The Great Depression: Post WWI Economic Problems Ms. Payne September 21, 2011

The Great Depression: Post WWI Economic Problems SS6H7a Describe major developments following WWI: the Russian Revolution, the Treaty of Versailles, world- wide depression, and the rise of Nazism

The Great Depression: Post WWI Economic Problems ESSENTIAL QUESTION: How did the Treaty of Versailles and world-wide depression impact Europe in the years between World War I and World War II?

Worldwide Depression ISN: Cornell Notes Definitions: Economic Depression: Inflation: Stock Market Crash: period of low economic activity when many people lose their jobs period when money loses it value and businesses raise prices a sudden dramatic decline of stock prices across a significant cross- section of a stock market, resulting in a significant loss of paper wealth

Depression in Germany Factors German Resentment and Humiliation After the war Germany did not like losing territory and making war payments. The territorial and economic loss caused Germans to have resentment and be humiliated.

The Great Depression: Post WWI Economic Problems Germany made the 1st of reparation payments in 1921 claimed they could not afford to pay anymore Germany made the 1st of the reparation payments in 1921 The next year they claim they could not afford to pay anymore.

The Great Depression: Post WWI Economic Problems France’s Response Use German payments to rebuild their own economy. Sent troops to take German’s valuable mines and factories France got used to receiving reparations from Germany. France was using the payments to rebuild their economy. When Germany said they were not able to pay reparations the next year, France sent troops into Ruhr Valley to seize (take) valuable mines and factories that belonged to Germany as payment.

The Great Depression: Post WWI Economic Problems Germany’s Response workers at factories and mines went on strike  protest France’s takeover. began printing more money to pay wages Caused inflation Value of money ↓ Businesses prices ↑ Result takes more $$$ to buy things. people needed wheelbarrows full of money to buy a loaf of bread The workers at these factories and mines went on strike to protest France’s takeover. To help pay these workers’ wages, Germany began printing more money This backfired on the Germans causing inflation. Inflation is when money starts to lose its value and businesses raise their prices. The result is that it takes more money to buy things. Soon, German people had to have wheelbarrows full of money just to buy a loaf of bread. This German woman is using German paper money to keep her stove going. It was so worthless, the best use was for firewood!

The Great Depression: Post WWI Economic Problems Causes of the Great Depression Crash of the U.S. stock market Causes of the Great Depression Crash of the U.S. stock market Investors would buy stock with borrowed money. As long as stock prices increased, investors made the money to pay back the loans. HOWEVER, when stock prices decreased, investors were stuck with a loan they could not pay back!

The Great Depression: Post WWI Economic Problems Causes of the Great Depression Overproduction Inability to pay back loans Unemployed Investors Banks wanted loans paid back Banks collapsed many people lost their entire savings. Causes of the Great Depression Overproduction Many factories made too many goods and were not able to sell all they produced. This forced factories to slow down production and lay off workers. This created a problem because of the high number of unemployed people. They could not support themselves. Inability to pay back loans Banks started to want loans paid back. People out of work and investors who did not make a profit in the stock market could not pay back their loans. Banks collapsed and many people lost their entire savings.

The Great Depression: Post WWI Economic Problems The Great Depression spreads to Europe American investors pulled their money out of European banks. The European economy collapsed as well. Half of Germany’s population was unemployed.

Unemployment Rates The unemployment rate at the date of the stock market crash was less then about 4% in the U.S., about 11 % in Great Britain, and about 14% in Germany. By 1932 the rates spiked up to: about 23% in the U.S., about 24% in Great Britain, and 30% in Germany.

The Great Depression: Post WWI Economic Problems Impact Rise of Nazism & Hitler With the humiliation of the German people, the huge debt, and the starvation and economic depression in Germany after WWI, it is easy to see why the German people would put their faith in Hitler in a few years.

1931 German Financial Crisis PBWorks http://ss6paynelessons.pbworks.c om/w/page/45461718/Worldwide %20Depression YouTube http://youtu.be/IFSad6Mphoo

Worldwide Depression ISN: Cornell Notes Causes: Long-Term Huge debt resulting from WWI European dependence on American Loans Widespread of credit Overproduction of goods paired with a decline in demand

Worldwide Depression ISN: Cornell Notes Causes: Short-Term Stock Market Crash 1929 Banks demand repayment of loans Americans can no longer give loans to other countries Businesses and factories fail High protective tariffs

Worldwide Depression ISN: Cornell Notes Effects: Short-term Vast Unemployment and misery Bank failures and collapse of credit Loss of faith in capitalism and democracy Authoritarian leaders gain support

Worldwide Depression ISN: Cornell Notes Effects: Long-term Nazis take control of Germany Scapegoats are blamed for economy Fascist leaders gain control of Eastern Europe World War II begins

ISN: Cornell Notes Worldwide Depression Summary: