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/Economic Instability • War Debt • Inflation=Cost more than it’s worth. • The new concept of “credit” people didn’t have $ they were spending • Germany prints own money=WORTHLES! • Loans from the U.S. 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 Versilles – Good start but weak no enforcement • 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 $ Stock Market Crash & Global Depression • Countries start asking for payment on loans = the can’t • 1929: Stock Market Crashes: Banks, Margins, BAD loans, back loans • Tariffs: stop buying each other’s goods • European banks = NO $ • Can no longer support Mandates (colonies) 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. “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 top help the depression. – 1932: FDR New Deal, brings $ to U.S. & creates jobs • 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 *FDR* • When he was inaugurated unemployment had increased by 7 million. • Poor sections (like Harlem) had 50% of the pop. unemployed • Instated the “New Deal” • Yea! Frankie!