Great Depression Chapter 28. FYI’s Need Ch 27 reading quizzes asap! (tomorrow?) I have a new calendar, left it on my home computer (oops) Things to note.

Great Depression

Chapter 28

FYI’s

• Need Ch 27 reading quizzes asap! (tomorrow?)

• I have a new calendar, left it on my home computer (oops)

• Things to note – Not having a test next week, pushing it til after chapter 29– Ch 28 ID Quiz next Tuesday, starting a DBQ as well– Ch 28 Reading guide tomorrow – copy machine is down

Overview

• Europe in the 1920s didn’t see the economic prosperity that America did – inflated economies after WWI, reparations and war debts

• Three factors that extended the length of the Great Depression1. Financial crisis due to war and Treaty of Versailles2. Crisis in the production and distribution of goods

worldwide3. America and European governments alike

mishandled the crisis, cut government spending

• Affected countries across the globe– Unemployment, bank failures, collapse of credit, collapse

of prices in world trade

• Government responses varied– Some became very involved with running the economy,

like in the U.S. with FDR’s New Deal (eventually)– Some didn’t handle the crisis well, so their people began

to look for other alternatives (totalitarian leaders promised CHANGE!!)• Communist parties grew• Dictators who offered simple solutions in exchange for power appeared in some countries

Overview

Great Depression in America• 1929 – Stock market crashed• Investments and savings were lost• People panicked and went to banks for their money,

but banks didn’t have it• Over the next several years, consumer spending and

investment dropped• Steep declines in industrial output • Rising levels of unemployment as failing companies

laid off workers.

Why was the stock market crash such a big deal?

Great Depression moves to Europe• 1924 Dawes Plan had caused a lot of American

investment in Europe (especially Germany)• Contributed to the brief European prosperity• After the crash, Americans withdrew investments from

Europe

Great Depression moves to Europe

• Also, downturn in production and trade• Demands for good decreased, businesses/factories

shut down, causing unemployment

Keynesian Economics

• John Maynard Keynes – economist who theorized that the way out of depression was to increase government spending (like on public works)

• Orthodox economy policy said that government should cut spending during economic downturn

• Keynes’ theory wasn’t published until the mid 1930’s

Great Britain confronts Depression

• 1932 – Great Britain experienced a modest recovery following increased consumer spending

• 1934-35 – GB increases unemployment benefits and subsidizes construction of houses, stimulating economy further

• Industry and agriculture slowly returned to prosperity, unemployment fell

Germany

• Because of the Dawes Plan, the US had loaned a large amount of money to Germany

• The financial connection between the US and Germany meant that the Depression hit Germany harder than any other European nation

Unemployment in Germany, 1924-1932

1924978,000

19281,368,000

19303,076,000

July 19325,392,000

October 19325,109,00

Germany battles Depression

• 1930 – Young Plan extended date to which Germany had to pay reparations (1988)

• Lausanne Conference of 1932 declares an end to reparations

• Hitler’s rearmament campaign (rebuilding military) created jobs