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The Great Depression

The Great Depression. Essential Question. What caused the Great Depression, and why did it spread?. The World in Prosperity & Depression. Europe changed drastically after WWI Imperial governments were gone

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The Great Depression

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  1. The Great Depression

  2. Essential Question • What caused the Great Depression, and why did it spread?

  3. The World in Prosperity & Depression • Europe changed drastically after WWI • Imperial governments were gone • New countries emerged: Poland, Czechoslovakia, Hungary, Yugoslavia, & the Baltic States • Russia was in the middle of a civil war

  4. Reconstruction & Prosperity • In Europe, first years after war were tough • Central Europe – Famine caused by wartime blockade of food • Soldiers returning home from war faced unemployment • Next 5 years spent rebuilding & recovering from the war

  5. The German Economy • The Treaty of Versailles forced Germany to pay huge amounts in reparations to France & Britain • This slowed the recovery of their economy • Printed extra money to pay the debt, which resulted in hyperinflation • Hyperinflation – A decrease in the value of currency resulting from printing too much money. Prices increase in the affected area, so it takes more money to purchase things.

  6. The U.S. Economy • America emerged as world’s greatest economic power • Britain & France owed the U.S. a large amount of money – Bought war supplies on credit • Americans bought mass produced goods made in American factories • Automobile was most important factor in prosperity– Sold to Americans & Europeans • Americans invested overseas, especially in Germany • Women had more freedom (Voting, College) because they worked in place of men during the war

  7. The Great Depression • Stock market crash in New York sent world economy into a Great Depression • Depression – Economic downturn in which a large number of businesses fail & workers are unemployed • Prices of stocks started falling, & people scrambled to sell before they lost too much

  8. The Great Depression • People who lost money quit buying goods • Banks & investors recalled loans from Europe – Caused depression to spread worldwide • 40,000,000 workers became unemployed • Farmers could no longer sell cash crops

  9. Causes of the Great Depression • Prosperity was due to stock market & real estate over speculation • Over Speculation – People spend money they don’t have yet, assuming they will earn the money from what they are buying • Overproduction – More goods were produced than consumers could buy • Relationship of loans & debts between Europe & America ensured the recession would spread

  10. Causes of the Great Depression • Government leaders quit spending, tightened credit, & cut off international trade • This made the recession worse • People had no security net, like unemployment insurance & social security, if they lost their job & savings • Franklin Roosevelt elected President in 1932 – Created New Deal to try to provide jobs for unemployed citizens

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