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111-727: By time the Great Depression arrived in 1929, working class Puerto Rican citizens, especially rural agricultural laborers, were already facing economic hardship. After Spain ceded sovereignty of Puerto Rico to the United States following the 1898 Spanish–American War the island increasingly became economically dependent on the United States through an unbalanced colonial trade relationship that favored U.S. sugar, tobacco, coffee, and fruit companies. By 1910, four U.S. sugar corporations held near monopolies on sugar cane cultivation and sugar production had multiplied by 331%. By 1921,

222-634: A deflationary spiral started in 1931. Farmers faced a worse outlook; declining crop prices and a Great Plains drought crippled their economic outlook. At its peak, the Great Depression saw nearly 10% of all Great Plains farms change hands despite federal assistance. At first, the decline in the U.S. economy was the factor that triggered economic downturns in most other countries due to a decline in trade, capital movement, and global business confidence. Then, internal weaknesses or strengths in each country made conditions worse or better. For example,

333-418: A silver standard , almost avoided the depression entirely. The connection between leaving the gold standard as a strong predictor of that country's severity of its depression and the length of time of its recovery has been shown to be consistent for dozens of countries, including developing countries . This partly explains why the experience and length of the depression differed between regions and states around

444-650: A doctorate at Syracuse University and became an educator and administrator. He served as Puerto Rico's Secretary of Education in 1977 and 2009. His younger brother, Carlos Fernando Chardón (5 September 1907 – 9 December 1981), served as the Puerto Rico Adjutant General and Secretary of State of Puerto Rico from 1969 to 1973. Chardón was in the process of publishing the fourth and fifth volumes of Los Naturalistas en América Latina when he died on 7 March 1965, in San Juan, Puerto Rico . He

555-604: A former privately run bank, bearing no relation to the U.S. government (not to be confused with the Federal Reserve ). Unable to pay out to all of its creditors, the bank failed. Among the 608 American banks that closed in November and December 1930, the Bank of United States accounted for a third of the total $ 550 million deposits lost and, with its closure, bank failures reached a critical mass. In an initial response to

666-467: A greater reduction in credit. On 5 April 1933, President Roosevelt signed Executive Order 6102 making the private ownership of gold certificates , coins and bullion illegal, reducing the pressure on Federal Reserve gold. British economist John Maynard Keynes argued in The General Theory of Employment, Interest and Money that lower aggregate expenditures in the economy contributed to

777-535: A large bureaucratic agency whose administrators consisted of young Puerto Rican New Deal liberals, many of whom would become integral actors, along with Luis Muñoz Marín , in creating the pro-United States Popular Democratic Party of Puerto Rico ( Partido Popular Democratico , or PPD) in 1938. With the $ 35 million in allotted federal funds it received in late 1935, the PRRA instituted a variety of initiatives that were mostly experimental in nature, but geared toward changing

888-427: A massive decline in income and to employment that was well below the average. In such a situation, the economy reached equilibrium at low levels of economic activity and high unemployment. Carlos E. Chard%C3%B3n PR Dept of Agriculture (1920s) UPR (1931–1935) PR Reconstruction Administration (1930s) PR Lands Authority (1940) Carlos Eugenio Chardón Palacios (28 September 1897 – 7 March 1965)

999-600: A modern industrial city handled shortages of money and resources. Often they updated strategies their mothers used when they were growing up in poor families. Cheap foods were used, such as soups, beans and noodles. They purchased the cheapest cuts of meat—sometimes even horse meat—and recycled the Sunday roast into sandwiches and soups. They sewed and patched clothing, traded with their neighbors for outgrown items, and made do with colder homes. New furniture and appliances were postponed until better days. Many women also worked outside

1110-402: A monetary contraction first-hand were forced to join the deflationary policy since higher interest rates in countries that performed a deflationary policy led to a gold outflow in countries with lower interest rates. Under the gold standard's price–specie flow mechanism , countries that lost gold but nevertheless wanted to maintain the gold standard had to permit their money supply to decrease and

1221-567: A serious issue in the 1930s. Support for increasing welfare programs during the depression included a focus on women in the family. The Conseil Supérieur de la Natalité campaigned for provisions enacted in the Code de la Famille (1939) that increased state assistance to families with children and required employers to protect the jobs of fathers, even if they were immigrants. In rural and small-town areas, women expanded their operation of vegetable gardens to include as much food production as possible. In

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1332-485: A signature drive to declare Albizu Campos as "Student Enemy Number One". A pro-Nationalist faction of students protested, denouncing Chardón and the Liberal Party in turn. The following day, 24 October, a student assembly at the university declared Albizu Campos Persona non grata (person not welcomed). Concerned about the potential for violence, Chardón requested the governor to provide armed police officers at

1443-480: A small cadre of Labour, but the vast majority of Labour leaders denounced MacDonald as a traitor for leading the new government. Britain went off the gold standard , and suffered relatively less than other major countries in the Great Depression. In the 1931 British election, the Labour Party was virtually destroyed, leaving MacDonald as prime minister for a largely Conservative coalition. In most countries of

1554-713: A standstill agreement froze Germany's foreign liabilities for six months. Germany received emergency funding from private banks in New York as well as the Bank of International Settlements and the Bank of England. The funding only slowed the process. Industrial failures began in Germany, a major bank closed in July and a two-day holiday for all German banks was declared. Business failures were more frequent in July, and spread to Romania and Hungary. The crisis continued to get worse in Germany, bringing political upheaval that finally led to

1665-658: Is a consensus that the Federal Reserve System should have cut short the process of monetary deflation and banking collapse, by expanding the money supply and acting as lender of last resort . If they had done this, the economic downturn would have been far less severe and much shorter. Modern mainstream economists see the reasons in Insufficient spending, the money supply reduction, and debt on margin led to falling prices and further bankruptcies ( Irving Fisher 's debt deflation). The monetarist explanation

1776-493: Is supported by the contrast in how the crisis progressed in, e.g., Britain, Argentina and Brazil, all of which devalued their currencies early and returned to normal patterns of growth relatively rapidly and countries which stuck to the gold standard , such as France or Belgium. Frantic attempts by individual countries to shore up their economies through protectionist policies – such as the 1930 U.S. Smoot–Hawley Tariff Act and retaliatory tariffs in other countries – exacerbated

1887-539: The 1932 election , Hoover was defeated by Franklin D. Roosevelt , who from 1933 pursued a series of " New Deal " policies and programs to provide relief and create jobs, including the Civilian Conservation Corps , Federal Emergency Relief Administration , Tennessee Valley Authority , and Works Progress Administration . Historians disagree on the effects of the New Deal, with some claiming that

1998-798: The Government of Puerto Rico . He left Puerto Rico and helped in the agricultural and economic development of the Dominican Republic, Colombia, and Iran . After returning to Puerto Rico in 1940, he held positions as director of the Land Authority (1940), and the Tropical Agricultural Institute in Mayagüez (1942). Chardón married Dolores López Wiscovich; they had 4 children - two sons and two daughters. His second son, Carlos A. Chardón López , earned

2109-582: The New York Bank of United States – which produced panic and widespread runs on local banks, and the Federal Reserve sat idly by while banks collapsed. Friedman and Schwartz argued that, if the Fed had provided emergency lending to these key banks, or simply bought government bonds on the open market to provide liquidity and increase the quantity of money after the key banks fell, all the rest of

2220-720: The Royal Decree of Graces issued by the Spanish Crown, which was trying to attract new settlers to the island. Chardón received his primary and secondary education in his hometown. In 1915, he began his studies in agriculture at the College of Agriculture and Mechanical Arts in Mayagüez . Chardón went to the United States to continue his college education at Cornell University in New York State after Mayagüez

2331-546: The aphid "Aphis maidis" was the vector of the sugar cane Mosaic virus. Mosaic viruses are plant viruses. In the 1920s, he was appointed as Commissioner of Agriculture and Labor. In that position, he traveled in Central and South America, aiding agricultural programs in Colombia, Venezuela, Bolivia and Dominican Republic. After serving as a university administrator and head of a major agency, he returned to his academic work in

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2442-539: The coming to power of Hitler's Nazi regime in January 1933. The world financial crisis now began to overwhelm Britain; investors around the world started withdrawing their gold from London at the rate of £2.5 million per day. Credits of £25 million each from the Bank of France and the Federal Reserve Bank of New York and an issue of £15 million fiduciary note slowed, but did not reverse,

2553-474: The stock market , which resulted in growing wealth inequality . Banks were subject to minimal regulation under laissez-faire economic policies, resulting in loose lending and widespread debt. By 1929, declining spending had led to reductions in manufacturing output and rising unemployment . Share values continued to rise until the Wall Street crash, after which the slide continued for three years, which

2664-447: The 1937 recession that interrupted it). The common view among most economists is that Roosevelt's New Deal policies either caused or accelerated the recovery, although his policies were never aggressive enough to bring the economy completely out of recession. Some economists have also called attention to the positive effects from expectations of reflation and rising nominal interest rates that Roosevelt's words and actions portended. It

2775-596: The 500-acre law came with the Puerto Rican government's 1940 victory in a U.S. Supreme Court case against the Robert Hermanos Company, which owned 12,000 acres on the island. This pivotal lawsuit upheld the validity of the 500-acre law and set the stage for subsequent land reform in the 1940s. In 1941, the Land Authority of Puerto Rico was created under legislation entitled Law 26 of April 12, 1941. The Land Authority's parcelas provision allowed for

2886-813: The British crisis. The financial crisis now caused a major political crisis in Britain in August 1931. With deficits mounting, the bankers demanded a balanced budget; the divided cabinet of Prime Minister Ramsay MacDonald's Labour government agreed; it proposed to raise taxes, cut spending, and most controversially, to cut unemployment benefits 20%. The attack on welfare was unacceptable to the Labour movement. MacDonald wanted to resign, but King George V insisted he remain and form an all-party coalition " National Government ". The Conservative and Liberals parties signed on, along with

2997-530: The Depression. Businessmen ignored the mounting national debt and heavy new taxes, redoubling their efforts for greater output to take advantage of generous government contracts. During World War I many countries suspended their gold standard in varying ways. There was high inflation from WWI, and in the 1920s in the Weimar Republic , Austria , and throughout Europe. In the late 1920s there

3108-521: The Dow returning to 294 (pre-depression levels) in April 1930, before steadily declining for years, to a low of 41 in 1932. At the beginning, governments and businesses spent more in the first half of 1930 than in the corresponding period of the previous year. On the other hand, consumers, many of whom suffered severe losses in the stock market the previous year, cut expenditures by 10%. In addition, beginning in

3219-489: The Federal Reserve did not act to limit the decline of the money supply was the gold standard . At that time, the amount of credit the Federal Reserve could issue was limited by the Federal Reserve Act , which required 40% gold backing of Federal Reserve Notes issued. By the late 1920s, the Federal Reserve had almost hit the limit of allowable credit that could be backed by the gold in its possession. This credit

3330-442: The Great Depression is right, or the traditional Keynesian explanation that a fall in autonomous spending, particularly investment, is the primary explanation for the onset of the Great Depression. Today there is also significant academic support for the debt deflation theory and the expectations hypothesis that – building on the monetary explanation of Milton Friedman and Anna Schwartz – add non-monetary explanations. There

3441-642: The Great Depression. According to the U.S. Senate website, the Smoot–Hawley Tariff Act is among the most catastrophic acts in congressional history. Many economists have argued that the sharp decline in international trade after 1930 helped to worsen the depression, especially for countries significantly dependent on foreign trade. Most historians and economists blame the Act for worsening the depression by seriously reducing international trade and causing retaliatory tariffs in other countries. While foreign trade

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3552-481: The New Deal prolonged the Great Depression, as they argue that National Industrial Recovery Act of 1933 and National Labor Relations Act of 1935 restricted competition and established price fixing. John Maynard Keynes did not think that the New Deal under Roosevelt single-handedly ended the Great Depression: "It is, it seems, politically impossible for a capitalistic democracy to organize expenditure on

3663-548: The PRERA received only $ 770,000 from the federal government due to oversights in application processes. By the fall of 1933, the PRERA was unable to keep up with the flood of relief applications from Puerto Ricans, which totaled approximately 50,000 per month. Adding to the program's relative ineffectiveness was the 1933 implementation of an agricultural tax under the Agricultural Adjustment Act (AAA). The tax

3774-504: The PRRA built a model coffee farm and instituted reforestation and soil erosion projects in Puerto Rico's rural regions. The PRRA also organized a Producer's Association among small coffee and fruit farmers, which offered financial assistance and provided instruction in the use of new agricultural and marketing techniques. By 1936 the administration had employed between 50,000 and 60,000 Puerto Rican workers. The most enduring program of

3885-402: The PRRA was its rural electrification program. The project facilitated the construction of seven hydroelectric dams and extended power lines and stations across the island, bringing affordable power to thousands of rural citizens for the first time in Puerto Rico's history. In addition to providing power, the hydroelectric dams also provided crucial flood control, irrigation for crops, and improved

3996-689: The Puerto Rican socioeconomic infrastructure. In the early years of its existence, the PRRA's projects included the creation of public housing and parks as well as the construction of a fully functional cement factory, which provided essential materials for the construction of hurricane proof buildings. In 1935 and 1936 it purchased the Ponce Electric Company and two large centrals (sugar processing factories) in Arroyo and Arecibo . Island wide, it established health clinics and parasite eradication programs for farm animals and crops. Additionally,

4107-655: The School of Agriculture of Medellín . He also traveled to Venezuela , Bolivia and the Dominican Republic to assist in their agricultural programs. In 1929 he returned to Colombia and established the Experimental Station of Palmira in Palmira, Valle del Cauca, Colombia. He resigned from his position as Commissioner of Agriculture and Labor in 1931, when he was named by Theodore Roosevelt Jr. ,

4218-544: The U.K. economy, which experienced an economic downturn throughout most of the late 1920s, was less severely impacted by the shock of the depression than the U.S. By contrast, the German economy saw a similar decline in industrial output as that observed in the U.S. Some economic historians attribute the differences in the rates of recovery and relative severity of the economic decline to whether particular countries had been able to effectively devaluate their currencies or not. This

4329-425: The U.S. secretary of agriculture. Further thwarting its implementation were questions of financing and the lobbying of U.S. sugar companies. Critics such as Albizu Campos claimed the plan and subsequent reconstruction efforts were not radical enough in that they still facilitated Puerto Rico's political and economic cooperation with the United States. Campos also called for a change in the 500-acre law that would amend

4440-490: The U.S. unemployment rate down below 10%. World War II had a dramatic effect on many parts of the American economy. Government-financed capital spending accounted for only 5% of the annual U.S. investment in industrial capital in 1940; by 1943, the government accounted for 67% of U.S. capital investment. The massive war spending doubled economic growth rates, either masking the effects of the Depression or essentially ending

4551-719: The US-appointed governor, as Chancellor of the University of Puerto Rico. As the first Puerto Rican to hold that position, Chardón was in a very prominent role. Don Pedro Albizu Campos , president of the Puerto Rican Nationalist Party , believed that Chardón was being used by the US for its own interests at the university. He thought the Liberal Party of Puerto Rico , a leading political party of

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4662-695: The United States Tobacco Trust also held monopolies on cigarette and cigar markets in Puerto Rico, giving them an economic advantage over small scale tobacco farmers. While American companies expanded and profited, sugarcane and other agricultural workers saw little to no change in wages between 1898 and 1920 and Puerto Rican laborers generally experienced a poor standard of living. Malnutrition, poor sanitation, lack of sewage systems, and dangerous working and living conditions led to high mortality rates due to workplace accidents and diseases such as dysentery, diarrhea, malaria, and tuberculosis. In

4773-622: The United States, agricultural organizations sponsored programs to teach housewives how to optimize their gardens and to raise poultry for meat and eggs. Rural women made feed sack dresses and other items for themselves and their families and homes from feed sacks. In American cities, African American women quiltmakers enlarged their activities, promoted collaboration, and trained neophytes. Quilts were created for practical use from various inexpensive materials and increased social interaction for women and promoted camaraderie and personal fulfillment. Oral history provides evidence for how housewives in

4884-543: The United States, remained on the gold standard into 1932 or 1933, while a few countries in the so-called "gold bloc", led by France and including Poland, Belgium and Switzerland, stayed on the standard until 1935–36. According to later analysis, the earliness with which a country left the gold standard reliably predicted its economic recovery. For example, The UK and Scandinavia, which left the gold standard in 1931, recovered much earlier than France and Belgium, which remained on gold much longer. Countries such as China, which had

4995-452: The United States. By 1938, the program's total funding had reached $ 57,953,189.00 an estimated 12 percent of which had been used to buy goods and supplies from the mainland. Additionally, approximately 80 cents per dollar spent by the administration was funneled back into the United States economy. The PRRA was officially dismantled by an act of Congress (67 Stat 584, August 15, 1953) on February 15, 1955, but its actual demise began as early as

5106-568: The agency; it was also modeled on some of the New Deal programs of the US President Franklin D. Roosevelt , developed by his administration to put people to work during the Great Depression . Well received, it was known informally as "Plan Chardón". It encouraged the training and development of Agriculture Technicians. Chardón resigned from his positions in PRRA and the University of Puerto Rico because of his disagreements with

5217-422: The allotment of one to three acres of land to many poor, rural landless workers. With Chardón as its head, by 1945 the organization had parceled out plots to 14,000 families and by 1959 the number of families with acreage reached 52,287. Puerto Rican New Deal policies also did little in the way in improving wages for the island's workers. In 1940, the average per capita income for Puerto Rican workers remained roughly

5328-460: The banks would not have fallen after the large ones did, and the money supply would not have fallen as far and as fast as it did. With significantly less money to go around, businesses could not get new loans and could not even get their old loans renewed, forcing many to stop investing. This interpretation blames the Federal Reserve for inaction, especially the New York branch . One reason why

5439-465: The behavior of housewives. The common view among economic historians is that the Great Depression ended with the advent of World War II . Many economists believe that government spending on the war caused or at least accelerated recovery from the Great Depression, though some consider that it did not play a very large role in the recovery, though it did help in reducing unemployment. The rearmament policies leading up to World War II helped stimulate

5550-414: The cardboard manufacturing industries. The central intent of the plan was to break the monopolies of American corporations, diversify the economy, and to utilize available labor in the promotion of locally sourced industrial and agricultural development with the hope of raising the overall Puerto Rican standard of living. Plan Chardón was never officially enacted, as it did not receive the required approval of

5661-462: The collapse in global trade, contributing to the depression. By 1933, the economic decline pushed world trade to one third of its level compared to four years earlier. While the precise causes for the occurrence of the Great depression are disputed and can be traced to both global and national phenomena, its immediate origins are most conveniently examined in the context of the U.S. economy, from which

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5772-475: The crash was a mere symptom of more general economic trends of the time, which had already been underway in the late 1920s. A contrasting set of views, which rose to prominence in the later part of the 20th century, ascribes a more prominent role to failures of monetary policy . According to those authors, while general economic trends can explain the emergence of the downtown, they fail to account for its severity and longevity; they argue that these were caused by

5883-625: The crisis, the U.S. Congress passed the Smoot–Hawley Tariff Act on 17 June 1930. The Act was ostensibly aimed at protecting the American economy from foreign competition by imposing high tariffs on foreign imports. The consensus view among economists and economic historians (including Keynesians , Monetarists and Austrian economists ) is that the passage of the Smoot–Hawley Tariff had, in fact, achieved an opposite effect to what

5994-633: The decade. The Depression had devastating economic effects on both wealthy and poor countries: all experienced drops in personal income , prices ( deflation ), tax revenues, and profits. International trade fell by more than 50%, and unemployment in some countries rose as high as 33%. Cities around the world , especially those dependent on heavy industry , were heavily affected. Construction virtually halted in many countries, and farming communities and rural areas suffered as crop prices fell by up to 60%. Faced with plummeting demand and few job alternatives, areas dependent on primary sector industries suffered

6105-408: The depression. Not all governments enforced the same measures of protectionism. Some countries raised tariffs drastically and enforced severe restrictions on foreign exchange transactions, while other countries reduced "trade and exchange restrictions only marginally": The gold standard was the primary transmission mechanism of the Great Depression. Even countries that did not face bank failures and

6216-435: The domestic price level to decline ( deflation ). There is also consensus that protectionist policies, and primarily the passage of the Smoot–Hawley Tariff Act , helped to exacerbate, or even cause the Great Depression. Some economic studies have indicated that the rigidities of the gold standard not only spread the downturn worldwide, but also suspended gold convertibility (devaluing the currency in gold terms) that did

6327-402: The drop in demand. Monetarists believe that the Great Depression started as an ordinary recession, but the shrinking of the money supply greatly exacerbated the economic situation, causing a recession to descend into the Great Depression. Economists and economic historians are almost evenly split as to whether the traditional monetary explanation that monetary forces were the primary cause of

6438-427: The economies of Europe in 1937–1939. By 1937, unemployment in Britain had fallen to 1.5 million. The mobilization of manpower following the outbreak of war in 1939 ended unemployment. The American mobilization for World War II at the end of 1941 moved approximately ten million people out of the civilian labor force and into the war. This finally eliminated the last effects from the Great Depression and brought

6549-576: The end of the month. A large sell-off of stocks began in mid-October. Finally, on 24 October, Black Thursday , the American stock market crashed 11% at the opening bell. Actions to stabilize the market failed, and on 28 October, Black Monday, the market crashed another 12%. The panic peaked the next day on Black Tuesday, when the market saw another 11% drop. Thousands of investors were ruined, and billions of dollars had been lost; many stocks could not be sold at any price. The market recovered 12% on Wednesday but by then significant damage had been done. Though

6660-500: The explanations of the Keynesians and monetarists. The consensus among demand-driven theories is that a large-scale loss of confidence led to a sudden reduction in consumption and investment spending. Once panic and deflation set in, many people believed they could avoid further losses by keeping clear of the markets. Holding money became profitable as prices dropped lower and a given amount of money bought ever more goods, exacerbating

6771-503: The few women in the labor force, layoffs were less common in the white-collar jobs and they were typically found in light manufacturing work. However, there was a widespread demand to limit families to one paid job, so that wives might lose employment if their husband was employed. Across Britain, there was a tendency for married women to join the labor force, competing for part-time jobs especially. In France, very slow population growth, especially in comparison to Germany continued to be

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6882-521: The fields of land use and agriculture in 1940 and later. He published several books on his studies in Puerto Rico and Latin America. Carlos Eugenio Chardón Palacios was born in Ponce, Puerto Rico , to Carlos Felix Chardón and Isabel Palacios Pelletier. His great-grandfather, Juan Bautista Chardón, a Catholic native of Champagne, France , immigrated to Puerto Rico from Louisiana in 1816, encouraged by

6993-636: The first Puerto Rican mycologist. He returned to Puerto Rico and began a career in the fields of taxonomy of fungi , phytopathology , and agricultural development. He continued to collaborate with Whetzel as well as Frank Dunn Kern on the rust and smut fungi of Puerto Rico. Chardón worked as a phytopathologist at the Agricultural Experimental Station in Río Piedras . He became the first person to describe Ophionectria portoricensis in 1921. In 1922 he discovered

7104-505: The first week of June, 540 million in the second, and 150 million in two days, 19–20 June. Collapse was at hand. U.S. President Herbert Hoover called for a moratorium on payment of war reparations . This angered Paris, which depended on a steady flow of German payments, but it slowed the crisis down, and the moratorium was agreed to in July 1931. An International conference in London later in July produced no agreements but on 19 August

7215-606: The government tried to reshape private household consumption under the Four-Year Plan of 1936 to achieve German economic self-sufficiency. The Nazi women's organizations, other propaganda agencies and the authorities all attempted to shape such consumption as economic self-sufficiency was needed to prepare for and to sustain the coming war. The organizations, propaganda agencies and authorities employed slogans that called up traditional values of thrift and healthy living. However, these efforts were only partly successful in changing

7326-519: The home, or took boarders, did laundry for trade or cash, and did sewing for neighbors in exchange for something they could offer. Extended families used mutual aid—extra food, spare rooms, repair-work, cash loans—to help cousins and in-laws. In Japan, official government policy was deflationary and the opposite of Keynesian spending. Consequently, the government launched a campaign across the country to induce households to reduce their consumption, focusing attention on spending by housewives. In Germany,

7437-527: The initial crisis spread to the rest of the world. In the aftermath of World War I , the Roaring Twenties brought considerable wealth to the United States and Western Europe. Initially, the year 1929 dawned with good economic prospects: despite a minor crash on 25 March 1929, the market seemed to gradually improve through September. Stock prices began to slump in September, and were volatile at

7548-424: The island rather than on its initial goal of economic reform. University of Puerto Rico - Digital Collection - PRRA Great Depression The Great Depression was a severe global economic downturn from 1929 to 1939. The period was characterized by high rates of unemployment and poverty; drastic reductions in liquidity , industrial production, and trade; and widespread bank and business failures around

7659-432: The island was roughly 36% and by 1933 Puerto Rico's per capita income dropped 30% (by comparison, unemployment in the United States in 1930 was approximately 8% reaching a height of 25% in 1933). Average wages for employed agricultural workers in 1931 ranged from roughly 23 cents per day for children, 25 cents per day for women, 60 cents per day for men, a number that varied due to the seasonal nature of their employment. Since

7770-563: The lack of an adequate response to the crises of liquidity that followed the initial economic shock of 1929 and the subsequent bank failures accompanied by a general collapse of the financial markets. After the Wall Street Crash of 1929 , when the Dow Jones Industrial Average dropped from 381 to 198 over the course of two months, optimism persisted for some time. The stock market rose in early 1930, with

7881-571: The land owning quota to 300 acres. On May 28, 1935 the Puerto Rico Reconstruction Administration (PRRA) was created by President Roosevelt under executive order 7057 and would operate under the authority of the Department of Interior and its secretary Harold Ickes . Modeled on Plan Chardón, the PRRA fell under the direction of American Ernest Gruening and Carlos Chardón . Gruening and Chardón oversaw

7992-465: The late 1930s. In 1939, the administration received only $ 7 million in operating costs, just over half of its estimated budgetary requirements of $ 13 million and due to economic constraints, several of its initiatives were stalled. As a result, the insular government increasingly gained financial and administrative control over many of the PRRA's projects. Particularly hard hit were educational, health, and sanitation facilities. By World War II , Puerto Rico

8103-407: The majority of Puerto Rico's arable land was reserved for export crops, 98% of Puerto Rican family income was spent on food and other necessities, which were imported from the United States and sold at inflated prices. In 1930, agricultural exports to U.S. comprised 94.3% of total Puerto Rican exports and food accounted for roughly 33% of total imports by 1935. High unemployment rates and low wages at

8214-521: The market entered a period of recovery from 14 November until 17 April 1930, the general situation had been a prolonged slump. From 17 April 1930 until 8 July 1932, the market continued to lose 89% of its value. Despite the crash, the worst of the crisis did not reverberate around the world until after 1929. The crisis hit panic levels again in December 1930, with a bank run on the Bank of United States ,

8325-414: The mid-1930s, a severe drought ravaged the agricultural heartland of the U.S. Interest rates dropped to low levels by mid-1930, but expected deflation and the continuing reluctance of people to borrow meant that consumer spending and investment remained low. By May 1930, automobile sales declined to below the levels of 1928. Prices, in general, began to decline, although wages held steady in 1930. Then

8436-423: The monetary base and by not injecting liquidity into the banking system to prevent it from crumbling, the Federal Reserve passively watched the transformation of a normal recession into the Great Depression. Friedman and Schwartz argued that the downward turn in the economy, starting with the stock market crash, would merely have been an ordinary recession if the Federal Reserve had taken aggressive action. This view

8547-502: The most to make recovery possible. Every major currency left the gold standard during the Great Depression. The UK was the first to do so. Facing speculative attacks on the pound and depleting gold reserves , in September 1931 the Bank of England ceased exchanging pound notes for gold and the pound was floated on foreign exchange markets. Japan and the Scandinavian countries followed in 1931. Other countries, such as Italy and

8658-427: The most. The outbreak of World War II in 1939 ended the Depression, as it stimulated factory production, providing jobs for women as militaries absorbed large numbers of young, unemployed men. The precise causes for the Great Depression are disputed. One set of historians, for example, focuses on non-monetary economic causes. Among these, some regard the Wall Street crash itself as the main cause; others consider that

8769-582: The need to balance the national budget and was unwilling to implement expensive welfare spending . In 1930, Hoover signed the Smoot–Hawley Tariff Act , which taxed imports with the intention of encouraging buyers to purchase American products, which worsened the Depression because foreign governments retaliated with tariffs on American exports. In 1932, Hoover established the Reconstruction Finance Corporation , which offered loans to businesses and support to local governments. In

8880-483: The physical volume of exports fall, but also the prices fell by about 1 ⁄ 3 as written. Hardest hit were farm commodities such as wheat, cotton, tobacco, and lumber. Governments around the world took various steps into spending less money on foreign goods such as: "imposing tariffs, import quotas, and exchange controls". These restrictions triggered much tension among countries that had large amounts of bilateral trade, causing major export-import reductions during

8991-480: The policies prolonged the Depression instead of shortening it. Between 1929 and 1932, worldwide gross domestic product (GDP) fell by an estimated 15%; in the U.S., the Depression resulted in a 30% contraction in GDP. Recovery varied greatly around the world. Some economies, such as the U.S., Germany and Japan started to recover by the mid-1930s; others, like France, did not return to pre-shock growth rates until later in

9102-459: The political situation in Europe. In their book, A Monetary History of the United States , Milton Friedman and Anna J. Schwartz also attributed the recovery to monetary factors, and contended that it was much slowed by poor management of money by the Federal Reserve System . Chairman of the Federal Reserve (2006–2014) Ben Bernanke agreed that monetary factors played important roles both in

9213-449: The quality of drinking water. The electrification program also helped to create the infrastructure for the future urban industrialization efforts under Operation Bootstrap . Although another initial intention of Chardón-influenced PRRA was to seek enforcement of the 500-acre law and aid in land distribution among Puerto Rican citizens, the agency took no steps in this regard as it was not within its legal power to do so. Legal enforcement of

9324-512: The radical labor organizing leadership of Puerto Rican nationalists Albizu Campos and Jose Enamorado Cuesta who also called for independence from the United States. These factors combined with the economic fallout of the depression prompted the Roosevelt Administration to create relief, recovery and reconstruction policies specifically aimed at Puerto Rico. The first New Deal agency created to improve conditions in Puerto Rico

9435-435: The restructuring and decolonization of the Puerto Rican economy through the government acquisition of private U.S. sugar company land and mills. The acreage and production sites were to be taken under a rarely enforced land tenure measure written into the 1900 Foraker Act and the 1917 Jones Act . The 500-acre law, which stipulated that corporations operating in Puerto Rico were forbidden from owning more than 500 acres of land,

9546-528: The same as per capita income from 1930. From its inception other problems such as minor financial mismanagement, opposition from members of the U.S. Congress and sugar companies also plagued the PRRA, and it was also criticized by the Puerto Rican Republican-Socialist coalition for purported political and economic corruption. Three years after its inception, statistics show that PRRA expenditures often benefitted business interests in

9657-434: The scale necessary to make the grand experiments which would prove my case—except in war conditions." According to Christina Romer , the money supply growth caused by huge international gold inflows was a crucial source of the recovery of the United States economy, and that the economy showed little sign of self-correction. The gold inflows were partly due to devaluation of the U.S. dollar and partly due to deterioration of

9768-447: The start of the Great Depression led to increased labor unrest in Puerto Rico, which alarmed American officials and business interests. Beginning in August 1933 and lasting through the next two years, numerous violent strikes broke out among roughly 16,000 workers in the textile, stevedore, tobacco, taxi, and sugar industries and boycotts were called against American petroleum and electric corporations. American officials were also alarmed by

9879-550: The students Eduardo Rodríguez Vega and José Santiago Barea also died that day. The incident became known as the " Río Piedras massacre " and caused national outrage. In 1935, Chardón was appointed by Blanton Winship , the island governor, as head of the Puerto Rico Reconstruction Administration (PRRA). Luis Muñoz Marín , a senator in the Puerto Rican legislature and member of the Liberal Party of Puerto Rico , had encouraged formation of

9990-602: The time, was allied with US interests there. On 20 October 1935, the Nationalist Party broadcast their meeting in Maunabo , at which Albizu Campos denounced Chardón, the university deans, and the Liberal Party as "traitors," saying they wanted to convert the university into an "American" propaganda institution. In reaction, on 23 October 1935, students at the university in Rio Piedras who supported Chardón began

10101-404: The university because of the tensions. That day, two police officers saw what they thought was a suspicious-looking automobile and asked the driver, Ramón S. Pagán, for his license. His friend Pedro Quiñones was with him, and a confrontation developed that resulted in the deaths of Pagán and Quiñones. The local newspaper El Mundo reported the next day that an explosion and gunfire had been heard;

10212-515: The vector of the Mosaic virus of sugar cane, which was the aphid Aphis maidis. His findings were published in the Journal of Phytopathology. Chardón was appointed Commissioner of Agriculture and Labor by Horace Mann Towner , the US-appointed governor. As commissioner, he continued his studies of the diseases of tobacco and sugar cane. In 1926 Chardón traveled to Colombia , where he reorganized

10323-476: The world, recovery from the Great Depression began in 1933. In the U.S., recovery began in early 1933, but the U.S. did not return to 1929 GNP for over a decade and still had an unemployment rate of about 15% in 1940, albeit down from the high of 25% in 1933. There is no consensus among economists regarding the motive force for the U.S. economic expansion that continued through most of the Roosevelt years (and

10434-673: The world. The financial crisis escalated out of control in mid-1931, starting with the collapse of the Credit Anstalt in Vienna in May. This put heavy pressure on Germany, which was already in political turmoil. With the rise in violence of National Socialist ('Nazi') and Communist movements, as well as investor nervousness at harsh government financial policies, investors withdrew their short-term money from Germany as confidence spiraled downward. The Reichsbank lost 150 million marks in

10545-493: The world. The economic contagion began in 1929 in the United States , the largest economy in the world, with the devastating Wall Street stock market crash of October 1929 often considered the beginning of the Depression. The Depression was preceded by a period of industrial growth and social development known as the " Roaring Twenties ". Much of the profit generated by the boom was invested in speculation , such as on

10656-778: The worldwide economic decline and eventual recovery. Bernanke also saw a strong role for institutional factors, particularly the rebuilding and restructuring of the financial system, and pointed out that the Depression should be examined in an international perspective. Women's primary role was as housewives; without a steady flow of family income, their work became much harder in dealing with food and clothing and medical care. Birthrates fell everywhere, as children were postponed until families could financially support them. The average birthrate for 14 major countries fell 12% from 19.3 births per thousand population in 1930, to 17.0 in 1935. In Canada, half of Roman Catholic women defied Church teachings and used contraception to postpone births. Among

10767-418: The years immediately preceding the depression, negative developments in the island and world economies perpetuated an unsustainable cycle of subsistence for many Puerto Rican workers. The 1920s brought a dramatic drop in Puerto Rico's two primary exports, raw sugar and coffee, due to a devastating hurricane in 1928 and the plummeting demand from global markets in the latter half of the decade. 1930 unemployment on

10878-658: Was a scramble to deflate prices to get the gold standard's conversation rates back on track to pre-WWI levels, by causing deflation and high unemployment through monetary policy. In 1933 FDR signed Executive Order 6102 and in 1934 signed the Gold Reserve Act . The two classic competing economic theories of the Great Depression are the Keynesian (demand-driven) and the Monetarist explanation. There are also various heterodox theories that downplay or reject

10989-478: Was a small part of overall economic activity in the U.S. and was concentrated in a few businesses like farming, it was a much larger factor in many other countries. The average ad valorem (value based) rate of duties on dutiable imports for 1921–1925 was 25.9% but under the new tariff it jumped to 50% during 1931–1935. In dollar terms, American exports declined over the next four years from about $ 5.2 billion in 1929 to $ 1.7 billion in 1933; so, not only did

11100-500: Was accompanied by a loss of confidence in the financial system. By 1933, the U.S. unemployment rate had risen to 25 percent, about one-third of farmers had lost their land, and about half of the country's 25,000 banks had gone out of business. Many people, unable to pay mortgages or rent, became homeless and relied on begging or charities to feed themselves. The U.S. federal government initially did little to help. President Herbert Hoover , like many of his fellow Republicans , believed in

11211-474: Was endorsed in 2002 by Federal Reserve Governor Ben Bernanke in a speech honoring Friedman and Schwartz with this statement: Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression, you're right. We did it. We're very sorry. But thanks to you, we won't do it again. The Federal Reserve allowed some large public bank failures – particularly that of

11322-597: Was forced to limit the services of or close numerous health care clinics, hospitals, and schools. Puerto Rico's location in the Caribbean and proximity to the United States, the Panama Canal, and Cuba made a place of strategic importance during World War II and the Cold War. Although the PRRA continued to receive aid from Washington, D.C. until 1955, most of its funding was directed toward the military fortification of

11433-426: Was given by American economists Milton Friedman and Anna J. Schwartz . They argued that the Great Depression was caused by the banking crisis that caused one-third of all banks to vanish, a reduction of bank shareholder wealth and more importantly monetary contraction of 35%, which they called "The Great Contraction ". This caused a price drop of 33% ( deflation ). By not lowering interest rates, by not increasing

11544-500: Was in the form of Federal Reserve demand notes. A "promise of gold" is not as good as "gold in the hand", particularly when they only had enough gold to cover 40% of the Federal Reserve Notes outstanding. During the bank panics, a portion of those demand notes was redeemed for Federal Reserve gold. Since the Federal Reserve had hit its limit on allowable credit, any reduction in gold in its vaults had to be accompanied by

11655-446: Was intended. It exacerbated the Great Depression by preventing economic recovery after domestic production recovered, hampering the volume of trade; still there is disagreement as to the precise extent of the Act's influence. In the popular view, the Smoot–Hawley Tariff was one of the leading causes of the depression. In a 1995 survey of American economic historians, two-thirds agreed that the Smoot–Hawley Tariff Act at least worsened

11766-618: Was leveled on surplus crops and served to increase food prices for Puerto Rican families who were already at a financial breaking point. The PRERA's primary successes came with its implementation of disease control measures, the building highway infrastructure, and in its distribution of food to needy families. In 1934, recognizing a need for long term economic recovery and reform, a proposal was crafted by assistant secretary of agriculture, Rexford G. Tugwell , University of Puerto Rico rector Carlos Chardón , and Puerto Rican Liberal Party senator Luis Muñoz Marín . Entitled Plan Chardón, it called for

11877-450: Was struck by an earthquake in 1918 . It did considerable damage to the university and the city, damaging hundreds of masonry and wooden buildings, both commercial and residential. Chardón earned his B.A. degree in 1919 and continued towards his Master's. He specialized in phytopathology and mycology , and studied diseases of sugar cane under the supervision of Herbert H. Whetzel . Chardón earned his master's degree in 1921 and became

11988-724: Was the Puerto Rico Emergency Relief Administration (PRERA) in 1933. The PRERA worked under the authority of the Federal Emergency Relief Administration (FERA) and through matching grants would provide direct relief funding and the creation of jobs through public works initiatives. Under its directors, the Roosevelt appointee James Bourne , and the island's governor, the American Robert H. Gore ,

12099-518: Was the first Puerto Rican mycologist , a high-ranking official in government on agriculture during the 1920s, the first Puerto Rican appointed as Chancellor of the University of Puerto Rico (1931–1935), and the head of the Puerto Rico Reconstruction Administration in the mid-to late 1930s during the Great Depression . He was also known as "the Father of Mycology in Puerto Rico". He discovered that

12210-470: Was the rollback of those same reflationary policies that led to the interruption of a recession beginning in late 1937. One contributing policy that reversed reflation was the Banking Act of 1935 , which effectively raised reserve requirements, causing a monetary contraction that helped to thwart the recovery. GDP returned to its upward trend in 1938. A revisionist view among some economists holds that

12321-432: Was usually circumvented by proxy landownership and absenteeism. Under the proposed Chardón system the confiscated land would be redistributed to small-scale farmers and the landless who would in turn process sugar locally rather than ship it to the United States for refining. Other proposed projects included the creation of island-based fruit and vegetable canning and bottling facilities, and the promotion of island tourism and

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