The Global Depression

1. The Global Depression Unit 6

2. Agenda • Announcements • Motivational Quote • Warm Up • Lecture • Activity

4. Warm Up • What do you think is the hardest thing a country has to deal with after a war?

5. Europe After the War • Major European countries nearly bankrupt • Only U.S. and Japan in better financial shape • War drained the continent’s resources

6. New Democracies Are Unstable • Europe’s last absolute rulers overthrown • First time European’s use democracy • Little experience in representative government • Dozens of political groups • 40 changes in governments 1919-1938 • Voters sacrifice democracy

7. Weimar Republic Weak • 1919, democratic government • Germany lacked strong democratic tradition • Several major political parties • German’s blamed Weimar Government for defeat and humiliation

8. Inflation Causes Crisis in Germany • Did not increase wartime taxes • Printed money to pay war debt • Money lost value • Severe inflation set in • Loaf of bread < 1 Mk 1918, in 1923 200 billion Mk

9. Attempts at Economic Stability • Dawes Plan, $200 million to Germany • Stabilized German currency • Strengthened economy • Realistic schedule for reparations payments • 1929, German factories producing at prewar level

10. Efforts at a Lasting Peace • Gustav Stresemann tried to improve relations w/France • France/Germany treaty promising never to make war again • Germany admitted to League of Nations • Kellogg-Briand pact, 1928- almost all countries signed • Renounce war as a national policy • League had no armed forces • U.S. refusal weakened League

11. The Great DepressionA Flawed U.S. Economy • Uneven distribution of wealth • Richest 5% received 33% of all person • 60% earned less than $2,000 • most families unable to buy produced goods • stores cut back orders • Overproduction in business • factories reduce production • laid off workers • fear sets in, less buying, more lost jobs

12. The Stock Market Crashes • Middle income people buy stock on “margin” • Paid small percentage of the stocks price as a down payment • Borrowed the rest from a stockbroker • October 24, panic selling • October 29, 16 million stocks sold, market collapses

13. The Stock Market Crashes • Billions of dollars “paper wealth” vanish • 1932, factory production cut in half • Businesses fail and more banks close • 1933, 25% of all Americans with no jobs

14. The Global Depression • Bankers demand repayment of overseas loans • Withdraw money from Europe • Congress places high tariffs on imports • Other nations impose their own high tariff • World trade drops 65% • Germany and Austria hard hit • 1931, Austria’s largest bank fails

15. The World Responds to the CrisisBritain Takes Steps to Improve Its Economy • Multi-party coalition “National Government” • High protective tariffs, increased taxes, regulated the currency • Lowered interest rates, encourages industrial growth • 1937, unemployment cut in half • Preserved democracy

16. France Responds to Economic Crisis • Had a self-sufficient economy • Somewhat cushioned against the Depression • But, 1 million French unemployed • 5 coalition governments fail • Reforms for workers • Pay increases, holidays w/pay, 40-hour work week

17. Socialist Governments Find Solutions • Denmark, Sweden Norway • Built recovery programs on existing cooperative communities • Public works projects • Improved social benefits

18. Recovery in the United States • 1932, FDR elected president • The “New Deal” • Large public works projects • Provided jobs • Government agencies to help businesses and farms • Regulations to reform stock market and banking system • Preserved faith in democratic system