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94-625: Facing the crisis generated by the Great Depression in the United States, the president lost almost all his support. He selected his friend Júlio Prestes as his successor in 1930, but just three weeks before the end of his term, Luís was overthrown in a coup d'etat during the Brazilian Revolution of 1930 and was succeeded as president by the short-lived Brazilian Military Junta in the last few months of 1930. He

188-634: 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,

282-418: 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

376-604: 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

470-467: 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

564-601: 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. Taubat%C3%A9 Agreement The Taubaté Agreement ( Portuguese : Convênio de Taubaté ), was an agreement signed on 26 February 1906 during the First Brazilian Republic between the presidents of the states of Minas Gerais (Francisco Antônio de Sales), São Paulo ( Jorge Tibiriçá ) and Rio de Janeiro ( Nilo Peçanha ),

658-600: 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

752-402: 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

846-418: A period defined by an expressive increase in coffee prices began. The beginning of this cycle was marked by other movements that occurred at the same time: there was a strong growth in foreign demand, while the supply grew at an increasing yet irregular rhythm due to climatic conditions, the more or less appropriate treatment given to the plantantions and the fact that periods of great production were followed by

940-567: 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

1034-480: 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

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1128-713: 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

1222-411: A transitional period of plant exhaustion, which largely stimulated speculation . Due to the expansion of demand and the dynamics of supply, the international price of coffee doubled between 1885 and 1890, further stimulating the expansion of coffee plantations. The large expansion of production and other activities related to coffee, on the one hand, brought some wealth and progress to the country, but, on

1316-658: 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

1410-493: 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

1504-539: 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

1598-582: 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

1692-539: 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,

1786-547: The 1920s, the Old Republic suffered a deep wear due to demonstrations of opposition from the urban middle class, the lieutenants' and workers' movements and dissident oligarchies . Early in his administration, came to an end the Prestes Column , with 620 men who went into Bolivian territory and subsequently dissolved. The government of Washington Luís was no longer threatened by the lieutenants' rebellions and for

1880-447: 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

1974-955: The 3rd Battalion organized in Batatais to fight the rebels of São Paulo, which in 1925 became the Miguel Costa-Prestes Column . From 1925 to 1926, Luís served as a senator for the PRP. Through direct election, Luís went on to hold the Presidency of the Republic on 15 November 1926. He was deposed by the Revolution of 1930 on 24 October and went into exile in Europe and the United States, returning to Brazil after seventeen years in 1947. After returning from exile, he moved to São Paulo and devoted himself to historical studies. He

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2068-813: 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

2162-530: 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

2256-521: 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

2350-489: 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

2444-442: 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

2538-642: 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

2632-816: The Municipal Chamber in 1897. Luís was mayor of Batatais from 1898 to 1899. He was elected congressman from the Farmer's Party ( Partido da Lavoura ) in 1900. Luís was a state representative for the Republican Party of São Paulo ( Partido Republicano Paulista ; PRP) between 1904 and 1906, participating in the Constituent Assembly of São Paulo , which revised the Constitution of the State in 1905. He resigned as representative to take

2726-481: 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

2820-544: 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

2914-490: 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

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3008-622: 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

3102-543: 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

3196-638: The Wall Street crash, after which the slide continued for three years, which 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

3290-479: The advancement of the labor movement, however, to restrain new opposition movements he created Celerada Act in 1927, which imposed press censorship and restricted the right of assembly, leading to underground the Brazilian Communist Party, which had been recognized by the government earlier that year. The global economic crisis of 1929, triggered with the stock market crash on 24 October, was

3384-460: 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

3478-573: 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 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

3572-465: 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

3666-419: The coffee market had already been made, notably by Alessandro Vincenzo Siciliano, an Italian-born Brazilian coffee grower and industrialist, in 1903. However, president Rodrigues Alves was reluctant to intervene, due to his liberal and austerity policies. The coffee valorization policy was then carried out by his successor, Afonso Pena . Celso Furtado , in his work Formação Econômica do Brasil , summarized

3760-462: 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

3854-475: 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 downturn, they fail to account for its severity and longevity; they argue that these were caused by

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3948-536: The creation of the Caixa de Conversão  [ pt ] in order to stabilize the exchange rate, and thus, the income of coffee growers in domestic currency. The agreement started the first coffee price defense operation, which was made up of a policy of valuing the product and another of stabilizing the exchange rate. Coffee production in Brazil was established in the 1820s. Initially, coffee plantations spread through

4042-625: 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

4136-633: 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

4230-408: 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

4324-435: 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

4418-402: 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

4512-427: 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

4606-576: 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

4700-500: 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

4794-639: The fertile Paraíba Valley in Rio de Janeiro and São Paulo. Continuing its ascending march, there was an expansion of coffee production in the province of Minas Gerais ( Zona da Mata and the south of the province), at the same time that production was consolidated in the interior of São Paulo. The last 20 years of the Empire of Brazil saw an accentuated development of coffee growing in the so-called "Oeste Paulista" (Western São Paulo), up until that point an almost deserted region and whose vacant lands were quickly invaded by

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4888-503: 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

4982-505: 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

5076-602: The government of Rio Grande do Sul , Vargas and other politician such as Osvaldo Aranha began the political conspiracy that led to the movement of 3 October 1930, the Revolution of 1930 , as became known the episode. President Washington Luís was deposed on 24 October by the heads of the armed forces, and a provisional government junta took power, composed of generals Tasso Fragoso and Mena Barreto and by admiral Isaías de Noronha . Luís died in São Paulo on 4 August 1957. Great Depression The Great Depression

5170-606: 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

5264-554: The governors of the states of Minas Gerais (Francisco Antônio de Sales), São Paulo (Jorge Tibiriçá Piratininga) and Rio de Janeiro (Nilo Procópio Peçanha, later replaced by Alfredo Backer), met in Taubaté and as a result, on the ninth day of that month, signed an agreement that laid the foundations for a joint policy to value coffee, subject to approval by the President of the Republic . Earlier proposals for federal intervention in

5358-519: 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,

5452-527: 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

5546-563: 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

5640-494: The largest in the history of capitalism , reaching many countries and paralyzing economic activities. Its effects in Brazil overthrew the valuation policy of coffee , started in 1906 with the signing of the Taubaté Agreement . Coffee, which accounted for 70% of Brazilian exports, had its price reduced in the international market. The crisis threatened the stability of the government of Washington Luís, who did not allow

5734-535: The main producers of coffee in Brazil. Foreseeing the harvest of a record crop, the agreement was signed in order to artificially maintain the high prices of coffee. Based on the principles of the Governors' Policy  [ pt ] , an intervention by the Federal government of Brazil was agreed for the benefit of the coffee growers in certain regions of the country. The agreement established minimum prices for

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5828-521: 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 ,

5922-491: The measures as follows: As a result, coffee prices were kept artificially high, guaranteeing coffee growers' profits. These, instead of reducing coffee production, continued to produce it on a large scale, forcing the government to contract more loans to continue acquiring the surpluses. The State acquired the product for resale in more favorable moments until 1924, the year in which the Coffee Institute of São Paulo

6016-414: 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

6110-423: 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

6204-502: 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

6298-427: 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

6392-582: 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

6486-592: The new culture. The inauguration of railroads such as the São Paulo Railway Company in 1867, which crossed the Serra do Mar , connecting the coffee growing areas in the interior of São Paulo to the Port of Santos , and the abundance of cheap workforce, a result of the great immigration wave to Brazil at the end of the 19th century, largely contributed to the expansion of the coffee economy. In 1886,

6580-537: The new currency devaluation, pleaded by farmers before the disaster on the New York Stock Exchange . Under the system of coffee with milk politics that prevailed for most of the Old Republic, a man from Minas Gerais should have succeeded Washington Luís as president. However, Washington Luís supported another paulista , his friend Júlio Prestes , for president in 1930. Prestes' victory in

6674-414: The office of Secretary of State of Justice and Public Safety from 1906 to 1912. He was the leader of the situationists and again became a state representative for the Republican Party of São Paulo from 1912 to 1913. He interrupted his mandate to become mayor of São Paulo (1914–1919), when he faced the general strike of 1917 . He was governor of the state of São Paulo from 1920 to 1924. In 1924, Luís led

6768-478: The other hand, resulted in overproduction which caused the fall of prices. Initially, the effects of this fall were mitigated by the devaluation of the Brazilian currency. At the beginning of the 20th century, the overproduction crisis began to take shape. Coffee prices on the international market dropped significantly, prompting the mobilization of planters, who came together to create a strategy that would keep

6862-483: 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

6956-480: 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

7050-406: 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

7144-442: The presidential elections of 1 March 1930 was questioned on suspicion of fraud. The assassination of João Pessoa , governor of Paraíba and candidate for vice president on the plate of Getúlio Vargas on 26 July 1930, was a decisive factor for the worsening of movements opposed to the government of Washington Luís, already strained by the coffee crisis. The assassination, later proved, did not have any political purposes. Reassuming

7238-479: The prevailing political interests at the time, linked to the export of coffee. The Taubaté Agreement only helped to postpone the imminent end of the coffee cycle in Brazil, which happened with the crash of the New York Stock Exchange in 1929. The Taubaté Agreement was used to enrich coffee owners, who invested in the industrialization of São Paulo, since the production had guaranteed sales. With

7332-487: The price of the product valued in times of crisis. Since the Panic of 1893 , which particularly affected the United States, the main buyer of Brazilian coffee, the price of coffee fell significantly. Brazilian intervention in the international level of coffee prices was only possible thanks to its dominance in international production, as the country controlled alone three quarters of the entire world supply. In February 1906,

7426-399: The purchase of surplus coffee production by governments, that the export of inferior types of coffee was to be discouraged, the improvement of the advertising of Brazilian coffee abroad, the stimulation of domestic consumption and the restrictment of the expansion of coffee crops. Purchases would be financed by issues backed by external loans. In addition, the federal government was committed to

7520-434: 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

7614-476: 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

7708-673: 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

7802-778: 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

7896-658: 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

7990-505: 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 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

8084-478: 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

8178-671: Was a worthy member of the philanthropic hospital Santa Casa de São Paulo; honorary president of the Brazilian Red Cross; member of the Institutes of History and Geography of São Paulo, Bahia and Ceará; member of the Academia Paulista de Letras ; and member of the Brazilian Historic and Geographic Institute . The Rodovia Washington Luís in the state of São Paulo is named in his honor. Throughout

8272-718: Was born in Macaé , Rio de Janeiro, to a family of Portuguese Romani descent, and moved to São Paulo, where he was educated and graduated from the University of São Paulo Law School in 1891. He was appointed prosecutor in Barra Mansa , Rio de Janeiro in 1892, but resigned to devote himself to law in Batatais , São Paulo , where he began his political career. Luís was an alderman in Batatais with Federal Republican Party ( Partido Republicano Federal ; PRF) and became President of

8366-492: Was created, from when the intervention started to take place indirectly. Also according to Celso Furtado, the biggest flaw of this policy of artificial valorization of coffee was that the government did not encourage the diversification of Brazilian exports, through subsidies, in order to alleviate the pressure of domestic supply on the trend of falling prices observed. However, he himself agrees that such governmental action would be very difficult because it did not correspond to

8460-474: 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

8554-426: 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

8648-500: 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

8742-446: 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

8836-470: 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

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