Transcript Europe in the 1920s - Los Angeles Center for Enriched Studies

Essential Question
• What caused the global depression?
• How did western democracies react to
global depression?
Europe in 1919
Post War Economics
• Britain & France owe huge war debts to
the US
• Germany’s economy is crushed by
reparation payments
Great Britain: 1926 General Strike
Massive unemployment, low wages, severe worker unrest
France
• Economy recovers rapidly
• European economies return to peacetime
manufacturing and trade
• People enjoy a raising standard of living
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
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
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
• 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 $
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
• Economic crisis in the US spreads to the
rest of the world
The Great Depression [1929-1941]
London in 1930
Paris in 1930
Depression Spreads
• Problems spread around the world
• US stops making loans and demands
repayment of existing loans
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.
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
• 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
Decrease in World Trade: 1929-1932
• In addition to problems at home the”three
democracies” faced a difficult international
situation
• Peace settlements caused friction
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
The Maginot Line
Locarno Pact: 1925
Locarno Pact: 1925
Austin Chamberlain (Br.)
Aristide
Briand
(Fr.)
Gustave
Stresemann
(Ger.)
 Settled Germany’s disputed borders with France, Belgium,
Czechoslovakia, Poland
 Symbolize a new era of peace
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.
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
League of Nations Members