The Great Depression

Unit Objectives Understand the causes and impacts of the Great Depression Analyze individual programs of the Great Depression and their effectiveness Analyze how the Great Depression helped lead to the rise of the dictators of WWII

Post-WWI Only two nations were in better financial shape after the war than before: Japan and America European nations spent years rebuilding with the help of loans from the U.S.; Many European nations were bankrupt America entered the “Roaring Twenties”—the most prosperous economic decade in American history

New Democracies New democracies took the place of absolute rulers all over Europe but in places that had no history or experience with democracy—that made them ineffective and weak during hard times making people willing to accept authoritarian governments that made grand promises Weimar Republic: DEMOCRATIC GOVERNMENT ESTABLISHED IN GERMANY AFTER WWI; WEAK, DIVIDED, BLAMED BY MANY GERMANS FOR WWI DEFEAT AND TERMS OF TREATY OF VERSAILLES

Problems in Germany Weak government, inability to pay WWI war reparations, went off gold standard to print money that became worthless, inflation Many Germans questioned value of their democratic government

Late 1920s Germany tried to make peace with France, joined League of Nations, and signed the Kellogg-Briand Pact: INTERNATIONAL AGREEMENT TO NOT GO TO WAR; ALMOST EVERYONE SIGNED BUT THERE WAS NO WAY TO ENFORCE IT

Stock Market crashed in Oct. 1929 TOO MANY INEXPERIENCED PEOPLE BOUGHT STOCKS AND TOOK OUT LOANS TO COVER THE COSTS WHEN MARKET STARTED TO FALTER, EVERYONE PANICKED—EVERYONE TRIED TO SELL STOCKS, NO ONE WANTED TO BUY

Stock Market Crash of 1929 The world’s economy was dependent on America’s in the 1920s—when America’s economy struggled so did Europe’s Problems in America’s economy that no one recognized: UNEVEN DISTRIBUTION OF WEALTH OVERPRODUCTION BY FARMS AND INDUSTRY AMERICANS WERE BUYING LESS

Stock Market Crash of 1929 Stock Market Crash did not cause Great Depression all on its own but it was one of the main causes and it did make an already bad situation worse Impact of the Depression in America: FACTORY PRODUCTION CUT IN HALF UNEMPLOYMENT WAY UP PRICES AND WAGES FELL BUSINESSES FAILED BANKS CLOSED

Impact on the World U.S. banks demanded repayment of loans to European nations that could not be paid back U.S. investors withdrew money from Europe The U.S. raised tariffs to keep American money in the U.S. which caused the Europeans to stop buying American products and raise their own tariffs World trade went down Unemployment went up Germany and Austria were hit the hardest due to restrictions of the Treaty of Versailles and they were more dependent on U.S. loans and investment than anyone else The Depression was felt in Latin America and Asia as well

What did America try to do? Franklin Roosevelt was elected in 1932 promising a “New Deal” to get America out of the Depression The New Deal relied on the belief that increasing government spending would stimulate the economy, so public works programs were created to create jobs and welfare was created to provide help to individuals New government regulations of the stock market and banks to help ensure another Depression would never happen

What did other nations try? RAISED TARIFFS AND TAXES, LOWERED INTEREST RATES TO ENCOURAGE BUSINESS, MORE GOVERNMENT REGULATIONS

Overall impact of the Depression? Led to political instability in nations that were suffering Some nations believed capitalism was failing and turned to socialism Many individuals became desperate and found the promises of people like Mussolini and Hitler appealing