Chapter 15 Section 2
A Global Depression
A Global Depression
By the late 20’s, European nations were rebuilding war-torn
economies. They were aided by loans from the more
prosperous U.S. In the U.S., Americans seemed confident
that the country would continue on the road to even greater
economic prosperity. One sign of this was the booming
stock market. Yet the American economy had serious
weaknesses that were soon to bring about the most severe
economic downturn the world had yet known.
I.
Europe After the War
WWI left nearly every European country bankrupt-Only the
U.S. & Japan came out in better financial shape

Neither had been a wartime battlefield.

Both countries had expanded their trade during the
war.

Europe’s domination in world affairs had declined since
the war.

The long brutal fight had drained the continent’s
resources.
New Democracies Are Unstable
1.
2.
By 1918, most countries had rid themselves of absolute rulers.
Most had democracies.
Many countries had little experience with democracy & had
many political parties.
3.Nearly impossible for countries to elect
someone-created a coalition gov’t (or
temporary alliance)
4. Frequent changes made it impossible
to develop strong leadership
5. Some countries decided to trade
democracy for totalitarian-type of gov’t
C. Weimar Republic is Weak
1. Germany’s new democratic gov’t set up in 1919
2. Not a strong support for a democratic gov’t
Germany lacked a strong democratic tradition
 Postwar Germany had several major political parties &
many minor ones
 Millions of Germans blamed the Weimar government for
the country’s defeat & postwar humiliation.
D. Inflation Causes Crisis in Germany
1. To pay for WWI, Germans just printed $
2. After the war, the value of money drastically
decreased, so Germany printed even more $
3. In 1918, a loaf of bread cost 1 mark, 1922
160 marks, and by 1923 200 billion marks
4. Made Germans question their gov’t
E. Attempts at Economic Stability
1. Dawes Plan-$200 million loan from U.S.
banks to stabilize the German currency
and strengthen it’s economy
2. Soon Germany began to recover
F. Efforts at Lasting Peace
1. After the economy started recovering,
German officials met with Belgium, Italy, &
England and promised to not go to war
with them again
2. Recognized existing borders of France
and Belgium
3. Germany was accepted into the League
of Nations.
4. In 1928, the Kellogg-Briand Peace Pact
was signed by nearly every country in the
world (including the Soviet Union)
pledging to “renounce war as an
instrument of national policy.”
5. No way to enforce the pact!
II. The Great Depression
A.
A Flawed U.S. Economy
1.
3 weaknesses caused serious problems
a.
b.
c.
Uneven distribution of wealth
Overproduction by business & agriculture
Lessening demand for consumer goods
B. Stock Market Crashes
1. In order to make $, many middle class
families began buying stock on margin
(borrowing money to buy stock); only worked if
stock prices rise
2. Sept. 1929, stockbrokers started selling
unusually high stocks to make $
3. Tuesday, October 24, 1929-People panicked
and rushed to sell their stocks, prices fell to their
lowest points; “Black Tuesday;” start of the
Great Depression
4. By 1932, factory production had been
cut in half. 1000s of businesses failed.
5. About 9 million people lost their savings
accounts
6. By 1933, ¼ of all Americans had no
jobs
C. A Global Depression
1. U.S. Depression affect most of the world.
2. U.S. demands repayment of loans and puts
high tariffs on foreign goods
3. World trade dropped by 65%
4. In Asia, crop failures led to widespread
starvation; as many as 3 million workers lost
their jobs.
5. Latin America also felt the effects; no more
demand for certain products (such as sugar,
beef, copper & tin)
III. The World Responds to the
Crisis
A.
Britain Takes Steps to Improve Its
Economy
1.
2.
3.
4.
Elected a multi-party coalition called the
National Government
Passed high tariffs, increased taxes, &
regulated currency
Slow but steady recovery
No political extremes
B. France Responds to Economic Crisis
1. Was more self-sufficient (so cushioned against
the G.D.)
2. 5 Coalition gov’ts were formed and failed
3. 1936, moderates, Socialists, and Communists
formed a coalition (called the Popular Front)
4. P.F. increased pay, holidays with pay, and
enforced a 40 hour week
5. Preserved a democratic gov’t.
C. Socialist Governments Find Solutions
1. Scandinavian countries of Sweden, Denmark,
and Norway were successful in combating the
G.D.
2. Sponsored massive public works projects,
raised pensions for elderly, and increased other
welfare benefits
3. To pay for these projects, gov’ts taxed all
citizens
4. Democracy stayed intact
D. Recovery in the U.S.
1. Franklin D. Roosevelt was elected in
1932 with a plan to fix the U.S. economy
called the New Deal
2. Started new public works programs,
welfare and relief programs, regulated
banks and stock market
3. Democracy stayed