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1.
Treaty— formal agreement between two or more states in reference to peace, alliance, commerce, or other international relations
2.
Treaty of Versailles
3.
League of Nations
4.
Fourteen Points
Support Information
5.
6.
7.
Reparations
Demilitarized zone
Mandate system
8.
Great Depression
9.
Inflation
10.
Economy
7-4.2 Explain the outcomes of World War I, including the creation of President Woodrow Wilson’s
Fourteen Points, the Treaty of Versailles, the shifts in national borders, and the League of Nations.
The major effects of World War I were diplomatic solutions, geographic and political changes, and economic consequences. Students should recognize the Treaty of Versailles as the major peace treaty of World
War I and be able to describe the vital components of this Treaty. They should understand that President Wilson brought his proposals, known as the Fourteen Points, to the conference at Versailles to correct many of the problems that caused the Great War and to bring about lasting world peace. Wilson wanted the basis of the
Treaty to address the causes of the war. His Fourteen Point Proposal contained many ideas directly intended to undo the MAIN causes. Some of these points included no military build-up, no secret alliances, and the right to self-determination. His fourteenth point included the idea of creating a League of Nations, an international organization designed to resolve disputes between nations and avoid future wars. Unfortunately, the positive proposals of Wilson and the punitive peace treaty that the Allies come. Russia, among other nations, negotiated different treaties and was denied a seat at the Versailles negotiations. This lack of input undermined the cohesiveness of the victors and contributed to the inability of the Treaty to provide stability and prevent future wars.
While seen as the crowning achievement of the Treaty of Versailles by many, the League of Nations proved to be ineffectual in achieving its goal of world peace. At its core, the League was very weak and unstructured and was not given the components necessary to bring about its lofty goal. For instance, not all major powers were members of the League. The United States chose not to join, while Germany and Russia were not allowed to join (Germany was finally allowed to join in 1926, but withdrew in 1933, while the Soviet
Union finally joined in 1934). Japan and Italy, who were charter members, withdrew, in 1933 and 1937, respectively. The League had virtually no authority or influence with these nations thereby limiting its ability to influence international affairs.
It is critical for students to recognize the changes in political boundaries in Europe following World War I.
Nationalism, one of the causes leading to World War I, was an issue that needed to be addressed as nations emerged from the conflict. In his Fourteen Points, Wilson proposed self-determination as one of the critical components to be used in determining international borders. This principle would be utilized selectively since it would not be applied to the victorious Allied Powers. The other major principle was to weaken those countries of Central and Eastern Europe that fought with the Central Powers. It is important that students be able to use maps and understand the significant territorial changes in Europe as a result of World War I. The most significant changes included the breakup of the Austro-Hungarian and Ottoman Empires; German territorial losses, including all overseas colonies; the creation of Poland; and Russian territorial losses, the separate peace negotiated between Germany and Russia in 1917, though the Soviets did regain some of this territory after the war.
7-4.3 Explain the causes and effects of the worldwide depression that took place in the 1930s, including the effects of the economic crash of 1929.
The depression of the 1930s, most commonly referred to as the Great Depression, was international in scope and not limited to the American experience with which most students are familiar. Due to the severe damages caused by World War I and the heavy monetary penalties imposed on Germany by the reparations included in the Treaty of Versailles, serious economic problems developed in Europe. Many European nations

were faced with the expense of having to rebuild from the war, and although the Allied nations were using the reparations from Germany to help rebuild, the expenses due to the extreme damages of the war were high.
Nations also faced the transition of soldiers returning from the war looking for work or replacing workers who held their jobs during wartime. Along with this transition, wartime spending had stretched many nations financially but had also kept employment high due to jobs created to maintain their militaries. Because of these factors, unemployment therefore rose in many nations after the war.
Germany faced the greatest economic challenges due to the high reparations and the loss of some of its prime industrial land and resources imposed by the Treaty of Versailles. While this seemed to support British and French goals for post-war aims articulated in the Treaty of Versailles in order to prohibit and prevent
Germany from causing another worldwide war, German economic weakness actually hurt trade and production in Western Europe as well. In 1923, France further sabotaged Germany’s ability to become economically viable and thus pay owed reparations by seizing the Ruhr Valley, Germany’s main industrial region. Germany’s response was to begin printing money that had no economic support, thereby causing hyperinflation and the devaluing of money across the continent. Due to all of these financial difficulties and the necessity to rebuild, European nations were not buying and investing in foreign goods, including goods from the United States.
Despite economic problems in Europe, the economy of the United States experienced an artificial boom in the 1920s. American companies continued producing goods at the high volume they had achieved during wartime to which they were accustomed expecting beneficial trade to continue. American farmers, who had fed the Allied armies and the people of Europe throughout the war, no longer had the European market and were in depression throughout the 1920s. The wages of industrial workers remained low. For a while, many Americans were able to buy goods on the installment plan; but, by the end of the decade, American consumers were reaching the extent of their buying power. The 1920s seemed like a boom time because many
Americans increasingly bought more stock in United States companies, hoping the good times would continue.
These stocks were often bought on credit on margin and the investments were risky as they relied on further business growth. This increase in buying stock on margin led to stock values rising quickly, making it appear as though money was there to be easily and quickly made enticing more investors into the risky stock market.
When sales of goods slowed because European consumers could not buy and American consumers slowed their purchases, companies began experiencing a surplus of goods with an ever-shrinking customer market. As this surplus rapidly increased, investors began to sell their stock and stock prices began quickly declining in the late 1920s. Creditors began demanding payment for stocks bought on margin, yet investors had no real wealth to make repayments. Investors intensified the selling off of stocks at a high volume and withdrew their money from the banks to meet their financial obligations. All of these activities culminated in a Stock Market Crash. On
October 29, 1929, known as Black Tuesday, the United States experienced the biggest loss in financial worth in the stock market. As a result of losses in the stock market and declining consumer demand, companies laid off workers and unemployment rose, furthering the problem of surplus goods because of shrinking demand. The cycle escalated as layoffs increased, sales decreased, and more people went to the banks to withdraw all of their money. These “runs on the banks” affected people nationwide. Even depositors who had not invested in the stock market had their savings wiped out in the panic to retrieve funds because the banks had loaned much of their capital and both the deposits and loans were not protected by bank insurance at the time. At the same time people were losing their savings, banks demanded full payment of their loans known as
“calling the loan” because no protections were in place to prevent this occurrence at that time, in order to reinstate their capital and prevent closure, causing citizens with mortgages or other loans to begin losing their homes or other collateral. Unemployment and homelessness continued to increase, banks and businesses closed, and the economic depression in the United States intensified the worldwide depression.