Western Democracies Stumble Chapter 16 Section 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

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

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

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

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 1924-1929 came from U.S. Banks and loans When the U.S. market failed so did the European economies

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

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

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…