BETWEEN WORLD WARS
VOCABULARY
On margin
Using credit to purchase stocks.
Calling the loan
To demand repayment of a loan in full.
Stock Market Crash
A time when stock prices fell, or crashed, at record rates.
Recession
A time of economic slowdown.
Depression
A period of very low economic activity combined with high
unemployment.
Tariff
Taxes on imports
New Deal
FDR’s plan for economic recovery, including public works
projects to increase employment and government
regulation of banks, the stock market, and various
industries.
Inflation
An increase in the price for goods or services.
Gold Standard
The amount of money in circulation is equal to the amount
of gold a country possesses.
EUROPE AFTER WW1
• European nations are faced with the massive expenses
of rebuilding after WW1.
• Soldiers returning for war were looking for work (high
unemployment rate).
• Germany is in heavy debt because of the war
reparations repayment; loses its territory in the Ruhr
Valley to France which was where much of its
industries were located.
• Germany begins printing money which devalues money
all through Europe.
• Europeans stop buying from Americans.
U.S. AFTER WWI
• After World War 1, U.S. is thriving economically because:
• No battles fought in the U.S.
• Fewer casualties because of our late entry to war
• Good economy due to manufacturing allowed us to loan
money to Western European countries after the war.
• Growth in manufacturing after the war due to the new
inventions: ex. Radio, automobiles, vacuum cleaner,
refrigerator.
• Americans purchase these new items using credit (on
margin).
UNDERLYING CAUSES OF THE GREAT
DEPRESSION
• 1. Farming prices fell due to oversupply of crops.
• 2. Made bad loans to European countries who could
not repay them; Europeans stop buying American
products.
• 3. Wealthiest Americans were driving stock market
prices higher and higher, well above what something
was actually worth.
• 4. Ordinary Americans bought stocks on “margin”
(credit) hoping to get rich.
STOCK MARKET CRASH OF 1929
• a.k.a. Black Tuesday: October 29, 1929
• Stocks started to drop, so investors began selling all of their stocks.
• Stocks lost between $10-15 billion in value that day.
EFFECTS of the Stock Market Crash:
1. Banks closed – “Runs on the bank” emptied out all the money banks
held as people went to withdraw their money from the banks.
2. Businesses failed = job loss
3. Individuals lost their savings = lost homes and land because banks
were demanding loans be repaid in full (leads to Hoovervilles)
4. Dust bowl (major drought) causes farms to fail = widespread hunger
WORLDWIDE EFFECTS OF THE U.S.
DEPRESSION
• Western Europe is struggling financially after WWI to rebuild.
• The U.S. makes loans to many European nations to help them
rebuild. In addition, the U.S. loaned Germany money to help
pay the war reparations.
• As the U.S. economy worsened, U.S. investors demanded
payment of the loans and stopped loaning any new funds. This
crippled the economies of the European nations.
• World-wide trade began to suffer, so the depression spread
around the world.
GLOBAL RESPONSE TO THE DEPRESSION
• Most nations turned inward and became isolationist in order to
solve their own economic problems.
• Democratic nations (U.S., Great Britain) – the governments
worked to pass laws to improve economic conditions.
• Other nations turned to totalitarian leaders (Germany, Italy) who
used their powers to begin imperializing to gain raw materials
and markets to help boost their economy.
U.S. RECOVERY
• Franklin Delano Roosevelt (FDR) elected president in
1932 on promises to help rebuild America.
• The New Deal – focused on public works projects to increase
employment and government regulations on banks, the stock
market, industry and farming production.
a. Created the Social Security Act
b. Created public works projects that built dams, highways,
and bridges around the country.
• The first time government creates assistance programs in
the United States.
BRITISH RECOVERY
• Enacted protectionist policies (policies designed to protect
domestic industries and services from foreign competition).
• Included dropping the gold standard
• Increase government ownership/management of key
industries
• Raised taxes to loan money to new businesses in the hopes
of increasing employment.
RESPONSE TO THE DEPRESSION IN EUROPE
• Great Britain: raised taxes, balanced the budget, and controlled
spending
• France: Radical political party called the Popular Front takes over.
They started an aid program called the French New Deal, but it
didn’t work
• Germany: created the Weimar Republic (they renamed Germany
to reflect a new democratic government). Germany
had problems of high unemployment, bankrupt
middle class, and major inflation (prices on goods
rise because money is worth less – the idea of
“just print more money.” Gives the opportunity for radical
groups such as the Nazi party to participate in politics.
CHANGES IN GOVERNMENTS
• Totalitarian governments take over
Europe!!! (When leaders control every
aspect of your life…)
• Fascism – a form of government that is nationalistic to the
extreme. War is glorified. The government has total control of
your life, and is led by a dictator or a small group of people.
Fascism allows individuals to have private property and allows
for class system (lower, middle, upper) Ex. Italy, Germany
• Communism – a form of government where a dictator or small
group of people control every aspect of your life. Under
communism, there are no social classes (everyone is equal) and
you are not allowed to own private property. Ex. Soviet Union,
China
THE RISE OF HITLER
• Germany owed the Allies $33 billion dollars.
• Began printing money (ex. Before the war, 4 marks = $1, after 4
trillion marks = $1)
• Hitler joins the Nazi Party (National Socialist German Workers’
Party) in 1919, takes control of the Party by 1921.
• After a failed attempt to start a revolution, he is thrown into jail.
He writes Mein Kampf (My Struggle): he blames the Jews and
the Communists for the loss of WWI, says the Germans
(Aryans) are a “master race.”
THE RISE OF HITLER
• Hitler’s ideas begin to
become popular and the
Nazi’s take over the
government.
• Hitler forces the German
President to name him
Chancellor of Germany.
• Hitler banned freedom of
speech, religion, assembly,
and the press.
• Passed the Nuremburg
Laws: barred Jews from
schools, owning
businesses, holding
government office, and
force the Jews to wear the
yellow stars. Encouraged
anti-semitism (anti-Jewish
feelings).
THE RISE OF STALIN
• Became the leader of the
Communist Party in 1928.
• Country began to
industrialize again.
• Created a secret police to
monitor everything said or
written (terrorized the
people).
• Censored all sources of
information, used
propaganda to keep power,
killed religious leaders,
outlawed religion.
THE RISE OF STALIN
• Came up with the Five Year
Plans – change the country
from agricultural to
industrial.
• Focused on iron and steel
production, so there was a
shortage of regular
household goods.
• Started collectivization of
farms: government took
over all of the farms, forced
the people to work them.
Increased food production.
• Improved the economy and
education, banned religion,
people had no rights.
• Anyone who disagreed
would be killed.
THE RISE OF MUSSOLINI
• Italy is angry because they
didn’t get the land it was
promised at the end of WWI,
and their economy is in the
dumps due to the war and
the depression.
• Benito Mussolini starts the
Fascist party in 1919.
Followers are the Black
Shirts, and they use violence
to force people to follow
them.
• King Victor Emmanuel III
named Mussolini the Prime
Minister.
THE RISE OF MUSSOLINI
• After a corrupt election,
Mussolini names himself Il
Duce, “The Leader”
• Banned all other political
parties
• Killed anyone who
disagreed with Fascism
• Stopped Communism from
spreading to Italy
• Decreased unemployment
by increasing the military
JAPAN
• Japan is a major manufacturing center after WWI.
• Population increases cause food shortages, on top of the effects
of the depression (job loss, low wages)
• The military blames the government for becoming too “Western.”
• Look for new markets to sell their products to and get resources
from.
• The military takes over the government (militarism), invades
Manchuria in 1931, attack China in 1937.
• Hideki Tojo (military general) runs the nation – wants to create a
Japanese Empire in Asia.
Spain
• 1936, General Francisco Franco
led a military revolt against the
government.
• Caused a bloody Civil War.
• Hitler and Mussolini helped Franco
(Germany gave him new weapons
to test).
• The U.S. and other countries tried
to help the government.
• Franco became dictator when the
civil war ended in 1939.