Effects of GD in Canada - Review

1. Effects of GD in Canada - Review • What was the goal of the CCF? • What was the goal of the Social Credit Party? • What was the goal of the Union Nationale? • What was the On To Ottawa Trek? • Describe the role of religion in Depression-era Canada. • Compare Canadian vs. US culture during the GD.

2. The Great Depression in Latin America A case study of Brazil & Argentina

3. 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, followed by US, France, & Germany

5. 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

6. 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

8. Three main solutions 1. Government regulation • Goal was to stabilize economy by setting prices and levels of production 2. Import Substitution Industrialization (ISI) • Goal was to encourage the creation of homegrown industries to replace LA dependence on foreign goods 3. 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

9. 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

10. 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

11. 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

12. President Washington Luis

13. 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

14. 1930 ElectionVargas vs.Prestes

15. 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

16. 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

18. 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) • 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

20. “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 read 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!” Vargas’ Policies

21. 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

23. 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 • After an assassination attempt, the military tried to force Vargas to resign • Instead, Vargas committed suicide in 1954

25. Vargas’ Death • 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

26. Review • Successes and Failures of Vargas

27. 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

29. 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.

31. 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.

34. 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

36. 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

38. 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.

39. Review • Successes and Failures of the Concordancia