2. Weimer Republic- Germany’s democratic government that was established after WWI. Inflation- When the value of a currency decreases. Black Tuesday- Oct 29, 1929, the day the NY Stock Exchange crashed.

3.  After WWI, European Nations were rebuilding their war-torn economies. Only the United States and Japan had come out in better financial shape. The United States offered loans and aid to the war-torn countries of Europe.

4.  New Governments From 1914-1918, Europe’s last absolute rulers were abolished. They were replaced with Democracies  These democracies functioned as Multi-Party Systems  This made it difficult to solve problems  Voters instead turned to Dictatorships

5.  Germany’s new Democratic Gov’t Many weaknesses  Lacked strong democratic tradition  Many political parties  Blamed for defeat in WWI and Versailles Treaty  Inflation Value of German currency plummeted

6.  Causes: 1. Uneven distribution of wealth  Working class Americans could not afford to buy goods being produced  Unable to sell goods, store owners cut back on orders  Factories laid off workers  Cause economic spiral downward 2. Overproduction of agriculture  Technology increased crop yields driving profits and prices down  Farmers couldn’t pay off their loans forcing banks to close

7. 3. Stock Market Crash  In 1929, Wall Street was the financial capital of the world  U.S. Economy was booming sending stock prices soaring  Many people bought stocks on margin (only paying for % of stock)  Worked if prices kept rising  Sept. 1929 investors thought prices were too high and began to sell stock  By Oct 24th, panic resulted, everyone wanted to sell stock and nobody wanted to buy.  “Black Tuesday” Oct. 29, 1929 The Market Collapsed

8.  The result was the collapse of the American Economy Thousands of businesses failed and banks closed People lost their life savings because banks had no money Stocks bought at high prices were now worthless By 1933, ¼ of Americans were unemployed

9.  Global Depression Investors withdrew their money from Europe Worldwide trade came to a halt because of high import tariffs Countries who depended on the U.S. for loans were particularly hard hit  Germany

10.  The Depression confronts democracies with serious challenges  Britain, France and the United States were able to create programs that slowly helped improve the economy  Other countries however, turned to an extreme form of government called Fascism

11.  Why were democracies unable to solve the economic and political problems?  What was Germany’s gov’t called and what problems did it face?  What were the 3 main causes of the Great Depression?  Why was the United States so important to the worldwide economy?