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Chapter 9, Section 1
For use with textbook pages 463-469
THE FUTILE SEARCH FOR STABILITY
CONTENT VOCABULARY
depression a period of low economic activity and rising unemployment (page 466)
collective bargaining the right of unions to negotiate with employers over wages and hours (page
468)
deficit spending going into debt to finance government projects (page 469)
California History
Social Science Standards
10.6 Students analyze the effects of
the First World War.
10.8 Students analyze the causes and
consequences of World War II.
Focuses on:
10.6.1, 10.6.2, 10.6.3, 10.8.2
• Uneasy Peace, Uncertain Security (page 464)
The peace settlement at the end of World War I made many nations unhappy. Some of the
provisions in the settlement led to border disputes in eastern Europe. The League of Nations was
not very effective in maintaining peace. This was partly because the League could not agree to
use military force against aggression. It was also due to the fact that the United States was not in
the League. The U.S. Senate refused to ratify (approve) the Treaty of Versailles. This meant that
the United States could not be a member of the League of Nations.
The Germans, in particular, were unhappy with the peace settlement. The French government
demanded strict enforcement of the Treaty of Versailles. In April 1921, the Allied Reparations
Commission determined that Germany had to pay 33 billion dollars for reparations (the
payments Germany was required to make for war damages). Germany tried to make these
payments, but after one year, they announced that they could no longer afford to pay. France sent
troops to occupy the Ruhr Valley, the chief industrial and mining center of Germany. The French
intended to collect reparations by operating the Ruhr mines and factories. German workers
resisted by going on strike. To pay the workers, the German government printed more and more
paper money. This added to the inflation (rise in prices) that had already begun in Germany. The
German mark (Germany's currency) soon became worthless. Workers took their weekly pay
home in wheelbarrows.
The Allies could see that this situation could not continue. In August 1924, a new plan for
reparations, the Dawes Plan, was produced. It reduced the total amount that Germany had to pay.
It also reduced the yearly payment amount to something that Germany could afford to pay. The
plan also granted a $200 million loan to Germany. This loan opened the door to American
investments in Europe. There was a brief period of prosperity from 1924 to 1929.
In 1925, France and Germany signed the Treaty of Locarno. This treaty guaranteed Germany's
new western borders. This treaty was viewed by many as the beginning of a new era of European
peace. Germany joined the League of Nations in 1926. In 1928, sixty-three nations signed the
Kellogg-Briand pact. These nations pledged "to renounce war as an instrument of national
policy." Unfortunately, there was no way to enforce the Kellogg-Briand pact. Most nations were
unwilling to risk their national security by reducing their military forces.
• The Great Depression (page 466)
The brief period of prosperity that began in 1924 ended in an economic collapse that became
known as the Great Depression. A depression is a period of low economic activity and rising
unemployment.
At least two factors played an important role in the start of the Great Depression. The first factor
was a series of downturns in the economies of individual nations during the second half of the
1920s. The second factor was an international financial crisis involving the U.S. stock market.
During the 1920s, the United States stock market was booming. American investors, who had
been making loans to Germany, began to pull money out of Germany to invest it in the stock
market. Then, in October 1929, the stock market crashed. American investors withdrew even
more money from Germany and other European markets. This weakened the banks of Germany
and other European countries. By 1931, trade was slowing down, industrial production was
declining, and unemployment was rising. During 1932, the worst year of the depression, 25
percent of British workers were unemployed, and 40 percent of the German workforce was
without work. Governments did not know how to deal with the crisis. Traditional solutions, such
as cutting costs by lowering wages, made matters worse.
The Great Depression had serious political effects. First, governments became more and more
involved in the economies of their countries. Second, Communism became more popular. Marx
had predicted that capitalism would eventually destroy itself through overproduction, and this
seemed to be coming true. Finally, masses of people began to follow dictators who offered
solutions.
• Democratic States After the War (page 467)
In 1919, most European countries had democratic governments. In many nations, women could
now vote. In Germany, the imperial government had come to an end. A German democratic state
known as the Weimar Republic was created, but it had problems. First, it had no outstanding
political leaders. In 1925, Paul von Hindenburg was elected president. He was a military hero
and did not fully endorse the republic that he was elected to lead. The Weimar Republic also had
serious economic problems. Inflation caused fixed incomes and life savings to become worthless.
This pushed the middle class toward political parties that opposed the republic. After a brief
period of prosperity, the Great Depression struck and led to mass unemployment. Fear seized the
country and led to the rise of extremist parties.
After the war, France was the strongest European power. Because its economy was more
balanced than the economies of other nations, the French did not experience the full effects of
the Great Depression until 1932. The economic problems had political effects. The government
changed six times in less than two years. Finally, in 1936, a coalition of leftist parties
(Communists, Socialists, and Radicals) formed the Popular Front government. This government
gave workers the right to collective bargaining, (the right of unions to negotiate with employers
over wages and hours), a 40-hour workweek, a two-week paid vacation, and a minimum wage.
But the Popular Front's policies were unable to solve the problems of the depression.
Academic Vocabulary
minimum: the lowest amount
possible (p. 469)
During the war, Great Britain had lost many of the markets for its products to the United States
and Japan. This led to a rise in unemployment. From 1925 to 1929, however, Britain had a
period of prosperity. After the Great Depression struck, the Labour Party was unable to solve the
country's problems and fell from power in 1931. A new government, led by the Conservatives,
took credit for bringing Britain out of the worst stages of the depression.
Most of the political leaders in Britain ignored the new ideas of a British economist, John
Maynard Keynes. Keynes believed that unemployment came from a decline in demand, not from
overproduction. He believed that the government should increase demand by putting people back
to work building highways and public buildings. He believed that governments should finance
these projects even if this meant deficit spending (going into debt).
After Germany, no nation was more affected by the Great Depression than the United States. By
1933, over 12 million people were unemployed. Under these circumstances, Franklin Delano
Roosevelt was elected to the presidency in 1932. He introduced an economic policy called the
New Deal. The New Deal included an increased program of public works. The Roosevelt
administration also introduced new legislation that began the U.S. welfare system. In 1935, the
Social Security Act created old-age pensions and unemployment insurance. However, the New
Deal alone could not solve the unemployment problems of the Great Depression. In 1938, more
than 10 million Americans were still unemployed
Academic Vocabulary
circumstance: a condition,
fact, or event accompanying,
conditioning, or determining
another (p. 469)