Global Depression By the late 1920s European nations were rebuilding their war-torn economies with loans from the US.

Europe After the War Every major European country was bankrupt Old forms of government ended - dynasties New democracies had little experience

Weimar Republic 1919 Germany’s new democratic government Many political parties competed for power Germans blamed the Weimar government for their defeat and humiliation - WWI

Problems in Germany Hyperinflation caused by reparations The Mark was now worth 1 trillionth of its original value 40% unemployment Cost of Bread in Germany 1918-1 Mark 1922-160 Marks 1923-200,000,000,000 Marks

Dawes Plan A 1924 plan to help slow inflation and restart manufacturing in Germany $200 million loan given to Germany from American banks Charles Dawes

Kellogg-Briand Pact A treaty sponsored by U.S. Sec. of State Frank Kellogg and France’s Briand Pledged to: “renounce war as an instrument of national policy” Signed by almost all of the world countries (including Germany, Soviet Union, and Japan)

Great Depression World depended on U.S. to have a strong economy 3 Problems with U.S. economy: Uneven distribution of wealth 60% of families made less than $2000 a year Overproduction by business and agriculture Drove prices down Lessening demand for consumer goods Most Americans too poor to buy goods they manufactured

Wall Street Wall Street was financial capital of the world Optimism about economy caused stock prices to rise Middle-class Americans purchased stock on margin Only paid down payment on stock and borrowed rest from stockbroker

Black Tuesday: October 29, 1929 Stocks became unnaturally high causing a selling trend Prices fell causing more people to sell stocks Oct 29, 1929 – Black Tuesday – the market collapsed and stocks were worthless

Great Depression Unemployment rose Industrial production dropped Wages dropped Businesses failed Banks closed

World Reaction US banks demanded repayment of overseas loans US investors withdrew money from Europe Congress placed a high tariff on imported goods Other nations imposed a tariff World trade dropped Unemployment soared Banks failed world-wide Crops failed → famine and a decline in exports Latin America could not repay debts

Recovery – Great Britain Voters elected a coalition government Passed a high protective tariff Increased taxes Regulated currency Lowered interest rates to encourage industry Encouraged a steady recovery without extremes & preserved democracy

Recovery - France Heavily agriculture and less dependent on foreign trade Economic crisis → political instability 1936 coalition government passed a series of workers reforms Pay increases Holidays with pay 40 hour work week Preserved democracy

Recovery in the U.S. Franklin D Roosevelt elected in 1932 New Deal program created public works projects to provide employment Financial aid to businesses and farms Instituted welfare and relief programs Regulated the stock market and banks

Europe Between Wars Communism failed to spread beyond the Soviet Union Political and economical instability led to dictatorships in Germany, Italy, Spain