Download Lesson 1: Instability After World War I

Lesson 1:
Instability After World War I
Page 562 in the textbook
Uneasy Peace
• Peace settlement ending WWI left nations
unhappy
• President Woodrow Wilson placed many
hopes for the future in the League of Nations
• This organization was not very effective in
maintaining the peace
League of Nations
• United States failed to join the league
• Most Americans wanted to avoid involvement
in European affairs.
• The US senate refused to approve the Treaty
of Versailles
• League of Nations weakened without United
States
Reparations
• French demanded strict enforcement of Treaty
of Versailles
• Began with issue of reparations from Germany
• April 21 1921 – Allied Reparations Commission
determined that Germany owed 33 billion US
dollars for reparations, payable in annual
installments.
Ruhr Valley
• German republic made first payment in 1921,
and one year later, facing financial crisis,
announced it could pay no more.
• Enraged, France sent troops to occupy Ruhr
Valley, Germany’s chief industrial and mining
center.
• France wanted to collect reparations by using
mines and factories.
Inflation in Germany
• German government had policy of passive
resistance to French occupation
• German workers went on strike
• German government paid their salaries by
printing more paper money
• Only added to the inflation (rise in prices) that
had already begun in Germany after the war.
• German mark became worthless.
• 1914: 4.2 marks = 1 US dollar
• 1923: 4.2 trillion marks – 1 US dollar
Woman uses German marks to
light her stove during the Great
Depression
Dawes Plan
• France and Germany sought way to end disaster
• Aug 1924: international commission adopted new plan
of reparation.
• Dawes Plan: named after American banker who
chaired the commission
• First reduced reparations
• Then coordinated Germany’s annual payment with its
ability to pay
• Granted initial $200 million loan for German recovery
• Loan opened door to heavy American investment in
Europe.
• Brief period of European prosperity followed.
Bellringer: Connection to Today
• Depression vs. Recession
When the United States experienced a recession in
2008, people worried unemployment would reach
Great Depression levels. But in studying
unemployment numbers, economists discovered that,
while the economic downturn was the worst since
World War II, it was nowhere near as bad as the great
Depression. In 1933, unemployment had reached 29.4
percent. In December 2010, 9.4 percent of the US
population was unemployed.
Question: What do you think are the causes of a
recession or depression in an economy?
The Great Depression
• The brief period of prosperity that began in
Europe in 1924 ended in a economic collapse
• Two factors caused the Great Depression:
• ECONOMIC and FINANCIAL
1. Economic.
• downturns of economies if individual nations
in the second half of the 1920’s
• Prices for farm products fell due to
overproduction
• Increase in use of oil and hydroelectricity led
to slump in coal industry.
• Poor distribution of wealth
• Reliance on credit
2. Financial
• Much of European prosperity in 1920’s was
built on US bank loans to Germany
• US stock market boomed in 1920’s
• Stocks rise to unrealistic levels
• By 1928, American investors pulled money out
of Germany to invest it in stocks
• By Oct 1929, the US stock market crashed,
stock prices plunged.
Great Depression
• Economic depression not new to Europe
• Extent of downturn in 1929 had never been
seen before
• 1932, worst year of depression, nearly 1 in
every 4 British workers was unemployed
• 5.5 million Germans (30% of labor force) had
no jobs
• Unemployed and homeless filled the streets
The Dust Bowl
The Dust Bowl
• The Dust Bowl, or the Dirty Thirties, was a period
of severe dust storms causing major ecological
and agricultural damage to American and
Canadian prairie lands in the 1930s, particularly
in 1934 and 1936.
• Caused by severe drought combined with farming
methods that did not include crop rotation,
fallow fields, cover crops, soil terracing and windbreaking trees to prevent wind erosion.
Bellringer
• How do you think the economic conditions of
post war Europe lead to the rise of
dictatorships and totalitarian states in the
1930’s?
Responses to the Depression
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Germany
Weak government plagued by economic crisis
Runaway inflation 1922 and 1923
Families watched their life savings disappear
Period of relative prosperity from 1924-1929
1930: unemployment grew to 3 million people
by March and 4.38 million by December
• Fear and rise of extremist parties to come
France
• Also suffered from postwar economic problems
• Had more balanced economy, did not feel effects
of depression until 1932
• 1936: coalition of Communists, Socialists, and
Radicals formed the Popular Front government
• Started program some call the French New Deal
• Gave workers right to collective bargaining, 40
hour work week, minimum wage
• Collective bargaining: right of unions to negotiate
with employers over wages and hours.
Great Britain
• Experienced limited prosperity from 1925-1929
• Effects of Great Depression hit in 1929.
• The Labor Party failed to solve problems, fell from
power in 1931
• New Conservative government: balanced budgets
and protective tariffs.
• British economist John Maynard Keynes:
unemployment came from decline in demand,
not overproduction
• Encouraged deficit spending, or going into debt if
necessary.
The United States
• Besides Germany, no Western nation was more
affected by the Depression than the U.S.
• By 1932, industrial production fell by almost 50
percent from its 1929 level.
• 12 million unemployed by 1933
• Democrat Franklin D. Roosevelt won the
presidential election in 1932 by a landslide
• Believed capitalism must be reformed
• Policy of government intervention in economy
known as the New Deal
The New Deal
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Included increased program of public works
Works Progress Administration (WPA) established in 1935
Employed 3 million people at its peak
Built bridges, roads, post offices, airports
Roosevelt instituted new social legislation
US welfare system
1935 Social Security Act: old age pensions, unemployment
insurance
• Did not solve unemployment problem
• 1938: USA still had 10 million unemployed.