Great Depression in Europe By: Maxwell Studley, Courtney Adelman, Cassidy Sullivan

Introduction to the Great Depression of the Interwar Period

• • • • • • Lasted 1919-1939 The great depression during this time period would result in economic crisis and political change.

Conditions of the Depression would bring people to reconsider, “the effectiveness and sustainability of democratic institutions.” – Digital History Reader Events of the Depression would show how interconnected and dependent economies had become upon one another It is commonly agreed on that the Great Depression in Europe was a result primarily due the factor of the American stock market crash which would move o the rest of the world “ All major factors contributing to the depression can be traced back to the United States of America.” – Dietmar Rothermund

Factors of the Beginning

The great depression would come to affect Europe as a result of the interaction of complex political, economical, and social factors

1. Economic impact of the Great War {WWI} The events of the war led to the disruption of normal actions of domestic, international trade, and the undermining of the economic financial strength of the old world of Europe. Countries methodized the printing of money in order to charge war efforts. However, this led to high inflation and rising prices. These complications would leave the governments of Europe in a position where they would have to act in order to instill means of deflation to preserve their countries finances. 2. Economic and Geo-Political dislocation caused by the war Major components of this factor would include the Russian Revolution, the collapse of the Ottoman Empire, and particularly the incidents that affected the Austro- Hungarian Empire. This led to major economic dislocation and political instability. Originally newly forming nations where used as free trading zones along the continent however, this was diminished after those particular nations set up “barriers” in order to instill customs of trade and certain restrictions.

3. Collapse of the Gold Standard During WWI countries printed money in order to fund their war efforts. As result of printing money they had to in return back up the value to the quantities in the reserves. This is what led to inflation of the prices. As a result governments where forced into a position where in order to return to the gold standard they had to deflate the prices by lowering them. Overall, the restriction of the gold standard resulted in the lack of foundation of Europe to pursue best economic avenues of prosperity for all nations. Instead nations acted towards only their best interest.

4. Global financial imbalances and German war reparations It is argued that the winners of WWI should have established operations that would function towards the restoration of balance in the continent by supporting economic reconstruction and cooperation for the greater good of all. In reality European victors of the war demanded that it was the loser’s responsibility to fund the operations to repair the damages caused. However, these countries such as Germany didn’t have sufficient funds to put towards these demands. 5. U.S. stock market bubble and crash of 1929 In accordance with the events of WWI America had become the “financial pillar,” in which the world had become dependent on. With the banks being unable to provide credit without demanding extra the economy came to a slowdown. On the morning of October 29 would devastate the economies heavily dependent on this variable. th 1929 the Dow Jones Industrial Index plunged. As business were forced to sell for less they consumed capital that was intended for Europe to cover losses and reparations of the war which 6. Lack of global financial leadership and application of mistaken economic policies This can be summarized into two components: 1 st what wasn’t done by the victors or they lack of initiative to enact means of restoration upon Europe. 2 nd what wasn’t done by Britain and U.S. in response to the crash of the stock market and when economic activity started to decline

France

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Conditions of France as a result of the Great Depression in Europe during the interwar period

Lasted form about 1929 to 1939 or 1940 They had an difficulties in recovering war reparations after WWI from Germany.

• • • France was one of the last countries to become afflicted by the impact of the Great Depression. This was a result of France’s self-sufficient derived from its’ ability to rely on the agricultural base of the economy.

By 1929 had become recognized as, “ island of prosperity,” this was a result of three particular factors. 1 st France’s tradition of being wary of big companies and trusts {relationship where prosperity is held by over party for benefit of another} • 2 nd The economy of France was founded on small and medium sized businesses not financed by shares or investors. • 3 rd French invested little on stock exchange and put their confidence in the gold With the signing of the Treaty of Versailles in 1919 France would begin to receive war reparations from Germany. 1927 world’s largest holder of gold 18 billion Francs in 1927 to 80 billion Francs in 1930 • As a result of the American stock market crash in 1929 tourism began declining in France 1930 France would become the world’s leading producer in iron • When French workers lost jobs they found other means of producing income commonly by working in agriculture 1932 sharp increase of unemployment out of 40 million less than ½ million found themselves without work even at the worst of times.

• Pierre Laval installed provisionally deflationist policy 1935 to reduce salaries in effort to lessen unemployment The reduction of salaries resulted in a decrease of activity in small businesses February 6 th 1934 fall of old government, now Socialist Popular Front Government governs France. They were officially established in 1936 • President Lebrun called Edouard Daladier to form new government without socialists that relied on liberal economics • Defaulted war debts primarily with the united states in 1934

Germany

• • • • • • • • • • • Weimar Republic’s or Second Reich’s economy was heavily dependent on the huge loans provided by the U.S. These loans where outlined in the Dawes Plan in 1924 and the Young Plan in 1929. These funds were introduced into the economy by paying off war reparations and helping reconstruct the nation. By the end of 1929 the government was bankrupt and incapable of lending money Unemployment affected nearly every German family just six years after the last major economic disaster With no means of providing for their families the majority of those who were unemployed the men sought assistance and was provided with means of guidance from the Nazi and Communist Parties of Germany.

1922, hyperinflation crisis as Germany printed more money pay reparations the value of that money went down forcing them to pay more money. This is a cycle that would continue and repeat itself.

As a result of hyperinflation the German Marks became practically worthless money. Prices for everyday items skyrocketed Actually fed fireplaces to cook and heat with the worthless bank note Layoffs as German businesses couldn’t maintain staff and loss profit from sales Collapse of German banks in 1931 acted as the initiation of the depression 1932, Germany defaulted on war reparations

Great Britain

• • • • • • • • • • • • • • • • • • • • • • • • • Known as “The Great Slump” Broke out as still trying to recover from WWI Economic output fell 25% between 1918 and 1921 Lasted 20 years from 1918 to 1938 By funding war effort of WWI with foreign assets net loss of 300 million {pounds} Had to operate merchant operations with only 60% of original merchant feet after losses of WWI British products in the motor and electrical industries were not good enough to challenge others like them in the market Little chance of Britain being able to gather capital in order to recharge the overseas investments 1921 began slow process of economic recovery April 1925, Winston Churchill restored the Pound Sterling and rate of 4.86 U.S. dollars However this made British exports more expensive on world markets Britain would recovery slowly from the depression May 1926 General Strike people were unhappy as their wages were trying to be cut to compensate for high exchange rate Throughout 1920s unemployment stayed steady at one million By the end of 1930 unemployment had more than doubled from 1 million to 2.5 million {20% of workforce} Exports fell in value by 50% Industrial areas hardest hit northern England , South Wales, and central Scotland also included coal mining, London and Southeast were impacted the least. 1933 30% of Glaswegians {citizens of the largest city in Scotland Glasgow} were unemployed due to decline in large industry Sept 10 th 1931 in order to balance budget issued an emergency budget, public sector wages and unemployment pay were cut by 10% Income tax raised from 22.5% to 25% This resulted in mutiny of Royal Navy 1931 unemployment reached nearly 3 million Sept 21, 1931 government was forced to abandon the gold standard Exchange of the pound fell by 25% Defaulted war debts primarily to US in 1934

Austria

• • • • The crisis began when Boden-Kredit Anstalt also referred to as the Creditanstalt, or the most important bank in Austria and Eastern Europe had to merge with Oesterreichische Kredit-Anstalt after attempts of the banks redemption by both the the Austrian government and other banks had failed. March 1931, Austria claimed customs union with Germany, but as a result the French ordered that they were entitled for there bank’s redemption and as a result the bank collapsed. Austria declared national bankruptcy by deciding to leave the gold standard. It is considered that the collapse of the Austrian banks is what was the spark that ignited the Depression in Europe.

Italy

• After 1929 was affected by slowdown in economic activity.

• 1931, unemployment had reached significant levels.

• Even with events of the Depression the regime was not weakened as a result.

• 1937, Economic activity recovered but their were still high amounts of unemployed citizens.

United States of America

• • • • • • • • Began with the stock market crash of the New York Stock Exchange in October 1929 Lasted from 1929 until 1939 1932, U.S. stocked had reached a level where the stocks had dropped to only 20% of their values Banks were forced into insolvency 1933, 11,000 of 25,000 of American banks failed With a reduced level of spending in 1932 U.S. manufacturing fell to 54%, unemployment had risen to 12 and 15 million or 20%-35% of the work force.

Human conditions that were affected in the Great Depression were homelessness, unemployment, hoovervilles, {shack villages, named after Hoover who they believed was responsible for their condition} Dust Bowl, starvation, and illness No food was being rationed for people who couldn’t afford it.

Conclusion

The end of the global depression was a result of capitalist societies reforming to incorporate socialistic practices. These included welfare and government stimulus programs. As WWII drew closer nations managed to stimulate economic activity as the governments worked to increase their military’s strength with armament It can noticed that all the nations suffered from conditions that resemble one another throughout Europe during this time period This is the movie: it shows some of the conditions of the Depression

http://www.youtube.com/watch?v=v85I0qO I7wA&feature=BFa&list=PLD6E1A9C85B 77EC1C

Questions

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What were the factors that led to the depression affecting Europe?

What were at least three reasons that France was among the last nations to be affected by the depression?

What made Germany so heavily dependent on U.S. loans?

Name the top three worst economic conditions in Great Britain during the depression.

What happened in Austria that was viewed as a spark of the depression?

Why was Europe affected by the stock market crash?

Bibliography

• • • • • • • • • • • • • • http://www.canbekeconomics.com/research_papers/The_Great_Depression_and_Europe.pdf

http://historyannex.com/20th-century-Europe/France-1930s/great-depression.html

http://en.wikipedia.org/wiki/Great_Depression_in_France http://www.historylearningsite.co.uk/weimar_depression_1929.htm

http://scheong.wordpress.com/category/general-history/20th-century/the-great-depression-1929 1939/ http://en.wikipedia.org/wiki/Great_Depression_in_the_United_Kingdom http://www.english.illinois.edu/maps/depression/about.htm

http://www.dhr.history.vt.edu/modules/eu/mod04_depression/index.html

http://isemodernworldhistorygrade9.wikispaces.com/The+Great+Depression http://historiesofthingstocome.blogspot.com/2011/12/1930s-deja-vu.html

http://www.newsmax.com/Newsfront/Creditanstalt/2009/04/06/id/329283 http://histclo.com/essay/war/dep/cou/ita/dep-ita.html

http://www.worldology.com/Europe/interwar.htm

http://bigmateo0.tripod.com/id2.html