Great Depression
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Transcript of Great Depression
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Great Depression
Background and causes
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The war is overEurope is in ruins
Countries are nearly bankruptThere is a great deal of uncertainty
The US and Japan are doing wellNeither had been a wartime battlefieldTheir influence rose after WWI
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Unstable DemocracyNew Democracies in Europe
Russia (provisional government)Germany (Weimar Republic)
Problems lead to instabilityNo democratic tradition in some countriesFrance and Italy had many political parties
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Democracy in GermanyWeimar Republic
Created in 19191st democracy in Germany
Major problemMany Germans were angry with the Weimar for signing the Treaty of Versailles
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Economic CrisisBackground
During the war, Germany printed more money to pay the costs of the war reparations.
InflationDefinition: when the value of a currency drops and prices go upSuddenly, German marks became worthless
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Attempts at Economic StabilityDawes Plan
Began in 1924$200 million in loans from
the US to GermanyDesigned to stabilize the currency and strengthen the economyBy 1929, Germany had recovered
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Efforts at a Lasting PeaceGermany in the League of Nations (1925)
France and Germany agree never to fight each other again
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The ‘Roaring 20s’Good times
Easy money: corruption scandals, shady business tycoons, and gangstersBig Band music, dance clubsAthletes become major celebrities
‘A Return to Normalcy’The economy seemed strongWar was a distant memory
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Flaws in the US EconomyDistribution of income
A wealthy elite kept most of the profitsOverproduction
Too much production = lower pricesLower prices = less profit
Unpaid debtsMany farmers could not sell their cropsAs a result, banks could not collect debts
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The Rise of Totalitarianism
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Desperate Times...Global Economic Depression
Rising unemployment & falling productionGrowing inflation destroyed savings
Failure of moderate governmentsMany democratic governments were unable to deal with the crisis• Russia (provisional government)• Germany (Weimar Republic)
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…desperate measuresRadical solutions
Many stocks became worthlessSome of the world’s wealthiest people saw their fortunes disappear
Strong leadership9 million people lost their savingsMany farmers lost their land
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The Depression BeginsUnemployment
Factory production dropped by 50%Less production meant fewer jobsBy 1933, 25% of Americans and Canadians had no job
The Vicious CycleLess money available = fewer purchasesFewer purchases = less money available
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Tariffs Affect Global TradeTariffs
Definition: fees charged on goods produced in other countriesThe US tried to protect its own industries by making imports more expensive
Global Trade dropsOther countries increased their tariffsGlobal trade declined by 65%
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A Global DepressionEurope
Austria’s largest bank failed
Latin AmericaMany countries could not sell their products
AsiaCrop failures led to famine