Kagan Ch. 27, pp Weimar Republic, Great Britain and France

 2 Phases ◦ The early 20s – especially in Germany ◦ international Great Depression German men carrying their daily wages home in wicker baskets.

Germans found themselves facing high unemployment at both the beginning and end of the 1920s. In 1930s 25% of all British and US workers were unemployed, 40% of all German. German man looking for work

 Financial crisis stemming from WWI ◦ Allied Reparations Commission, April $132 billion to be paid (2.5 billion gold Marks annually) ◦ Germany unable to pay in 1922  Crisis in production & distribution of goods ◦ Ruhr Crisis, 1923 – French military invades the Ruhr and commandeer industry and railroads ◦ Program of passive resistance – German workers strike  Mounting German Inflation!! = social revolution (middle class blames Western govt., big business, workers, Jews, Communists)  No strong governmental leadership ◦ Great Britain becoming increasingly concerned w/ French intentions ◦ GB and France face similar problems as Germany = rise of Labour Party and Popular Front

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 NY stock exchange crashes in Oct  International Fallout ◦ USA unable to invest in Europe = less money available to develop economy and pay back war loans ◦ Financial crises throughout Europe  Austrian Kreditanstalt collapses -> possible German collapse  Increased inflation and unemployment across Europe  Herbert Hoover ( ) ◦ June year moratorium on all debt payments

Germany 1930 Fear mounts over the international banking crises spurred on by US stock market crash.

 Collapse of grain prices mean lower incomes for European farmers  Large estates in Eastern Europe broken up for small inefficient farms  People in Asia, South America, and Africa could no longer afford to buy finished goods from industrial Europe  Commodity production outstripped world demand, leading to vast unemployment and an increased depression Copyright © 2010 Pearson Education, Inc., Upper Saddle River, NJ All rights reserved.

 “The day is not far off when the economic problem will take the back seat where it belongs, and the arena of the heart and the head will be occupied or reoccupied, by our real problems / the problems of life and of human relations, of creation and behavior and religion.”  True or False: Keynes believed that in times of great economic depression governments need to spend more money, in order to encourage employment stimulate the production and consumption of goods, thereby stimulating the (inter)national economy.  What is so radical about this idea?

 Orthodox economic theory felt cuts in government spending would prevent inflation  John Maynard Keynes – urged government spending to expand overall demand John Maynard Keynes  Private economic enterprise becomes subject to new trade, labor, and currency regulations Copyright © 2010 Pearson Education, Inc., Upper Saddle River, NJ All rights reserved.

 Ramsay MacDonald – headed Labour government, wanted to slash the budget, reduce government salaries, and cut unemployment benefits  National Government – in 1931 takes three steps to end the depression ◦ (1) raised taxes, cut benefits, and lowered government salaries ◦ (2) took Britain off the gold standard ◦ (3) Import Duties Bill – leveled a tariff on all imports, except those from the empire  Banking crisis that plagued most of Europe is avoided, but unemployment remains high and the economy remains stagnant Copyright © 2010 Pearson Education, Inc., Upper Saddle River, NJ All rights reserved.

 Depression in France started later and lasted longer due in part to the stoppage of the payment of reparations  Right-wing violence ◦ Groups such as the Action Francaise and Croix de Feu resemble the Nazis in their opposition to parliamentary government, socialism and communism ◦ Large demonstration of right-wingers leads to the death of fourteen demonstrators in Paris in 1934  Socialist-communist cooperation – the Popular Front – a coalition of left-wing parties takes over the government  Leon Blum - Popular Front’s elected leader ◦ Calls for massive labor reforms involving wages, working hours, recognition of unions and the establishment of a National Wheat Board, that managed the sale of grain ◦ French bankers and businessmen outraged  Popular Front dissolves in 1938, leaving France divided and faith lost in the republic Copyright © 2010 Pearson Education, Inc., Upper Saddle River, NJ All rights reserved.