The Roaring Twenties

EUROPE

ProblemsHigh unemployementRising pricesWar loansGermany was unable to pay war

compensations:oMassive inflationoUnemployementoDecline in the population’s

standard of living

SOLUTIONSDaws plan: Loans to Germany

Locarno Treaties: oRenegotiation of Germany’s debts

oSet up the borders of Europe

The Great Depression

Great Depressiono Overproduction. The production increased a lot since

Europe imported American goods in WWI. However, after its end the demand decreased, although the production did not. Prices and profits halted in 1926, but the production went on.

o Low prices of agricultural products. Many farmers went bankrupt and could not buy anything.

o Speculation. Profits had been really high between 1921 and 1926. Many people bought shares since it could not be invested in industry since there was overproduction. The quote of shares was did not match their actual worth. Loans were easy to get. Hence, more shares were bought.

Great DepressionWhy?

Share’s prices were higher than their real value

Great Depression

Great DepressionPeople were panicked since they could not buy any share in the New

York Stock Exchange. o On Black Thursday (24 October) shares were massively sold in

that marketplace. o On Black Tuesday (29 October) the sale of shares was

complete and economy collapsed: More than 5,000 banks had to close due to those loans they had previously granted and they could not get back. Moreover, many people withdrew their savings from the banks. Industry was severely affected since demand decreased and they had lots of stocks; hence prices decreased. Many people went unemployed and many farmers were completely unable to pay back their loans. The most affected countries by the Crash were the USA, Germany, and Japan.

The Great DepressionResults:

General Economic recession: Unemployement Consumption fell Companies closed

down

The Great DepressionInternational consequences:

U.S. banks withdrew their money from Europe (they asked for their loans)

SolutionsNEW DEALProblems in Europe