1. The Great Depression

2. Essential Question
What caused the Great Depression, and why did it spread?

3. The World in Prosperity & Depression
Europe changed drastically after WWI
Imperial governments were gone
New countries emerged: Poland, Czechoslovakia, Hungary, Yugoslavia, & the Baltic States
Russia was in the middle of a civil war

5. Reconstruction & Prosperity
In Europe, first years after war were tough
Central Europe – Famine caused by wartime blockade of food
Soldiers returning home from war faced unemployment
Next 5 years spent rebuilding & recovering from the war

6. The German Economy
The Treaty of Versailles forced Germany to pay huge amounts in reparations to France & Britain
This slowed the recovery of their economy
Printed extra money to pay the debt, which resulted in hyperinflation
Hyperinflation – A decrease in the value of currency resulting from printing too much money. Prices increase in the affected area, so it takes more money to purchase things.

7. The U.S. Economy America emerged as world’s greatest economic power
Britain & France owed the U.S. a large amount of money – Bought war supplies on credit
Americans bought mass produced goods made in American factories
Automobile was most important factor in prosperity – Sold to Americans & Europeans
Americans invested overseas, especially in Germany
Women had more freedom (Voting, College) because they worked in place of men during the war

9. The Great Depression
Stock market crash in New York sent world economy into a Great Depression
Depression – Economic downturn in which a large number of businesses fail & workers are unemployed
Prices of stocks started falling, & people scrambled to sell before they lost too much

10. The Great Depression People who lost money quit buying goods
Banks & investors recalled loans from Europe – Caused depression to spread worldwide
40,000,000 workers became unemployed
Farmers could no longer sell cash crops

11. Causes of the Great Depression
Prosperity was due to stock market & real estate over speculation
Over Speculation – People spend money they don’t have yet, assuming they will earn the money from what they are buying
Overproduction – More goods were produced than consumers could buy
Relationship of loans & debts between Europe & America ensured the recession would spread

12. Causes of the Great Depression
Government leaders quit spending, tightened credit, & cut off international trade
This made the recession worse
People had no security net, like unemployment insurance & social security, if they lost their job & savings
Franklin Roosevelt elected President in 1932 – Created New Deal to try to provide jobs for unemployed citizens