Great Depression Background and causes

The war is over Europe is in ruins The US and Japan are doing well Countries are nearly bankrupt There is a great deal of uncertainty The US and Japan are doing well Neither had been a wartime battlefield Their influence rose after WWI

Unstable Democracy New Democracies in Europe Russia (provisional government) Germany (Weimar Republic) Problems lead to instability No democratic tradition in some countries France and Italy had many political parties

Democracy in Germany Weimar Republic Major problem Created in 1919 1st democracy in Germany Major problem Many Germans were angry with the Weimar for signing the Treaty of Versailles

Economic Crisis Background Inflation During the war, Germany printed more money to pay the costs of the war reparations. Inflation Definition: when the value of a currency drops and prices go up Suddenly, German marks became worthless

Attempts at Economic Stability Dawes Plan Began in 1924 $200 million in loans from the US to Germany Designed to stabilize the currency and strengthen the economy By 1929, Germany had recovered

Efforts at a Lasting Peace Germany in the League of Nations (1925) France and Germany agree never to fight each other again

The ‘Roaring 20s’ Good times ‘A Return to Normalcy’ Easy money: corruption scandals, shady business tycoons, and gangsters Big Band music, dance clubs Athletes become major celebrities ‘A Return to Normalcy’ The economy seemed strong War was a distant memory

Flaws in the US Economy Distribution of income Overproduction A wealthy elite kept most of the profits Overproduction Too much production = lower prices Lower prices = less profit Unpaid debts Many farmers could not sell their crops As a result, banks could not collect debts

The Rise of Totalitarianism

Desperate Times... Global Economic Depression Rising unemployment & falling production Growing inflation destroyed savings Failure of moderate governments Many democratic governments were unable to deal with the crisis Russia (provisional government) Germany (Weimar Republic)

…desperate measures Radical solutions Strong leadership Many stocks became worthless Some of the world’s wealthiest people saw their fortunes disappear Strong leadership 9 million people lost their savings Many farmers lost their land

The Depression Begins Unemployment The Vicious Cycle Factory production dropped by 50% Less production meant fewer jobs By 1933, 25% of Americans and Canadians had no job The Vicious Cycle Less money available = fewer purchases Fewer purchases = less money available

Tariffs Affect Global Trade Definition: fees charged on goods produced in other countries The US tried to protect its own industries by making imports more expensive Global Trade drops Other countries increased their tariffs Global trade declined by 65%

A Global Depression Europe Latin America Asia Austria’s largest bank failed Latin America Many countries could not sell their products Asia Crop failures led to famine