Post WW I Europe

After World War I… U.S. & Japan are the only countries in better financial shape after the war than before. –European nations in shambles financially Rise in new democracies

Some Democracies Fail Most citizens have little experience with democracyMost citizens have little experience with democracy Too many political partiesToo many political parties Hard to develop strong leadershipHard to develop strong leadership Hard to move towards long- term goalsHard to move towards long- term goals … people willing to give up democracy for strong authoritarian leadership

The Weimar Republic Germany’s post -WWI democratic governmentGermany’s post -WWI democratic government Weaknesses Weaknesses –Germans lacked strong democratic tradition –Too many political parties –People blamed Weimar government for defeat in WW I

Inflation Causes Crisis in Germany During the World War I, Germany did not increase wartime taxesDuring the World War I, Germany did not increase wartime taxes Printed more moneyPrinted more money –Money lost value –War Reparations – Germany prints even more money & value of German Mark falls *1923 – $1 U.S. = over 4 trillion German marks*

Cost of Bread 1918 – Less than one Mark1918 – Less than one Mark 1922 – over 160 Marks1922 – over 160 Marks 1923 – 200 billion Marks1923 – 200 billion Marks

U.S. attempts Economic Stability International committeeInternational committee Dawes PlanDawes Plan –$200 million loan from U.S. banks to stabilize German currency –More realistic schedule for reparation payments –Helps slow inflation –Attracts more loans/investments from U.S. *1929 – Germany back to pre- war production status* Charles Dawes

Efforts toward peace… Germany & France try to improve relationsGermany & France try to improve relations –Sign treaty – never make war again –Agree to respect existing borders of France/Belgium League of Nations weakLeague of Nations weak –No armed forces –U.S. not a member

Causes ofOctober Financial Collapse Causes of October Financial Collapse Late 1920s: U.S. economic prosperity sustained the world economyLate 1920s: U.S. economic prosperity sustained the world economy –Flawed Uneven distribution of wealthUneven distribution of wealth Overproduction of business/agricultureOverproduction of business/agriculture

The 1920s Stock Market Soaring prices for stocksSoaring prices for stocks –Middle Class invests –Buying on margin – buy stocks on borrowed money -When market went down, people couldn’t pay back the bank -People and banks were suddenly bankrupt

The Crash of 1929 – a timeline Sept – investors start sellingSept – investors start selling The gradual decrease of stock prices becomes a steady slide downwardThe gradual decrease of stock prices becomes a steady slide downward Tuesday, October 29 thTuesday, October 29 th –“Black Tuesday” –Panic! – Everyone sells stocks –No one buys! –Market collapses

The Great Depression People can’t pay back borrowed moneyPeople can’t pay back borrowed money Unemployment risesUnemployment rises Economic production, prices, wages declineEconomic production, prices, wages decline –9 million people lose their savings accounts –farmers lose land – can’t pay their mortgages Unemployment =25%Unemployment =25%

Global Depression…why? U.S. bankers demand repayment of overseas loans – withdraw money from EuropeU.S. bankers demand repayment of overseas loans – withdraw money from Europe American demand for European goods fallAmerican demand for European goods fall Congress places tariffs on imported goodsCongress places tariffs on imported goods –Makes depression worse!

Global Effects… Germany & AustriaGermany & Austria –Hit hard –Depended on U.S. AsiaAsia –Value of exports fell by ½ in 2 years Latin AmericaLatin America –Products not demanded by Europe & U.S. –Prices collapse

The World Confronts Crisis: Britain Government worked to stabilize crisisGovernment worked to stabilize crisis Lowered interest rates to encourage industrial growthLowered interest rates to encourage industrial growth *Brought slow/steady recovery* *Avoided political extremes* *Preserved Democracy*

The World Confronts Crisis: France Political instabilityPolitical instability Political leaders scared of anti- democratic forcesPolitical leaders scared of anti- democratic forces 1936-moderates, socialists & communists form a coalition1936-moderates, socialists & communists form a coalition –Passed reforms to help the workers *Preserved Democracy*

The World Confronts Crisis: Scandinavian Countries Became more Socialist Built recovery programs on tradition of cooperative community action Raised pensions for elderly & increased unemployment insurance, housing subsidies & other welfare benefits Government taxed people to pay for these benefits *Preserved Democracy*

The World Confronts Crisis: United States FDR – The New DealFDR – The New Deal –Public works projects - provided jobs for unemployed –Gave financial help to businesses/farms –Public $ spent on welfare/relief programs –Regulated stock market & banking system *Reformed U.S. economic system* *Preserved Democracy*