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Understanding the Depression. 10.6.2 - Describe the effects of the war and resulting peace treaties on the international economy 3/1/12 Leave a blank page for your new table of contents. Economics at the end of World War I. After the war, USA strongest economy in the world

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Understanding the depression
Understanding the Depression

10.6.2 - Describe the effects of the war and resulting peace treaties on the international economy

3/1/12

Leave a blank page for your new table of contents


Economics at the end of world war i
Economics at the end of World War I

  • After the war, USA strongest economy in the world

    • 50% of world’s industrial production!

    • Lent $ to UK, France, and Germany

  • Problem: Overproduction

    • Demand could not keep up with production

      • Factories lay off workers

      • Workers and families purchase less

      • Leads to further business closures and job loss



Stations: All work goes into your notebook10.6.2 - Describe the effects of the war and resulting peace treaties on the international economy


Do now
DO NOW

Grab a textbook. Open to page 472.

Read the “History in depth” box.

Scan the text on pages 472 - 473.

Answer in complete sentences:

Why might Americans have been buying less in the years just before the stock market crash?

How did margin buying contribute to the stock market crash?


A worldwide depression
A Worldwide Depression

  • WORK TOGETHER and use textbook (p. 470-475) to state REASONS for the following developments

    Yes, copy them down,

  • In new postwar democracies, there were frequent changes in government

  • In Germany, the Weimer Republic was weak from the start

  • Postwar Germany suffered from severe economic inflation

  • The US had a flawed economy

  • October 29, 1929 the US stock market crashed

  • A long depression followed the crash in the US

  • Collapse of the US economy affected countries worldwide.

  • In Britain, the National Government rescued the economy

  • In France, the Popular Front was formed as a coalition government

  • Socialist gov’ts in Scandinavian countries dealt with the economic crisis successfully


A worldwide depression1
A Worldwide Depression

  • In new postwar democracies, there were frequent changes in gov’t

    • Had little experience with representative gov’t; having many political parties made it difficult to reach agreements in gov’t

  • In Ger, the Weimer Republic was weak from the start

    • Lacked a strong democratic tradition; many political parties; ppl blamed Weimer Republic for defeat & Treaty of Versailles

  • Postwar Ger suffered from severe economic inflation

    • Gov’t printed $ for war expenses & reparations; devalued money

  • The US had a flawed economy

    • Uneven distribution of wealth, overproduction of goods and agriculture lessened demand for consumer goods

  • October 29, 1929 the US stock market crashed

    • Investors believed stock prices would drop so they tried to sell high-priced stocks they had bought on margin but no one wanted to buy


A worldwide depression2
A Worldwide Depression

  • A long depression followed the crash in the US

    • Unemployment rates rose as production, prices, & wages fell; businesses & banks closed; savings and farms were lost

  • Collapse of the US economy affected countries worldwide.

    • Countries had war debts and depended on US for loans and investments; worried US banks would demand loan repayments; US investors pulled their $ out of Europe; US market for imported goods fell; high tariffs decreased world trade and market demand

  • In Brit, the National Government rescued the economy

    • High protective tariffs, increased taxes, regulated currency, lowered interest rates to encourage industrial growth

  • In France, the Popular Front was formed as a coalition gov’t

    • Economic crisis in France led to political instability & leaders feared growth of antidemocratic forces

  • Socialist gov’ts in Scandinavian countries dealt with the economic crisis successfully

    • Tradition of cooperative community action & gov’t sponsored public works programs kept ppl employed and producing; gave $ to those who needed it


Stations: All work goes into your notebook10.6.2 - Describe the effects of the war and resulting peace treaties on the international economy


A worldwide depression3
A Worldwide Depression

  • Postwar Europe

    • New political realities

      • Unhappy people did not really favor particular parties

      • Coalition gov’ts necessary

        • Had to give in to workers demands

          (fight off revolutionaries)

    • Weimar Republic has trouble

      • Ger ppl unhappy with the Treaty of Versailles

      • War debts helped create inflation

      • Inflation is stopped by Dawes Plan

        • US banks loaned GER $200 mil

        • Stabilizes Ger economy

Coalition gov’t: temporary alliance of several parties

Party: group of people with same political ideas

Inflation: value of money goes down & price of goods goes up

Stabilize: to make stable, not shaky


  • Great Depression

    • Apparent in the Stock Market Crash

      • False wealth: people buying stock with borrowed money raised stock prices artificially

      • Eventually falling prices created a panic and then the crash (prices wiped out wealth)

    • US economy falls & spreads to world

      • Uneven distribution of wealth

      • Surplus of factory & agricultural products

      • Banks and investors took their $ back from Europe

Stocks: ownership of a company

Distribution of wealth: how wealth is spread between rich and poor

Surplus: extra

Public works projects: jobs created by the gov’t



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