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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
slide4

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
slide9

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

slide11
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