1. Western Democracies Stumble
Chapter 16 Section 2

2. Uneasy peace and uncertain security
The Treaty of Versailles
Many borders were left disputed
It was Germany that was determined to change them
They vowed to revise the terms of Versailles
League of Nations
An organization of nations to maintain the peace
However, they were unable to do so
The U.S. never ratified the treaty – not a member
Americans did not want to become involved in European affairs
League members were unable to agree on the use of force against aggressors

3. So, what was the solution to this problem?
The French
The demanded the Treaty of Versailles be strictly enforced
The Germans
Major economic problems
They were unable to pay the $33 billion owed to France
So, what was the solution to this problem?
France took over the Ruhr Valley
Why? The French plan on taking the money by operating German industries and mines themselves

4. German Inflation Dawes Plan
German strikes start because of the French occupation of the Ruhr Valley
Germany starts printing more money to pay salaries
This adds to inflation
1923- $1 U.S. equals 130 billion German Marks
Dawes Plan
Initiated a $200 million loan for German recovery
This plan opens the door for American investments
Prosperity followed but only for 5 years

5. The Kellogg-Briand Pact
Treaty of Locarno
Guaranteed the new Western Borders of Germany with France and Belgium
People and nations thought this would finally bring peace to Europe
The Kellogg-Briand Pact
Signed by 63 nations
It pledged to ‘renounce war as an instrument of national policy’
Problem: This pact never stated anything about violations to the pact

6. The Great Depression What is a Depression?
A period of low economic activity and rising unemployment
What caused the Great Depression
Downturn of the economies in individual nations
Prices of farm products, esp. wheat, were falling from rapid over production
Fall of the U.S. market
Much of the European prosperity from came from U.S. Banks and loans
When the U.S. market failed so did the European economies

8. Responses to the Depression
Cutting costs by lowering wages and raising tariffs
This hurt the economies even more
Some countries tried to increase govt. activity in economics – businesses
Communism began to gain strength
Marxist thought that capitalism and overproduction would destroy this system seemed to becoming true
Rise of Dictatorships
Many nations led people/leaders who promised simple solutions in exchange for dictatorial power

9. Democratic States after the War
Germany
Weimar Republic – German Democratic State
This republic had many problems
No good leaders
Economic problems – end of 1930, German unemployment = 4.3 million
France
After the War, France was the strongest European Power
However, weak policies and failed economic policies failed to solve any of France’s Depression

10. Great Britain
Political leaders ignored the new ideas of John Maynard Keynes
The Theory of Employment, Interest and Money
It argued that:
1. unemployment came from lack of demand; not overproduction
2. Demand could increase work by building highways and public buildings
The U.S.
New Deal – economic policy
Increases programs in public works
Builds roads, buildings, post offices, airports, etc…