unemployment soared (43% in Germany in 1932), leading to widespread poverty. - Rise of authoritarian regime as a solution to solve the crisis. - Social unrest with demonstrations “against hunger and starvation” ⇒ THE ECONOMIC CRISIS DISRUPTS THE POLITICAL AND SOCIAL WORLD BALANCE II.

How to overcome the crisis? “Laissez-faire” policy of Hoover, thinking that the market will regulate itself + decrease in imports (protectionism) , resulting in a tightening of global trade and crisis worsening. The Smooth-Hawley tariff act passed in 1930 that raised import duties to protect American businesses and farmers → ineffective due to retaliation from other countries taxing foreign products as well. Another strategy: devaluation (=lowering the value of your currency) in order to make your export goods more competitive but other countries did the same, leading to a collapse of the global monetary system. ⇒ BOTH POLICIES FAILED.

ECONOMISTS SUCH AS THE AMERICAN JOHN MAYNARD KEYNES SUPPORTS MORE STATE INTERVENTION IN THE ECONOMY TO SOLVE THE CRISIS A) New policies enhance the role of the state in a democracy USA : Franklin Delano Roosevelt elected president in 1932 = introduces a vast programme to revive the economy and resolve unemployment in the country : THE NEW DEAL A state involved in the economy – Measures to restore confidence in the banking system – Industrial reforms – Agricultural subsidies A welfare state – Creation of public sector jobs to reduce unemployment – Creation of social security for workers Political modernisation – A president closer to the people – The “brain trust” a new group of advisers ⇒ The New Deal inspired other countries, such as France FRANCE : less touched by the crisis because they depended less on USA’s loans= more affected by the repercussions of the crisis in Germany and UK → economic depression in the late 30’s but could watch how the other countries reacted before but don’t have the money for an economic recovery = punctual reforms with a minister instability THE FRONT POPULAIRE “happy strikes”, great depression, threat of far right movements in France with political corruption = the fascist coup d’Etat attempt of February 6th 1934. ⇒The unification of left-wing parties (socialists, communists and radicals) to counter the fascist threat and win the future legislative elections. THE MATIGNON AGREEMENTS Front Populaire victory in May 1936 caused big strikes with factory occupations in a festive atmosphere to celebrate the victory, high hope for workers and their working conditions.

In the long term, it was the economic crisis that had been affecting the country since the early 1930s.

This was a context of social crisis, characterised by unemployment and poverty..... »