1. The 1930’s: Depression and War

2. Causes of the Great Depression Financial Crisis: outcome of Versailles Problems of production/distribution in World Markets: agricultural crisis Lack of economic cooperation or leadership

3. Financial Crisis from the peace Unleashed inflation After armistice, demand for consumer/industrial goods drove up prices, which drove up wages Currencies couldn’t keep value, especially German Reparations and War Debts France paid reparations 1815, 1871 and expected Germany to do the same; finance France’s recovery from WWI US wanted repayment from Allied loans, other European nations counted on reparations to help repay (mostly to US) Britain wanted redefinition (We’ll only require France, others to repay as much as US demands we repay; US wouldn’t decrease demands) Currency speculations meant no money going into capital investments; tariffs high so balance of payments not awful

4. Whoops! It all crashes! Dominoes: American influence Dawes Plan: organizes reparations and debt repayment to US Handy: US in good shape invests in Europe, especially Germany—short term loans BUT 1928 American money invested into booming stock market instead Wall Street Crash October 1929 result of unregulated financial speculation results in bank failure; No money for Europe; loans not renewed End of reparations Because of American crash, European crash: Kreditanstalt, major Vienna Bank creditor all E Europe, collapsed German banking system only saved by government ; no longer make reparations payments Hoover declares 1 year moratorium on war debts; France has to go along Lausanne Conference 1932: ends reparations

5. Agricultural Commodities Expanded agricultural world wide = prices down Better methods of farming, better varieties of wheat, expanded farming acreage, better transport worldwide = more production Prices down, good for consumer, but lower income for farmers, especially Euro breadbasket of E/Central Euro Farmers couldn’t repay loans = banks down Land reform in E Euro Romania and Czechoslovakia (less in Poland and Hungary) meant smaller farms, inefficient GREAT DEPRESSION deepens

6. World Market Woes No money = no demand for European goods Demand for Euro goods shrank relative to production Idle factories, fewer jobs=prices up, fewer still could buy Glut on world market meant even less money to farmers, less for spending on other goods GREAT DEPRESSION deepens even more