The Great Depression: Post WWI Economic Problems.

The Great Depression:Post WWI Economic Problems

The Great Depression:Post WWI Economic Problems

ESSENTIAL QUESTION:

How did the Treaty of Versailles and world-wide depression impact Europe in the years between World War I and World War II?

Depression in Germany

• German Resentment and Humiliation

- after the war Germany resented losing territory and making war payments

The Great Depression:Post WWI Economic Problems

- Germany made the first of the reparation payments in 1921 and claimed the next year that they could not afford to pay anymore.

The Great Depression:Post WWI Economic Problems

• France’s Response - France was going to

use the German payments to rebuild their own economy.

- They sent troops into the Ruhr Valley to seize valuable mines and factories that belonged to Germany as payment.

The Great Depression:Post WWI Economic Problems

• Germany’s Response - The workers at these factories and

mines went on strike to protest France’s takeover.

- To help pay these workers’ wages, Germany began printing more money

- This backfired on the Germans causing inflation. Inflation is when money starts to lose its value and businesses raise their prices. The result is that it takes more money to buy things.

- Soon, German people had to have wheelbarrows full of money just to buy a loaf of bread.

This German woman is using German paper money to keep her stove going. It was so worthless, the best use was for firewood!

The Great Depression:Post WWI Economic Problems

• Dawes Plan - plan created in 1924 by the

United States and other Western European nations to help Germany recover from its economic problems

- The plan would reduce the amount of money owed by Germany, set affordable payments, and loaned Germany 200 million dollars.

- This worked for a short time but the Dawes Plan set the world economy up for disaster. Charles Dawes: creator of the

Dawes Plan and Vice-President of the United States under Calvin Coolidge

The Great Depression:Post WWI Economic Problems

• Causes of the Great Depression

- Crash of the U.S. stock market

Investors would buy stock with borrowed money. As long as stock prices increased, investors made the money to pay back the loans. HOWEVER, when stock prices decreased, investors were stuck with a loan they could not pay back!

The Great Depression:Post WWI Economic Problems

• Causes of the Great Depression - Overproduction Many factories made too many goods and were

not able to sell all they produced. This forced factories to slow down production and lay off workers.

This created a problem because of the high number of unemployed people. They could not support themselves.

(Does this sound familiar?)

The Great Depression:Post WWI Economic Problems

Causes of the Great Depression - Inability to pay back loans Banks started to want loans paid back. People out of work and investors who did not make a

profit in the stock market could not pay back their loans. Banks collapsed and many people lost their entire

savings.

The Great Depression:Post WWI Economic Problems

• The Great Depression spreads to Europe

- American investors pulled their money out of European banks.

- The European economy collapsed as well.

- Half of Germany’s population was unemployed.

The Great Depression:Post WWI Economic Problems

- With the humiliation of the German people, the huge debt, and the starvation and economic depression in Germany after WWI, it is easy to see why the German people would put their faith in Hitler in a few years.

Vocabulary

Inflation – period when money loses it value and businesses raise prices

Depression – period of low economic activity when many people lose their jobs