A Global Depression Chapter 15, Section 2

Europe After the War Europe was ravage by WWI Every major European country was bankrupt Only the U.S.A. and Japan came out in better financial shape then they went in They both expanded trade during WWI Europe is no longer the dominate figure in world affairs

New Democracies Are Unstable From 1914-1918 the absolute rulers of Europe are overthrown Hohenzollerns – Germany, Hapsburgs – Austria-Hungary, Romanovs – Russia, Ottomans – Turkey Russia forms the first new government Known as? They went quick to the communist Many political groups = problems for a new democracy Coalition Government – Alliance among many groups (extremely difficult to work)

Weimar Republic is Weak New German government (after the war) It was doomed from the start: Germany had no history of being a republic To many political parties in Germany at the time Because the Weimar took over at the end of WWI, people blamed them for the war and outcome They signed the Treaty of Versailles

Inflation Causes Crisis in Germany The economy in Germany collapses The Germans did not increase taxes during the war (Britain and France did) they just printed more money Think about classic market economies Want for something = more $ Too much of something = the item cost less Plus Germany had to pay the war debt A loaf of bread in Germany: 1918 – less then a mark 1922 – 160 marks 1923 – 200 billion marks

Attempts at Economic Stability Germany did recover from the 1923 inflation due to an international committee. Headed by Charles Dawes (an American banker) The Dawes Plan provided a $200 million dollar loan to Germany and gave it a realistic timeline to buy back the war debt It did work and by 1929 Germany was back on its feet

Efforts at a Lasting Peace Germany and France tried to improve relations Italy, Belgium and Britain came to Switzerland as well They all signed a treaty that said France and Germany would never make war again (with each other) Germany accepted the boarders it had and enter the League of Nations

Efforts at a Lasting Peace In 1928 hopes grew from the “spirit of Locarno” (city in Swiss where Ger. Fra. treaty) The Kellogg-Briand peace pact was signed by almost every country in the world You cannot use war as a political tool Explain Well that’s all good but who is going to enforce it?

Great Depression America had propped Europe up with massive investments if U.S.A. economy collapsed then the worlds economy would as well And this all happened in 1929 The house of cards tumbled to the ground

A Flawed U.S. Economy The U.S. was prosperous but had three big weakness: Uneven distribution of wealth Overproduction Less demand Production way up, Common person in U.S. poor, people don’t need all these products, factories scale back production, people are fired

A Flawed U.S. Economy Agricultural production was way up around the world Soon prices dropped and profits are nonexistent When factories and farmers could not pay back the loans they took from the banks this caused them to go under and close

The Stock Market Crashes If you do not have money to save you should not be buying stocks The U.S. economy was way up so people felt they should buy stocks (the prices were going up) Buying on the margin – Someone buys a stock for a % of the cost and borrowed the rest from a stockbroker

The Stock Market Crashes People believed that stock prices had gotten to high so they started selling off their stock Prices of stock start to fall and everyone with stock starts to sell, this creates the panic of October 24, 1929 Everyone sold their stock and the financial center for the world The New York Stock Exchange collapsed

Stock Market Crash Billions of dollars in “paper wealth” was gone in a matter of days The crash, unemployment soaring, outstanding debts cannot be paid, wages down, production down The Great Depression is born Many businesses went under, banks included My people lost their savings when the banks could not pay them A quarter of all Americans had no jobs

A Global Depression America demands to be paid High tariffs all around World trade drops by 65% Germany and Austria get it the worst No country was left undamaged by the Depression

The World Responds to the Crisis Britain takes steps to improve its economy Heavily on trade economy A new government was elected Their actions worked and slowly turned the economy around France responds to economic crisis France did not take a big of a blow 1 million workers lost their jobs Leads to political instability Moderates, Socialist and Communist form a coalition to help workers rights

The World Responds to the Crisis Socialist governments find solutions Demark, Sweden, and Norway all have socialist governments that find the way They create recovery programs Massive public works Recovery in the United States Franklin D Roosevelt creates the New Deal Large public works to employ workers, bailouts for farmers and businesses, lots of welfare

Trouble on the Horizon With all the economic and societal change it leaves the door open for people with an “idea of direction” to take over