Unstable Governments &
Weak Democracies
• Fall of Kingdoms/Empires
new
democracies in Europe.
• Ruled by others for centuries: don’t know
how to rule themselves.
• Frequent changes in government =
instability
• 1919 Weimer Republic: Germany’s gov’t
with a lot of weaknesses.
The Roaring 20’s
• Fun times
reigned
–Dancing
–Flappers
–Drinking
German Inflation/Attempts to
Stabilize
• War Debt
• Inflation=Cost more
than it’s worth.
• The new concept of
“credit”  people didn’t
have $, but they were
spending
• Germany prints own
money=WORTHLESS!
• Loans from the U.S.
Continue to next slide 
Continued  Why was
this bad?
• Credit system
– People didn’t really have
the money they were
spending
• WWI
– The U.S. was a major
credit loaner to other
nations in need
– Many of these nations
could not pay us back
Efforts At A Lasting Peace
• Treaty of Versailles – Good start
but weak no enforcement
• Germany signed peace treaty w/
France  Kellogg-Briand Pact
• Many nations renounced war (not
U.S)
• League of Nations = FAILED
• We didn’t join!
Flawed U.S. Economy
• Europe’s lands = Trashed by war
• Good for U.S. factories = 50%
industrial goods produced at home
• Uneven wealth: $ goes to factory
owners NOT workers
• Farms: produce too much food lose
$
• Banks closing!
Stock Market Crash &
Global Depression
• People buying stocks on margin (credit)
• 1929: Stock Market Crashes: Banks,
Margins, BAD loans, back loans
• Tariffs: stop buying each other’s goods;
world trade drops 65%
• European banks = NO $
• Can no longer support Mandates (colonies)
• MAIN CAUSE  closing of banks
The Stock Market
• People bought stocks
on margins
– If a stock is $100 you
can pay $10 now and
the rest later when the
stock rose
• Stocks fall
– Now the person has
less than $100 and no
money to pay back
And then….
• With people panicking
about their money
investors tried to sell
their stocks
– This leads to a huge decline
in stocks
– Stocks were worthless now
• People who bought on
“margins” now could not
pay
• Investors were average
people that were now broke
• Farmers were already feeling the effects
– Prices of crops went down
– Many farms foreclosed
• People could not afford luxuries
– Factories shut down
– Businesses went out
• Banks could not pay out money
• People could not pay their taxes
– Schools shut down due to lack of funds
• Many families became homeless and had
to live in shanties
Many waited in unemployment
lines hoping for a job.
People in cities would wait in line for
bread to bring to their family.
Some families were forced to relocate
because they had no money.
• Herbert Hoover was
president at the start
• Philosophy: We’ll
make it!
• What He Did: Nothing
• The poor were looking
for help and no ideas
on how to correct or
help were coming
“Hooverville”
• Some families were
forced to live in
shanty towns
– A grouping of shacks
and tents in vacant
lots
• They were referred to
as “Hooverville”
because of President
Hoover’s lack of help
during the depression.
The World Responds
• Britain: Very industrial, depression hit hard.
– High tariffs; increased taxes; regulated $, led to slow
recovery.
• France: self-sufficient, agriculture economy, less
foreign trade = weak depression
• Socialist govt’s: heavy govt. involvement & taxes (still
today) = no depression
• United States:
– Hoover: did nothing to help the depression.
– 1932: Franklin Roosevelt elected & starts New Deal,
brings $ to U.S. & creates jobs
*FDR*
• When he was
inaugurated
unemployment had
increased by 7
million.
• Poor sections (like
Harlem) had 50% of
the population
unemployed
• Created the “New
Deal”
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