Learning Goal The students will understand the instability in Europe after WWI Annual Appropriate Depression Deficit Spending Surrealism Uncertainty Principle

Discussion How do you think the citizens of Germany felt about these provisions of the treaty? German citizens would not have been happy about having to pay for war damages and having to give up territory.

Treaty of Versailles and the United States: The U.S. Senate refused to ratify the Treaty of Versailles, so the United States could not join the League of Nations. League of Nations: Without the support of the United States, the League of Nations was weakened. War reparations: France demanded war reparations from Germany, in accordance with the Treaty of Versailles, and sent troops to occupy the Ruhr Valley when Germany could not pay. German inflation: To pay government salaries, Germany printed more money, which led to inflation. Treaties and pacts: In the Treaty of Locarno, France and Belgium agreed to new borders with Germany. Sixty-five nations agreed to "renounce war" in 1928.

Discussion How might a strong League of Nations have influenced France's decision to occupy part of Germany? A stronger League of Nations might have found a peaceful resolution to the problem of Germany's failure to pay war reparations.

Discussion How did Germany's financial crisis cause problems in postwar Europe? It caused inflation in Germany and was related to France's occupation of the Ruhr Valley.

Background The victorious Allies forced Germany to give up all of its colonies in Asia and Africa, as well as to cede land to France, Belgium, and Poland. Additionally, Germans had to agree that the war was their fault. Besides cash, they had to ship coal to France and Belgium. When this went unpaid, these countries invaded the heavily industrialized and valuable Ruhr Valley. The Allies' desire to punish Germany and destroy its armies inspired Hitler's later promises to restore Germany's glory and retake lost lands.

Background German hyperinflation grew so fast that printers stopped putting numbers on bills. The price of a meal went up before diners could finish eating it. A train ticket could not be paid for with a life's savings.

Key Terms reparations can be decoded by hearing the word repair in its pronunciation. The prefix re- means "to undo or to do again," as in remake or return.

The Great Depression Economic downturn: Economic downturns of individual nations in the late 1920s affected the worldwide economy. Prices for farm products fell rapidly due to overproduction. Stock market: American investors stopped making loans to Germany in order to invest in the U.S. stock market. After the stock market crashed, investors continued to divert money from Germany, causing its banks to fail.

Background In the United States in 1928 and 1929 the Federal Reserve raised interest rates in order to hamper the rise in stock prices, but stock prices continued to soar. As interest rates rose, domestic spending, especially on large ticket items, such as homes and automobiles fell. In October 1929 price declines in stocks led to a wave of panic selling on "Black Thursday," as investors lost confidence in the stock market. U.S. stock prices declined approximately 33% between their peak in September 1939 and their low in November 1939.

Discussion How did investors in America help to produce economic collapse in Germany? When U.S investors stopped lending money to Germany, Germany's banks failed.

Discussion Why do you think unemployment was so high during the Great Depression? Businesses lost money and could not afford to employ as many workers.