Saturday, July 10, 2010

THE GREAT DEPRESSION

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About the Great Depression


The Great Depression was an economic slump in North America, Europe, and other industrialized areas of the world that began in 1929 and lasted until about 1939. It was the longest and most severe depression ever experienced by the industrialized Western world.

Though the U.S. economy had gone into depression six months earlier, the Great Depression may be said to have begun with a catastrophic collapse of stock-market prices on the New York Stock Exchange in October 1929. During the next three years stock prices in the United States continued to fall, until by late 1932 they had dropped to only about 20 percent of their value in 1929. Besides ruining many thousands of individual investors, this precipitous decline in the value of assets greatly strained banks and other financial institutions, particularly those holding stocks in their portfolios. Many banks were consequently forced into insolvency; by 1933, 11,000 of the United States' 25,000 banks had failed. The failure of so many banks, combined with a general and nationwide loss of confidence in the economy, led to much-reduced levels of spending and demand and hence of production, thus aggravating the downward spiral. The result was drastically falling output and drastically rising unemployment; by 1932, U.S. manufacturing output had fallen to 54 percent of its 1929 level, and unemployment had risen to between 12 and 15 million workers, or 25-30 percent of the work force.

The Great Depression began in the United States but quickly turned into a worldwide economic slump owing to the special and intimate relationships that had been forged between the United States and European economies after World War I. The United States had emerged from the war as the major creditor and financier of postwar Europe, whose national economies had been greatly weakened by the war itself, by war debts, and, in the case of Germany and other defeated nations, by the need to pay war reparations. So once the American economy slumped and the flow of American investment credits to Europe dried up, prosperity tended to collapse there as well. The Depression hit hardest those nations that were most deeply indebted to the United States, i.e., Germany and Great Britain. In Germany, unemployment rose sharply beginning in late 1929, and by early 1932 it had reached 6 million workers, or 25 percent of the work force. Britain was less severely affected, but its industrial and export sectors remained seriously depressed until World War II. Many other countries had been affected by the slump by 1931.

Almost all nations sought to protect their domestic production by imposing tariffs, raising existing ones, and setting quotas on foreign imports. The effect of these restrictive measures was to greatly reduce the volume of international trade: by 1932 the total value of world trade had fallen by more than half as country after country took measures against the importation of foreign goods.

The Great Depression had important consequences in the political sphere. In the United States, economic distress led to the election of the Democrat Franklin D. Roosevelt to the presidency in late 1932. Roosevelt introduced a number of major changes in the structure of the American economy, using increased government regulation and massive public-works projects to promote a recovery. But despite this active intervention, mass unemployment and economic stagnation continued, though on a somewhat reduced scale, with about 15 percent of the work force still unemployed in 1939 at the outbreak of World War II. After that, unemployment dropped rapidly as American factories were flooded with orders from overseas for armaments and munitions. The depression ended completely soon after the United States' entry into World War II in 1941. In Europe, the Great Depression strengthened extremist forces and lowered the prestige of liberal democracy. In Germany, economic distress directly contributed to Adolf Hitler's rise to power in 1933. The Nazis' public-works projects and their rapid expansion of munitions production ended the Depression there by 1936.

At least in part, the Great Depression was caused by underlying weaknesses and imbalances within the U.S. economy that had been obscured by the boom psychology and speculative euphoria of the 1920s. The Depression exposed those weaknesses, as it did the inability of the nation's political and financial institutions to cope with the vicious downward economic cycle that had set in by 1930. Prior to the Great Depression, governments traditionally took little or no action in times of business downturn, relying instead on impersonal market forces to achieve the necessary economic correction. But market forces alone proved unable to achieve the desired recovery in the early years of the Great Depression, and this painful discovery eventually inspired some fundamental changes in the United States' economic structure. After the Great Depression, government action, whether in the form of taxation, industrial regulation, public works, social insurance, social-welfare services, or deficit spending, came to assume a principal role in ensuring economic stability in most industrial nations with market economies.

Source


The International Depression










The Great Depression of 1929-33 was the most severe economic crisis of modern times. Millions of people lost their jobs, and many farmers and businesses were bankrupted. Industrialized nations and those supplying primary products (food and raw materials) were all affected in one way or another. In Germany the United States industrial output fell by about 50 per cent, and between 25 and 33 per cent of the industrial labour force was unemployed.

The Depression was eventually to cause a complete turn-around in economic theory and government policy. In the 1920s governments and business people largely believed, as they had since the 19th century, that prosperity resulted from the least possible government intervention in the domestic economy, from open international relations with little trade discrimination, and from currencies that were fixed in value and readily convertible. Few people would continue to believe this in the 1930s.

THE MAIN AREAS OF DEPRESSION

The US economy had experienced rapid economic growth and financial excess in the late 1920s, and initially the economic downturn was seen as simply part of the boom-bust-boom cycle. Unexpectedly, however, output continued to fall for three and a half years, by which time half of the population was in desperate circumstances (map1). It also became clear that there had been serious over-production in agriculture, leading to falling prices and a rising debt among farmers. At the same time there was a major banking crisis, including the "Wall Street Crash" in October 1929. The situation was aggravated by serious policy mistakes of the Federal Reserve Board, which led to a fall in money supply and further contraction of the economy.


Map 1

The economic situation in Germany (map2) was made worse by the enormous debt with which the country had been burdened following the First World War. It had been forced to borrow heavily in order to pay "reparations" to the victorious European powers, as demanded by the Treat of Versailles (1919), and also to pay for industrial reconstruction. When the American economy fell into depression, US banks recalled their loans, causing the German banking system to collapse.


Map 2

Countries that were dependent on the export of primary products, such as those in Latin America, were already suffering a depression in the late l920s. More efficient farming methods and technological changes meant that the supply of agricultural products was rising faster than demand, and prices were falling as a consequence. Initially, the governments of the producer countries stockpiled their products. but this depended on loans from the USA and Europe. When these were recalled, the stockpiles were released onto the market, causing prices to collapse and the income of the primary-producing countries to fall drastically (map3).


Map 3

NEW INTERVENTIONIST POLICIES

The Depression spread rapidly around the world because the responses made by governments were flawed. When faced with falling export earnings they overreacted and severely increased tariffs on imports, thus further reducing trade. Moreover, since deflation was the only policy supported by economic theory at the time, the initial response of every government was to cut their spending. As a result consumer demand fell even further. Deflationary policies were critically linked to exchange rates. Under the Gold Standard, which linked currencies to the value of gold, governments were committed to maintaining fixed exchange rates. However, during the Depression they were forced to keep interest rates high to persuade banks to buy and hold their currency. Since prices were falling, interest-rate repayments rose in real terms, making it too expensive for both businesses and individuals to borrow.

The First World War had led to such political mistrust that international action to halt the Depression was impossible to achieve In 1931 banks in the United States started to withdraw funds from Europe, leading to the selling of European currencies and the collapse of many European banks. At this point governments either introduced exchange control (as in Germany) or devalued the currency (as in Britain) to stop further runs. As a consequence of this action the gold standard collapsed (map 4).


Map 4

The gold standard linked currencies to the value of gold,
and was supported by almost every country in the world.
From 1931, however, countries began to leave the
standard, leading to its total collapse by 1936. Although
at the time this was seen as a disaster, it actually presented
opportunities for recovery in many countries, allowing
governments to intervene to create economic growth.
























POLITICAL IMPLICATIONS

The Depression had profound political implications. In countries such as Germany and Japan, reaction to the Depression brought about the rise to power of militarist governments who adopted the regressive foreign policies that led to the Second World War. In countries such as the United States and Britain, government intervention ultimately resulted in the creation of welfare systems and the managed economies of the period following the Second World War.

In the United States Roosevelt became President in 1933 and promised a "New Deal" under which the government would intervene to reduce unemployment by work-creation schemes such as street cleaning and the painting of post offices. Both agriculture and industry were supported by policies (which turned out to be mistaken) to restrict output and increase prices. The most durable legacy of the New Deal was the great public works projects such as the Hoover Dam and the introduction by the Tennessee Valley Authority of flood control, electric power, fertilizer, and even education to a depressed agricultural region in the south.

The New Deal was not, in the main, an early example of economic management, and it did not lead to rapid recovery. Income per capita was no higher in 1939 than in 1929, although the government�s welfare and public works policies did benefit many of the most needy people. The big growth in the US economy was, in fact, due to rearmament.

In Germany Hitler adopted policies that were more interventionist, developing a massive work-creation scheme that had largely eradicated unemployment by 1936. In the same year rearmament, paid for by government borrowing, started in earnest. In order to keep down inflation, consumption was restricted by rationing and trade controls. By 1939 the Germans� Gross National Product was 51 per cent higher than in 1929 � an increase due mainly to the manufacture of armaments and machinery.

THE COLLAPSE OF WORLD TRADE

The German case is an extreme example of what happened virtually everywhere in the 1930s. The international economy broke up into trading blocs determined by political allegiances and the currency in which they traded. Trade between the blocs was limited, with world trade in 1939 still below its 1929 level. Although the global economy did eventually recover from the Depression, it was at considerable cost to international economic relations and to political stability.



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FEMME FATALE

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RAY CHARLES: LOOKING BACK

As his 80th birthday approaches, a look at the life and legacy of the late Ray Charles.


"I just do what I do." That's what Ray Charles told Billboard in June 2002 when asked to assess his role in music history. Of course, Charles' self-effacing response belies a groundbreaking career and a legacy that endures today, as fans look toward celebrating what would have been the legendary artist's 80th birthday Sept. 23. Looking back at Charles' storied career, what comes to mind is the phrase "musical genius." In Charles' case, that's no hype.


Rare & Unseen Ray Charles Photos | Charles on the Charts

80th Birthday Year Events | Charles Charity


In 1954, the artist's melding of gospel and blues yielded the pioneering hit "I've Got a Woman"-and forged an indelible imprint on R&B, rock and pop. His earthy, soulful voice graced a steady stream of classics after "Woman," including "Drown in My Own Tears," "What'd I Say," "Hit the Road Jack," "Unchain My Heart," "I Can't Stop Loving You" and "Georgia on My Mind."

Video below: Ray Charles performs "Hit The Road Jack" in São Paulo, Brazil on September 22, 1963.


Video below: Ray Charles performs "Then I'll Be Home" in Montreux, Switzerland on July 19, 1997.


Just as at home on the Hammond B-3 organ as he was on the piano, he also landed at the top of Billboard's R&B, pop, country and jazz charts-and even the dance chart, collaborating with childhood friend Quincy Jones and Chaka Khan on "I'll Be Good to You."

His final recording, 2004's "Genius Loves Company," made history when it won eight Grammy Awards, including album and record of the year for his pairing with Norah Jones on "Here We Go Again."

But what many may not know is that the inimitable Charles was also a genius when it came to the business side of music. In the early '60s he negotiated a rare feat after leaving Atlantic Records to sign with ABC-Paramount: ownership of his own master recordings. He also established his own labels. Tangerine (his favorite fruit) came first, which later evolved into CrossOver Records.

A songwriter who penned nearly 200 songs, Charles also operated his own publishing companies, Tangerine Music and Racer Music. For these entities, Charles and longtime manager Joe Adams designed and built the RPM International office and studios on Washington Boulevard in Los Angeles. The Ray Charles Memorial Library will open in the building this fall.

Charles also found time to manage the careers of other acts, including Billy Preston and '70s R&B group the Friends of Distinction. And way before it was de rigueur for artists to do, Charles set up what became a foundation to help needy children with hearing disabilities and later on support education.


He was an amazing human being," says Jones, 77, who became friends with Charles when both were scrappy teenagers in Seattle. "A true innovator who revolutionized music and the business of music," he adds. "Growing up, we only had the radio; no Michael Jackson, Diddy or Oprah. So it was hard to imagine today's entrepreneurial world. But that didn't stop us. We spent a lot of time talking and dreaming about things that brothers had never done before."

"He really was a genius," says singer Solomon Burke, a former Atlantic labelmate. "He did things the way he wanted."

Charles was born Ray Charles Robinson Sept. 23, 1930, in Albany, Ga. As many learned through actor Jamie Foxx's Academy Award-winning portrayal in the 2004 film "Ray," Charles became blind by age 7 and orphaned at 15 while growing up in northwest Florida.

In eight years at a state school for the blind, the young Charles learned how to read and write music. Leaving Florida in 1947, he headed for Seattle ("Choosing the farthest place he could find from Florida," Jones says), where he notched his first hit two years later as a member of the Maxin Trio, "Confession Blues."

Even then, Charles was an enterprising individual. "He had his own apartment, record player, two pairs of pimp shoes, and here I am still living at home," Jones recalls with a laugh. "His mother trained him not to be blind: no cane, no dogs, no cup. His scuffed-up shoes... that was his guide and driving force. He was the most independent dude I ever saw in my life. Ray would get blind only when pretty girls came around."

Signing with Atlantic Records in 1952, Charles as a West Coast jazz and blues man recorded such songs as "It Should've Been Me" and label co-founder Ahmet Ertegun's composition, "Mess Around."

Then he connected in 1954 with "I've Got a Woman," which set off a chain reaction of more hits capitalizing on his bold gospel/blues fusion. But Charles was just getting started. In 1958, he performed at the Newport Jazz Festival, accompanied by a band that featured such jazz cats as saxophonists David "Fathead" Newman and Hank Crawford. Further bucking convention, he recorded "The Genius of Ray Charles," a 1959 release offering standards on one side (including "Come Rain or Come Shine") and big band numbers on the other, featuring members of Count Basie's orchestra and several arrangements by Jones.


Video below: Charles' 1966 Coke commercial, "So Tired."



Leaving Atlantic for ABC-Paramount, a fearless Charles recorded the seminal "Genius + Soul = Jazz" album in 1961. A year later, his earlier dabbling in country music grew serious with the release of the million-selling "Modern Sounds in Country and Western Music."

Complemented by lush strings and a harmony-rich choir, he scored with covers of Don Gibson's "I Can't Stop Loving You" and Ted Daffan's "Born to Lose"-and spent 14 weeks at No. 1 on the Billboard 200.




For a black man to do this in 1962 was unheard of," says Tony Gumina, president of the Ray Charles Marketing Group, which handles the late artist's licensing affairs. "He was trying to sell records to people who didn't want to drink from the same water fountain as him. But this was one of his greatest creative and business moves: to not be categorized musically and cross over. Though he never worried about it, he was resigned to the fact that he might lose some core fans. But he thought he'd gain far more in the process."

Gumina was operating his own promotion company working with state lotteries when he met Charles in 1999. The two teamed up on a series of commercials for various state lotteries and also introduced a line of Ray Charles slot machines also accessible to the blind.

"Everything he did had a business acumen to it," says Gumina, who cites Charles' liaison with manager Adams as a pivotal turning point. Originally hired to be Charles' stage announcer, former radio DJ Adams segued into overseeing production of the singer's shows, lighting and wardrobe.

Together the pair designed and built Charles' L.A. business base, RPM International (Recording, Publishing and Management) studio. When he began recording there in 1965, the label rented the studio from him, so he made money on his recordings before they were even released.

To save money on travel expenses, Charles purchased an airplane to ferry his band around to gigs. A smaller plane was also acquired so that Charles could wing in to, say, New York to record a couple of songs before flying back out in time for a show.

"He understood the entertainment business enough to know that you may not be popular forever," Gumina says, "and you need to maximize your product. At the same time, he had as much fun as any rock star but without the sad money stories. There was a time to work and a time to play, and he knew the difference. He didn't have a bunch of homes or a large entourage. That's why he was able to save $50 million before he died."

Calling Charles an "incredibly smart man," Concord president John Burk says he learned a lot from the ailing singer while he was recording his final studio album, "Genius Loves Company."

Video below: Ray Charles performs "It Ain't Easy Being Green" in Trentnton, NJ on Nov. 7, 2002.


Going through "some sticky deal points, he was amazing," Burk recalls. "He had the whole agreement in his head. Without referencing any material, he knew all the terms we proposed and had the deal done for the album in two discussions."

Creatively, Burk says Charles was an artist dedicated to delivering "a true performance from the heart. Part of his creative legacy was his approach to singing. He opened the door to vocal improvisations, changing how people perceived you could sing a song. Many singers today are influenced by him and they don't even know it."


Rare & Unseen Ray Charles Photos | Charles on the Charts

80th Birthday Year Events | Charles Charity

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