2Government Peru had a constitutional republic A constitutional republic limits the governments power over citizens – those part of the government (i.e- President) must govern according to existing constitutional law
3Diversified EconomyPeru’s economy was not hit as hard during the depression because of its diversified range of exportsCotton and industrial metals were its leading exportsPeru had a rapid recovery as early as 1932
4Industries during the Great Depression Exportskept a mainly open economy, didnt put up tariffs on imports. agricultural : cotton, sugar, wool and petroleum mining: silver gold, guano, lead, copperFishing industry textiles Imports:capital goods and manufacture
6Social Class Structure -organized into 3 class structures-Upper class (minority): approx only 3%-Middle class: workers that depend on salary and job(60% of pop.)-Lower class: workers and rural people (farmers)-class structure consists with a majority of middle class people.
7How hard was Peru hit by the depression? Demands for goods decreased so, less production of capital.Result: internal deflation , fall in value of Latin American Currencies , rise in unemploymentYear after WallStreet Crash: government intervened to change economic policies to address crisis.
8Government Action Internal deflation>unemployment Set prices and established max. level of production.Result: help economy gain strengthHuge range of exports (cotton and new metals…) country began to recover export earning early as 1933.Export sector dominated by foreign companies, so losses during the depression, did not have direct effect on PeruImport Substitution Industrialization: encourage homegrown industries to replace Latin American dependence on foreign manufactured goods.-did not use this policy-instead foccussed on export growth.TradeEngage in bilateral trade agreements with industrialized countries.- There was a change in exports: shifted from cotton, copper and silver to oil during the 20s.Financial Reforms in the 20sResult: creation of central banks and regulatory institutions with clear rulesResult: made govn. Intervention in this sector easier than other countries
9Peru and the Depression During this time Peru was under the control of President Leguia.However, overthrown and the 1930s were rocked by civil wars for the next 3 yearsThe policies that were developed during the depression as well as Peru’s export sector being dominated by foreign companies did not allow the Depression to affect them as much.Mining and Agriculture sectors, which made up a huge portion of Peru’s economy, were not hit as badly.Result: used to bring around recovery.Relying on more than one industry helped them. Reason: it did not rely only one industry, so if that one industry crashed the country would not be affected because it could rely on other exports. This is why used to bring around recovery. Wide range of trading partners to continue trade, not just one main trading partner. Therefore, not greatly affected.