1. A worldwide depression
31.2 Notes
A worldwide depression

2. Postwar Europe
Late 1920s European nations were rebuilding economies, helped by loans from US
US and Japan only nations to come out of war in better financial shape than before
American economy seemed strong but serious weaknesses would bring about most severe economic depression ever

4. Unstable New Democracies
The war’s end saw many new democracies-last European absolute rulers were overthrown.
Citizens of new democracies had little experience with representative government-large number of political parties made effective government difficult
It was hard for one party to win enough support-a coalition government, or temporary alliance of several parties, was formed when no single party won a majority
The coalitions didn’t last long because parties couldn’t agree, frequent changes in government
Voters were then willing to sacrifice democratic gov’t for strong, authoritarian leadership

5. The Weimar Republic
1919 Germany’s new democratic gov’t was set up, known as the Weimar Republic
Several weaknesses from start
1: Germany lacked strong democratic tradition
2: too many political parties
3: Germans blamed Weimar Rep for country’s defeat and humiliation

6. Inflation Causes Crisis in Germany
Germany didn’t increase wartime taxes, but instead printed money
After war this money lost value, printed more money, then inflation
The mark, Germany’s currency, fell sharply
These economic woes led many Germans to question value of new democratic gov’t

8. Attempts at Economic Stability
American banker Charles Dawes created the Dawes Plan to provide $200 million loan to stabilize German currency, strengthen economy, more realistic reparations payments
Put in to effect in 1924, by 1929 German factories were back to pre WWI levels

10. Financial Collapse Late 1920s weaknesses of US economy began to show:
overproduction by business and agriculture
uneven distribution of wealth
Americans were buying less
Store owners cut back orders from factories, which in turn reduced production and laid off workers, creating a downward spiral
Farmers couldn’t pay off bank loans, forced some banks to close, etc.

12. The Stock Market Crashes
1929 NYC’s Wall Street was financial capital of the world- optimism about economy led to soaring price of stocks
Middle class ppl began buying stocks on margin-paid a small percentage of a stock’s price as a down payment, borrowed the rest from a stockbroker
Sept 1929: in a panic that stock prices were unnaturally high, ppl began selling stocks
Black Tuesday: Oct 29th, 1929: 16 million stocks were sold, market collapsed

13. The Great Depression
This business slump came to be called the Great Depression=severe worldwide economic depression from
By 1932 factory production had been cut in half, 1000s of businesses failed, 9 million ppl lost savings
1933: ¼ of all American workers had no jobs

14. A Global Depression
American bankers demanded repayment of overseas loans, withdrew money from Europe
Congress placed high tariffs on imported goods which backfired bc other nations enacted tariffs too, so world trade dropped by 65%
Germany and Austria hit hardest bc of dependence on US loans, investments

15. The World Confronts the Crisis
Great Britain, France, and the Scandinavian Countries all able to keep democracies strong
Passed high protective tariffs, increased taxes, regulated currency=slow but steady recovery
Also sponsored massive public works projects that kept ppl employed and producing, raised pensions for elderly, increased unemployment insurance, subsidies for housing, welfare benefits

16. Recovery in the US
1932 first presidential elections after GB, FDR elected, began New Deal: program of gov’t reform
Large public works projects, new gov’t agencies gave financial help, public money spent on welfare, relief programs, regulations were created to help reform banking system, stock market
New Deal eventually fixed American economy, FDR’s leadership preserved democracy