2. Essential Question What caused the global depression? How did western democracies react to global depression?

3. Europe in 1919

4. Post War Economics Britain & France owe huge war debts to the US Germany’s economy is crushed by reparation payments

5. Great Britain: 1926 General Strike Massive unemployment, low wages, severe worker unrest

6. France Economy recovers rapidly European economies return to peacetime manufacturing and trade People enjoy a raising standard of living

7. The United States Booms US emerges form the war as the world’s leading economic power US loans and investments help the global economy remain stable

8. Falling Demand and Overproduction in the US Overproduction: A condition in which the production of goods exceeds the demand for them As demand slows, factories cutback on production and people loose their jobs

9. Crash and Collapse The stock market: the public invests in companies by purchasing stocks; in return for this they expect a profit b/c of booming 1920's economy, $ was plentiful, so banks were quick to make loans to investors investors only had to pay for 10% of the stock's actual value at time of purchase –this was known as BUYING ON MARGIN, and the balance was paid at a later date

10. this encouraged STOCK SPECULATION - people would buy and sell stocks quickly to make a quick buck all of this gave a false sense of security/confidence in the American market The Federal Reserve raised interest rates in 1928 and 1929 Made people nervous about borrowing $

11. The Great Depression Fall 1929--nervousness about the economy cause many people to sell their stocks Stock prices crash People’s fortunes are wiped out 1931 Federal Reserve raised interest rates again--making matters worse

12. Economic crisis in the US spreads to the rest of the world

13. The Great Depression [1929-1941] Paris in 1930 London in 1930

14. Depression Spreads Problems spread around the world US stops making loans and demands repayment of existing loans

15. Reaction to Depression By 1931-- in Great Britain 1 in every 4 workers was unemployed France was hit hard. Political turmoil between leftist and socialist groups.

16. Reaction in the US Herbert Hoover believes the government should not intervene in private business 1932-Preseident Franklin D. Roosevelt creates the New Deal---a massive package of social and economic programs –Social Security –New Jobs –Public Works Projects

17. The New Deal does not end the depression, but it eases suffering People loose faith in democratic gov’ts to solve problems Misery and hopelessness create a fertile ground for extremists who promised radical solutions

18. Decrease in World Trade: 1929- 1932

20. In addition to problems at home the”three democracies” faced a difficult international situation Peace settlements caused friction

21. The Maginot Line France builds massive fortification along German border The line will not stop another German invasion (1940) France creates an alliance with the USSR Strict enforcement of the Versailles treaty British care less about the treaty---fear that if Ger becomes too weak, Fr & USSR become too powerful

22. The Maginot Line

23. Locarno Pact: 1925

24. Gustave Stresemann (Ger.) Aristide Briand (Fr.) Austin Chamberlain (Br.)  Settled Germany’s disputed borders with France, Belgium, Czechoslovakia, Poland  Symbolize a new era of peace  Settled Germany’s disputed borders with France, Belgium, Czechoslovakia, Poland  Symbolize a new era of peace

25. Kellogg-Briand Pact: 1928  Sponsored by the US  15 nations committed to outlawing aggression and war for settling disputes.  Agree on disarmament  Problem  no way of enforcement.  Sponsored by the US  15 nations committed to outlawing aggression and war for settling disputes.  Agree on disarmament  Problem  no way of enforcement.

26. League of Nations 1926-Germany and USSR are admitted Kellogg-Briand pact outlaws war, but has no way of enforcing ban 1931-Japan invades Manchuria League can do nothing to stop it Ambitious leaders in Europe note the League’s weakness

27. League of Nations Members