The Great Depression Main Idea Why it Matters Now In the late 1920s an economic depression started in the United States and quickly spread around the globe. The depression caused great hardship and created ideal conditions for political unrest. Why it Matters Now Many social and economic programs introduced worldwide to combat the Great Depression are still operating.

Essential Questions What happened to the U.S. economy during the 1920s? How did the Depression spread throughout the United States? How did the Depression affect the world?

Postwar Democracies Democracy was new to most of Europe Citizens had little experience with representative government Large number of political parties made effective government difficult. Lack of unity made movements towards long-term goals difficult. Coalition Governments (Solution)

German Weimer Republic Weaknesses Germany lacked a strong democratic tradition Too many political parties German blame for signing the Treaty of Versailles

German Inflation Cause and Effects Government prints money Why? Value of the mark decreases Result = Inflation A rise in the general level of prices of goods and services in an economy over a period of time What happened to Savings?

Signs of Hope Economic and Political The Dawes Plan (1924) Plan to provide Germany with a $200 million loan Set realistic schedule on Germany’s reparations payments Inflation slowed Increased loans and investments from US into Germany Replaced by Young Plan (1930) Kellogg-Briand Pact (1928) Frank Kellogg (Secretary of State of USA) Aristide Briand (Foreign Minister of France) Renounced the use of war and called for the peaceful settlement of disputes

Flawed U.S. Economy 3 Weaknesses Uneven Distribution of Wealth Overproduction Decreased Demand for Consumer Goods

Stock Market Crashes October 29, 1929 Economic Boom Middle-Class people bought stocks on margin Crash Investors felt stocks prices were too high Future expectations led them to sell stocks Stock prices begin to decline Panic ensues So much to sell but no one to buy

Stock Market Crash Results Increased Unemployment Decreased Industrial Production Decreased Prices Decreased Wages Increased Business Failures Increased Loss of Life Savings (Banks) Increased Loss of Farmers Land (Banks) Increased Bank Closures

Worldwide Effects of American Actions Cause & Effect American Bankers Demand repayment of overseas loans What was the result? American Investors Withdrew their money from Europe American Government Sets high tariffs on imported goods

Britain Responds Dependent on Trade National Government (A multi-party coalition government) Policies High protective tariffs Increased taxes Regulated currency Lowered interest rates (Why?) Results Slow but steady recovery Unemployment cut in half Increase in production Democracy Preserved

France Responds Self-Sufficient Popular Front (A multi-party coalition government) Moderates, Socialists, Communists Reforms Increased Wages Paid Holidays 40-hour Work Week Results Price increases offset wages gains Unemployment remained high Democracy Preserved

Sweden Responds Coalition Governments (Had an existing tradition) Policies Public Works Projects Increased Pensions Increased Unemployment Insurance Increased Housing Subsidies Increased Welfare Benefits How was this all paid for? Results Business prospered Democracy Preserved

Europe’s Response Britain-France-Sweden What did they all fear could occur due to the Global Depression? Were they successful in combating that fear? How?

Recovery in the United States Keynesian Economics President Franklin D. Roosevelt Believed government spending would… create jobs start economic recovery New Deal Programs Created Jobs Offered Welfare Benefits Provided Financial Aid to Businesses & Farms Reformed the Stock Market & Banking System Results American economic system reformed and idealized Democracy Preserved

The General Theory of Employment, Interests and Money Keynesian Economics The General Theory of Employment, Interests and Money

German Inflation

German Inflation

1923-issue 50 million mark banknote 1923-issue 50 million mark banknote. Worth approximately $1 US when printed, this sum would have been worth approximately $12 million, nine years earlier. The note was practically worthless a few weeks later due to continued inflation.

Roaring twenties in Berlin hotel Esplanade, 1926

Stock Market Crash – Wall Street (October 29, 1929)

Brooklyn Newspaper Oct 30, 1929

Sold Out (1929), cartoon by Rollin Kirby