Great Depression Chapter 28

FYI’s Need Ch 27 reading quizzes asap! (tomorrow?) I have a new calendar, left it on my home computer (oops) Things to note  – Not having a test next week, pushing it til after chapter 29 – Ch 28 ID Quiz next Tuesday – Ch 28 ID Quiz next Tuesday, starting a DBQ as well – Ch 28 Reading guide tomorrow – copy machine is down 

Overview Europe in the 1920s didn’t see the economic prosperity that America did Europe in the 1920s didn’t see the economic prosperity that America did – inflated economies after WWI, reparations and war debts Three factors extended Three factors that extended the length of the Great Depression 1.Financial crisis due to war and Treaty of Versailles 2.Crisis in the production and distribution of goods worldwide 3.America and European governments alike mishandled the crisis, cut government spending

Affected countries across the globe – Unemployment, bank failures, collapse of credit, collapse of prices in world trade Government responses varied – Some became very involved with running the economy, like in the U.S. with FDR’s New Deal (eventually) – Some didn’t handle the crisis well, so their people began to look for other alternatives – Some didn’t handle the crisis well, so their people began to look for other alternatives (totalitarian leaders promised CHANGE!!) Communist parties grew Dictators who offered simple solutions in exchange for power appeared in some countries Overview

Great Depression in America 1929 – Stock market crashed Investments and savings were lost People panicked and went to banks for their money, but banks didn’t have it Over the next several years, consumer spending and investment dropped Steep declines in industrial output Rising levels of unemployment as failing companies laid off workers.

Why was the stock market crash such a big deal?

Great Depression moves to Europe 1924 Dawes Plan had caused a lot of American investment in Europe (especially Germany) Contributed to the brief European prosperity After the crash, Americans withdrew investments from Europe

Great Depression moves to Europe Also, downturn in production and trade Demands for good decreased, businesses/factories shut down, causing unemployment

Keynesian Economics John Maynard Keynes way out of depression was to increase government spending John Maynard Keynes – economist who theorized that the way out of depression was to increase government spending (like on public works) Orthodox economy policy said that government should cut spending during economic downturn Keynes’ theory wasn’t published until the mid 1930’s

Great Britain confronts Depression 1932 – Great Britain experienced a modest recovery following increased consumer spending – GB increases unemployment benefits and subsidizes construction of houses, stimulating economy further Industry and agriculture slowly returned to prosperity, unemployment fell

Germany Because of the Dawes Plan, the US had loaned a large amount of money to Germany The financial connection between the US and Germany meant that the Depression hit Germany harder than any other European nation

Unemployment in Germany, , ,368, ,076,000 July ,392,000 October ,109,00

Germany battles Depression 1930 – Young Plan extended date to which Germany had to pay reparations (1988) Lausanne Conference of 1932 declares an end to reparations Hitler’s rearmament campaign (rebuilding military) created jobs