The Global Depression

1. The Global Depression What factors caused the Global Depression? How did countries respond to this crisis? What factors shaped this response?

2. Post WW I - politics • New democracies – unstable • Russia’s provisional government fell to Bolsheviks • New nations from collapse of Austria-Hungary • Weimar Republic in Germany Why were these democracies weak? How did history, economics and diplomacy highlight the weakness of these democracies?

3. Post WW I economy • U.S. “boom” fueled by automobile and construction industries • U.S. banking industry supported European reconstruction • International efforts to help Germany rebuild / deal with inflation -- Dawes Plan • By 1929, European economy had “come back”

4. The roaring 20’s? – US economy Some problems in the U.S. economy were largely ignored: • Uneven distribution of wealth (richest 5% pop = 33% wealth / 60% pop < $2000 yr • Lower consumption >> cutbacks in prod./ layoffs >> downward economic spiral • Agricultural profits also went down -- Why? • Some early bank failures All these signals were ignored…

7. How did the Great Depression lead to a Global Depression? • The International Depression • “The Great Depression began in the United States but quickly turned into a worldwide economic slump owing to the special and intimate relationships that had been forged between the United States and European economies after World War I. The United States had emerged from the war as the major creditor and financier of postwar Europe, whose national economies had been greatly weakened by the war itself, by war debts, and, in the case of Germany and other defeated nations, by the need to pay war reparations. So once the American economy slumped and the flow of American investment credits to Europe dried up, prosperity tended to collapse there as well. The Depression hit hardest those nations that were most deeply indebted to the United States, i.e., Germany and Great Britain. In Germany, unemployment rose sharply beginning in late 1929, and by early 1932 it had reached 6 million workers, or 25 percent of the work force. Britain was less severely affected, but its industrial and export sectors remained seriously depressed until World War II. Many other countries had been affected by the slump by 1931. • Almost all nations sought to protect their domestic production by imposing tariffs, raising existing ones, and setting quotas on foreign imports. The effect of these restrictive measures was to greatly reduce the volume of international trade: by 1932 the total value of world trade had fallen by more than half as country after country took measures against the importation of foreign goods… • Industrialized nations and those supplying primary products (food and raw materials) were all affected in one way or another. In Germany the United States industrial output fell by about 50 per cent, and between 25 and 33 per cent of the industrial labour force was unemployed. • The Depression was eventually to cause a complete turn-around in economic theory and government policy. In the 1920s governments and business people largely believed, as they had since the 19th century, that prosperity resulted from the least possible government intervention in the domestic economy, from open international relations with little trade discrimination, and from currencies that were fixed in value and readily convertible. Few people would continue to believe this in the 1930s.” • “About the Great Depression.” An Online Journal and Multimedia Companion to Anthology of • Modern American Poetry. 15 April 2010. <http://images.google.com/imgres?imgurl=http://www.english.illinois.edu/maps/depression/dep03.jpg&imgrefurl=http://www.english.illinois.edu/maps/depression/about.htm&usg=__ACwWexQycKZgCJAmRzmPx59wEO8=&h=569&w=577&sz=171&hl=en&start=1&sig2=0jclXEdmzZkzA6rzfxrOA&um=1&itbs=1&tbnid=GEzCJwD8hstdXM:&tbnh=132&tbnw=134&prev=/images%3Fq%3Dgreat%2Bdepression%2Beurope%26um%3D1%26hl%3Den%26client%3Dfirefox-a%26sa%3DN%26rls%3Dorg.mozilla:en-US:official%26tbs%3Disch:1&ei=N0vOS7rSMIGdlgfkroSiCw>

8. Unemployment statistics during the great depression

11. How did countries cope with the crisis? U.S. – Hoover / FDR & New Deal Europe: Britain & France Britain: “National Gov’t.” passed high tariffs, increased taxes, regulated currency; lowered interest rates France: “Popular Front” passed reforms to help workers; Scandinavia: “cooperative community action”: pensions, unemployment, housing subsidies, and other welfare benefits. Paid by taxes. • Hoover >> against gov’t. intervention • 1932 – FDR came to office – instituted the New Deal: • Public works projects • 3R’s: Relief, recovery and reform/regulation What was the underlying premise or philosophy of this program?

12. IN THE U.S. AND WESTERN EUROPE: DEMOCRACY PRESERVED Why were these countries able to implement these reforms? Why did the citizens “cooperate” or “go along”?

13. What happened in the rest of Europe? In Italy, Germany and Spain, the citizens turned to fascist dictators. These leaders, along with Stalin in the USSR established Totalitarian regimes.