A Worldwide Depression HSCE 7.2.2-3Ch. 31 sec. 2 *1920s---Euro nations rebuilding after they are devastated by WWI---ONLY USA & Japan came out of WWI in better financial shape than before --America helps Europe—Americans think that everything is going to be awesome from here on out……but….. *Euro nations see new govts. open up *New, TEMPORARY govts. appear------DEMOCRATIC --coalition governments---temporary alliance of several parties---but parties disagreed on so many issues, these did NOT last long.

Frequent changes in govts *Frequent changes in govts. make it hard to develop good leadership and achieve long-term goals *Weimar Republic---1919—Germany’s new democratic govt. --Weak from the beginning --Germany did not have a democratic tradition --Way too many political parties **Millions of Germans blamed the Weimar Republic, NOT the wartime leaders for postwar humiliation & TOV. *Germany is in economic mess!! --did not increase taxes to pay for war……they just kept printing $$$$$ --After war, their paper $$ lost its value --Inflation sets in & Germans need LOTS of $$ just to buy basic goods. --It took a whole wheelbarrow of $$ just to buy food

*1923—Germany recovers, thanks to American banker, Charles Dawes---$200 million went to help Germany stabilize economy --1929—German factories are producing as much as they had before the war…….good or bad? *Kellogg-Briand Pact---almost every country in the world agreed to “renounce war as an instrument of national policy” --But League of Nations had no army to enforce the Pact and the U.S. was not part of LON

America Faces Financial Collapse! *1920s—U.S. economy helps stabilize the world economies --USA looked great on the outside….BUT had several weaknesses *By 1929—American factories are putting out nearly ½ of the world’s goods.---creates enormous wealth, but not evenly distributed. --families too poor to buy goods—store owners cut back on the orders from factories----factories produced less & laid off workers---Leads to downward economic spiral

*Oct. 29, 1929----Stock Mkt. Crashes *The Great Depression---people could not pay $$ owed on stock purchases --unemployment rates go thru the roof --1932—factory production cut in half --thousands of businesses failed --9 million people lost $$ in their savings accounts when banks closed --farmers lost land to banks *By 1933---1/4 of all American workers had NO jobs

*Stock crash goes all over world---American bankers demand $$ from overseas and take their $$$ out of Europe. *Crash hurts Germany/Austria-Hungry = depended on Am. $$ --hurts Australia & LA = exports on farm goods fell

*United States Recovery---1932---USA elects….. --FDR---established NEW DEAL---created large public works—helped give jobs to unemployed --Spent HUGE $$$ on welfare & relief programs --reformed stock mkt. and banking --New Deal established FDR as the most powerful man in the world.