Good Morning Bell-Ringer Read the charts on page 908, and answer Skill Builder questions 1 – 2.

Chapter 31, Section 2 “A Worldwide Depression”

I.Postwar Europe A. Unstable New Democracies 1. new Russian gov’t – 1917 a. Provisional Government b. constitutional & democratic rule c. fell to Communist dictatorship 2. little experience w/ representative gov’t 3. too many political groups 4. coalition government a. temporary alliance of several parties 5. frequent changes in gov’t made it hard for democratic countries to develop strong leadership & achieve long term goals

II.The Weimar Republic A. Germany’s New Democratic Government 1. several major political parties; many minor ones 2. blamed for country’s defeat & humiliation in WWI B. Inflation Causes Crisis in Germany 1. didn’t increase taxes during war 2. Germans simply printed $ to pay for war 3. $ lost value after war 4. printed even more $ to pay reparations 5. German mark ($) fell sharply = inflation

C. Attempts at Economic Stability 1. Dawes Plan a. $2 million loan from American banks b. realistic schedule for reparation payments c. helped Germany bounce back D. Efforts at Lasting Peace 1. G. Stresemann (Germany) & A. Briand (France) a. signed treaty promising 2 countries would never again make war against each other b. Germany was admitted to League of Nations 2. Kellogg-Briand peace pact a. Frank Kellogg (U.S.) arranged agreement w/ France b. almost every country signed c. “to renounce war as an instrument of national policy” d. no means to enforce provisions

III.Financial Collapse A. A Flawed U.S. Economy 1. uneven distribution of wealth a. rising productivity = profits b. profits not evenly distributed 2. many Americans buying less a. couldn’t afford goods 3. overproduction of business & agriculture a. factories produced, but Americans didn’t buy b. unable to sell, store owners cut back orders c. factories reduced production & laid off workers d. new farming methods & machinery = more crops = more food e. faced competition from other countries = decrease in prices & profits f. many farmers couldn’t pay bank loans = weakened banks, some closed

B. The Stock Market Crashes 1. middle class bought stocks on margin a. paid small % of stocks price as down pymt. & borrowed rest from stockbroker 2. Sept – stock prices increased 3. Oct – stock prices decreased 4. led to panic; everyone wanted to sell stocks; no one wanted to buy million stocks sold, then market collapsed

IV.The Great Depression A. A Long Business Slump 1. factory production cut in half, businesses failed, & banks closed 2. 9 million people lost savings accounts 3. many farmers lost land 4. by 1933 ¼ American workers had no job B. A Global Depression 1. bankers demanded repayment of overseas loans 2. American investors withdrew $ from Europe 3. U.S. Congress placed high tariffs on imports, so American $ would stay in U.S. & pay for goods 4. many countries depended on exporting to U.S. 5. other countries raised tariffs; world trade dropped by 65%

C. Effects Throughout the World 1. Germany & Austria a. b/c of war debts & dependence on U.S. loans b – Austria’s largest bank failed 2. Asia a. farmers & urban workers suffered as value of exports fell 3. Latin America a. U.S. & European demand for products dropped, prices collapsed

“Hoovervilles” in Seattle, Washington

"Nipomo, Calif. Mar Migrant agricultural worker's family. Seven hungry children. Mother aged 32, the father is a native Californian. Destitute in a pea pickers camp, because of the failure of the early pea crop. These people had just sold their tent in order to buy food. Most of the 2,500 people in this camp were destitute."

Bread Line

Soup Line

Men on the move in search of jobs, some abandon families altogether

The Dust Bowl

FDR giving one of his Fire-Side Chats

V.The World Confronts the Crisis A. Britain Takes Steps to Improve Its Economy 1. voters elected National Government a. passed high protective tariffs b. increased taxes c. regulated currency d. lowered interest rates 2. slow, but steady recovery B. France Responds to Economic Crisis 1. Popular Front a. didn’t work, but preserved democracy C. Socialist Governments Find Solutions 1. Denmark, Sweden, & Norway a. Sweden – public works b. increased welfare benefits c. taxed all citizens in order to pay for benefits

D. Recovery in the United States 1. Franklin D. Roosevelt (FDR) a. New Deal 1. large public works projects 2. welfare & relief programs 3. stock market & banking regulations b. Believed gov’t spending would create jobs & start a recovery 2. New Deal eventually reformed U.S. economic system Franklin D. Roosevelt

Daily Essential Questions 1.How did WWI change the balance of economic power in the world? 2. How did margin buying contribute to the stock market crash? 3. What problems did the collapse of the American economy cause in other countries?