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The Cause and Effect of the Great Depression
Problems of the 1930’s The Cause and Effect of the Great Depression
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Postwar Issues Postwar Europe faced grave problems:
1 Postwar Europe faced grave problems: Returning veterans needed jobs. War-ravaged lands needed to be rebuilt. Many nations owed huge debts because they had borrowed heavily to pay for the war. Economic problems fed social unrest and made radical ideas more popular. The peace settlements dissatisfied many Europeans, especially in Germany and Eastern Europe. Europe lacked strong leaders just when they were most needed.
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The Stock Market Crash Autumn 1929 October 29 Market Crash
Consumer spending slowed, sales suffered Many feared drop in stock prices Nervous investors began to sell off stocks October 29 Black Tuesday, 16 million shares of stock sold in one single day Few people wanted to buy stock, stock prices collapsed Investors who had borrowed to buy stocks forced to sell at loss Market Crash Stock market crash ruined many investors Banks that had lent money to investors were also in deep financial trouble Devastating blow dealt to American industry
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The Stock Market Crash In 1929, the Wall Street stock market crash ushered in a worldwide financial crisis.
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The Great Depression Nation after nation fell victim to:
Industrial decline Bank failures Deflated prices and profits Commercial stagnation
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The Depression Spreads
American economy took severe downward dive after stock market crash Economic downturn became known as Great Depression Depression result of complex factors One factor, slowdown in industry; began before crash, worsened quickly after Great Depression As industry slowed, workers lost jobs One out of four unemployed by 1933 Joblessness, poverty reduced ability to buy food, goods, hurt industry even further Banks suffered when businesses, investors failed to pay off loans; many failed Industry Slows
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The Worldwide Depression
In 1929 America was one of the world’s leading importers and lenders of money, and created much of the world’s industrial output. Events affecting America’s economy would soon impact other countries. Some countries having difficulties before stock market crash European countries recovering from World War I Allied Powers in debt to U.S. Before the Crash High interest rates in Great Britain Decreased spending, high unemployment Germany’s reparations led to inflation, crippled economy World Woes Japan’s economic depression forced banks to close U.S. Great Depression latest in long series of economic crises Effects far worse Series of Crises
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Personal Hardship People the world over suffered from:
Lowered standards of living Unemployment Hunger Fear of the future
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The Worldwide Depression
The postwar era left many countries politically unstable. As the Depression continued, unrest grew worse. Instability in Great Britain and France led to formation of several new governments Extremist political groups gained strength Germany’s Nazi Party blamed Jews Italian dictator Benito Mussolini tightened his control of the nation Political Impact Widespread misery, hopelessness worldwide Ideal conditions for rise of leaders who promised to restore their nations to glory World in midst of troubled times Worse crisis lay ahead Economies Worsen, New Leaders Emerge
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Policies of Self-Sufficiency
In desperation, governments sought economic recovery by adopting restrictive policies of self-sufficiency: High tariffs Import quotas Barter agreements
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Planned Economies Governments experimented with new plans for internal economies.
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Great Britain Great Britain adopted far-reaching measures in the development of a planned national economy.
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Overview: The Great Depression
1 Overview: The Great Depression Long-Term Causes Immediate Causes Worldwide interrelationship of governments and economies Huge war debts American loans to Europe Widespread use of credit Overproduction of goods Industrial wages rise as farm earnings fall New York stock market crash Farmers unable to repay loans Banks demand repayment of loans American loans to other countries dry up Without capital, businesses and factories fail Immediate Effects Long-Term Effects Rise of fascism and Nazism Governments experiment with social programs People blame scapegoats World War II begins Vast unemployment and misery Protective tariffs imposed Loss of faith in capitalism and democracy Authoritarian leaders emerge
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1 Unemployment, 1928 – 1938
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Britain and France in the Postwar Era
1 BRITAIN FRANCE The Great Depression intensified existing economic problems. Britain set up a coalition government made up of leaders from all three major parties. The government provided some unemployment benefits. British leaders wanted to relax the Versailles treaty’s harsh treatment of Germany. The French economy recovered fairly quickly. Many political parties competed for power and France was ruled by a series of coalition governments. France created the Maginot Line to secure its borders against Germany. The government strengthened the military and sought alliances with other countries, including the Soviet Union.
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