Thursday 21st of May

Hi everybody!

Today in the class of Social Sciences we have started a new unit:

The Interwar Period (1919-1939)
  1. The U.S.A: from the "Roaring Twenties" to the Great Depression
  2. Fascist Italy
  3. Nazi Germany

Before the class started, I have gone to the secretary's office to phone my parents because I have missed my glasses at home. Then, when I have arrived to class, everybody was discussing about the day to take the exam of this unit and finally we have decided to take it on the 9th of June.
After all this, we have started with the first point of the unit.

Today I have learnt that after WW1, the USA became the most important economic power in the world and the most important creditor of the European countries because the USA's productive system was intact after the war. They were the owners of half of the gold reserves and their currency, the dollar, became the predominant one in international trade.

The American way of life became a model. The USA attracted thousands of immigrants under the motto: "USA, land of opportunity" or "There's no way like the American way"

                                         http://allenbwest.com/2014/07/truth-american-way/

Then, Paqui has explained us that consumer society spread a lot thanks to installments and credits, while in Europe they were trying to recover the economy. But all wasn't as perfect as it seems because a lot of people were still living in poverty.

Later Paqui has explained us that between 1919 and 1933 the production sale and consumption of alcohol were forbidden because of the Prohibition. As the members of the parliament were so puritanical they approved the Prohibition, but this only caused the discontent of the citizens and the extraordinary development of the mafia and famous figures like Al Capone.

      Men againt the Prohibition                                                                         Alcapone
  http://www.realbeer.com/blog/?p=86                                                http://forum.joomla.hr/index.php?topic=4062.0

                                                      Women in favour of the Prohibition
                                            http://thecanberran.com/2013/08/16/dry-bars-the-pubs-with-no-beer/
   

After this, we have talked about racism in that period and that even if slavery was forbidden after the Civil War, many black people continued to be discriminated and they were hounded by the Ku Klux Klan, a racist organization related to white supremacism, whose members wore costumes similar to the ones used in Spain to celebrate the Holy Week. Nowadays they continue to exist in the south states of the USA.

                                                         Members of the Ku Klux Klan
                                                      http://ro.wikipedia.org/wiki/Ku_Klux_Klan

To end with the class we have talked about the symptoms of crisis. There was a huge demand for all kind of products, for example: farmers bought more land to increase production. Many people invested in the Stock Market because getting loans was very easy.

•  Real estate bubble: a lot of houses were built and easily sold, but the prices increased due to the high demand.
• Stock Market bubble: many people invested money without any knowledge of economics. Stock prices increased a lot due to the high demand

So, the first symptoms of crisis appeared:

• High debts to keep high levels of production and consumption (Cash-flow problems)
• When the European started recovering, there was a contraction of the demand for USA products and an overproduction crisis started: products couldn't be sold, stocks started accumulating, farmers couldn't give their loans bank...
• No correspondence between the real economic situation of the companies and the value of their stocks in the Stock Exchange Market (Stock Exchange bubble)

                                                             Stock Market crash, 1929

                                   http://storiesofusa.com/great-depression-causes-new-deal-1919-1939/

When the bell has rang, Paqui has given us homework: the exercises 1, 2 and 3 of the page 72

That's all for now! See you in class!

Words copied on the glossary:

Roaring: rugiente

To roar: rugir

Roaring Twenties: felices años 20

Interwar: entreguerra

Real estate: inmobiliaria 

Stock Exchange Market: bolsa de valores

Pound: libra

In instalments: a plazos

Banking loans: créditos bancarios

Washing place/site: lavadero

Prohibition: Ley Seca

Speakeasy: bar ilegal

Temperance League: Liga de Abstinencia 

To tax: gravar con un impuesto

To hound: cazar

Hound dog: perro de caza

Foreclosure: desahucio

Presentations for Unit 8

I don't know if we'll be able to finish this unit before the school year ends, but here you have the two presentations we are going to use to learn these interesting contents: 

The New Deal alphabet soup of agencies and laws

AAA, SEC, PWA, NIRA, SSA, TVA and so on. During the 1930s Franklin Delano Roosevelt´s federal government created a lot of national agencies to carry out the New Deal programs. Over 30 new agencies were created to put federal programs in practice. Here you have some cartoons about the New Deal remedies: 

Roosevelt: "Of course we may try to change remedies if we don´t get results"

Source: http://www.tpwd.state.tx.us/spdest/findadest/historic_sites/ccc/new_deal_texas_html/media/images/new_deal_remedies_cartoon_600x531.jpg

Source: http://www.livinghistoryfarm.org/farminginthe30s/money_13.html

Roosevelt to Uncle Sam on 1933 Christmas´ Eve: "Uncle, I´m surely expecting something!"

Source: http://blsciblogs.baruch.cuny.edu/his1005fall2010/2010/11/01/hope-for-change/

All these agencies and programs were abbreviated with the use of several acronyms and were known as the Alphabet Soup. On this cartoon we can see that even Albert Einstein had difficulties to understand this letter soup: 

Einstein to Roosevelt: "It´s very perplexing. Relativity is so simple by comparison!"

Source: http://www.vaguelyinteresting.co.uk/?attachment_id=1596

On this link you have a list of the most used New Deal Acronyms: 

http://americanhistory.about.com/library/glossary/blglossnewdeal.htm

And here you have some more information about the Top Ten New Deal Programs: 

http://americanhistory.about.com/od/greatdepression/tp/new_deal_programs.htm

Many of the agencies created during the New Deal years still exist. Here you have a report about them: 

http://www.stltoday.com/suburban-journals/metro/news/article_e87bbfc3-f6b4-511b-b723-61807db15382.html

The New Deal programs mobilized 64,000 million dollars, reduced poverty and created a lot of jobs, but some groups in the USA considered Roosevelt´s programs as a step forward towards centrally planned economy  and socialism and went to the Supreme Court of Justice to oppose these this programs. This cartoon reflects this opinion: 

On the right in the background we can observe Stalin saying "How red the sunrise is getting!".

On the left in the foreground we can read the interpretation the critics made of the New Deal spending program. 

Source: http://blsciblogs.baruch.cuny.edu/his1005fall2010/2010/10/26/throw-money-at-the-problem/

And this is another cartoon where Roosevelt denied that his program was revolutionary:

Source: http://popartmachine.com/art/LOC+1045111/IT-IS-EVOLUTION,-NOT-REVOLUTION,-GENTLEMEN!-CD-1---BERRYMAN-(C.K.),...

The Supreme Court of Justice declared some of the New Deal laws unconstitutional. Here you have a list of them and the reasons why they were considered to be unconstitutional: 

http://wiki.answers.com/Q/What_New_Deal_legislation_did_the_US_Supreme_Court_declare_unconstitutional

Roaring crisis

Just in case you want to sing ;)

And here you have the original song: American idiot, by Green Day

Something more about Keynes

Henry Morgenthau (on the left) and John Maynard Keynes (on the right) at the Bretton Woods Conference

Source: http://iconicphotos.wordpress.com/tag/alfred-eisenstaedt/

John Maynard Keynes is one of the most influential world economists, together with Adam Smith (considered to be the father of economic liberalism) and Karl Marx (theorist of Scientific Socialism). Keynes´s  ideas had an important role in the solution of the 30s Great Depression and the foundation of the so called Golden Age of Capitalism, which extended from the end of WW2 and the beginning of the 1970s decade. 

Keynes was a British economist who studied in Cambridge and belonged to the Bloomsbury group, a heterogenous group of intellectuals who lived, studied and worked together at the beginning of the 20th century. He had a lot of personal interests and worked as an investor and businessman. He opposed to WW1 from pacifism, but collaborated with the British government during the war and was sent to the Conference of Paris as financial representative for the Treasury. He resigned due to his disagreement with the ideas of revenge against Germany and the war reparations imposed to them (40,000 million dollars). His book The Economic Consequences of the Peace (1919) warned about the impossibility of paying these war reparations (2,000 million dollars per year) and the danger of reducing Germany to servitude. He considered that the hard conditions imposed to Germany would be very negative for the future. Here you have two excerpts of his book

The policy of reducing Germany to servitude for a generation, of degrading the lives of millions of human beings, and of depriving a whole nation of happiness, should be abhorrent and detestable.... Nations are not authorised, by religion or by natural morals, to visit on the children of their enemies the misdoings of parents or of rulers.... 

The Treaty includes no provisions for the economic rehabilitation of Europe - nothing to make the defeated Central Empires into good neighbours, nothing to stabilise the new States of Europe, nothing to reclaim Russia... The Council of Four paid no attention to these issues, being preoccupied with others - Clemenceau to crush the economic life of his enemy, Lloyd George to bring home something that would pass muster for a week, the President to do nothing that was not just and right.

Keynes, John Maynard (1919) The Economic Consequences of Peace

Source: http://www.johndclare.net/ToV6_British_reaction_sources.htm

His main ideas were explained on his book The General Theory of Employment, Interest and Money,  written in 1936. Due to this book Keynes is considered to be the father of macroeconomics. He wrote a smaller book called Essays in persuasion, where he explained his ideas in a simpler way. These are the most important ideas he developed: 

- He described the mechanism of crises, as it had been observed in 1929: prosperity is characterized by  investing euphoria and speculation, there is a credit expansion, which leads to overproduction. Those who got credits can´t give them back and crisis starts. The consequence is credit contraction and this leads to recession. 

- Keynes also talked about animals spirits, the human impulses which can´t be explained rationally and produce economic fluctuations, for example consumer confidence in some products or a reduction of consumption which can´t be explained rationally. 

- His most important contribution was the idea of the need for a State intervention when there is a macroeconomic void. The State has to intervene in order to correct the problems individuals can´t solve on their own and heal the system. The State intervention he defended didn´t mean ending with capitalism, but strengthening it to make it work better and more efficiently. Keynes didn´t think that the State had to own the means of production (as the Socialists said). The role of the State had to be the one of a regulator, to avoid risk and do what the individuals were not doing, to stimulate economy when it was depressed, in order to recover full employment. That means that the State has to act as an economic agent when the circumstances demand it. Keynes also defended the existence of institutions to control credit and money and collect economic data, so that the State could be ready to intervene when it was necessary. 

- Another important idea was that times of prosperity and economic growth  are the best moment to reduce deficit. If you do it during recession , you will make things worse. 

- Although Keynes wrote a lot of pages of economic theory, he was a pragmatist and considered economics as a practical and instrumental science, whose main objective is providing people with all they needed to live better and have more time to do other things. 

- Keynes also warned about the danger of overestimating the importance of economics. This could mean putting economic problems over other people´s needs. He was not an orthodox, but a flexible thinker, ready to prove other solutions if what was being done didn´t work. 

Keynes participated in Bretton Woods Conference, the meeting called to design the international economic system after WW2. He defended the idea of creating an International Clearing Union (a World Central Bank) to lend money to the countries in crisis and help them rebalance their accounts. He also proposed the creation of an international currency, the bancor. His ideas were rejected and the USA government imposed its opinion. 

As we have studied, Keynes´s ideas were very important to solve the crisis of the 30s and basic for the foundation of the Welfare States as an alternative to non-regulated economic liberalism and Stalinism. Keynes´s influence was decisive for more than 30 years. When a new crisis started in the 1970s decade, his prescriptions were forgotten and neo-liberal economists focused their interest on controlling inflation and public deficit. The recent recession has revived Keynes´s ideas and some of the most influential current economists, such as Nobel Prize Winners Joseph Stiglitz and Paul Krugman, define themselves as Neo- Keynesian.  

Here you have two curious videos about a theoretical combat between John Maynard Keynes and Friedrich Von Hayek (defender of the free market and the non intervention of the State in economy): 

The main part of this post is based on Joaquín Estefanía´s book La economía del miedo, edited by Galaxia Gutenberg-Círculo de Lectores in 2011. 

Some cartoons about the Great Depression during Hoover´s presidency

Yesterday we studied that the USA government followed the liberal othodoxy at the beginning of the economic crisis. They expected that the "invisible hand of the market" would solve the problems without any political intervention. But the evidence showed that things wouldn´t work if reforms were not done. President Hoover's government followed a deflationist policy, increased tariffs to protect the USA production and started some emergency programs to help the poor, but the intervention of the government in economy didn´t start until Franklin D. Roosevelt started ruling in March 1933. 

Here you have some political cartoons about the Great Depression during Hoover´s presidency: 

Source: http://www.mindfulmoney.co.uk/9472/economic-impact/are-we-in-another-great-depression-not-yet.html

Source: http://apus-b.wikispaces.com/depression-political+cartoons

Source: http://socialstudiesliteracytechnology.blogspot.com.es/2011/04/great-depression.html

Source: http://superitch.com/?p=9882

Source: http://ocw.mit.edu/courses/history/21h-126-america-in-depression-and-war-spring-2003/related-resources/lec1images/

Source: http://classprojects.cornellcollege.edu/HIS240_2009/Hoover1/Hoover_1/Home.html

Source: http://blsciblogs.baruch.cuny.edu/his1005fall2010/tag/hoover/