THE GREAT DEPRESSION
Essential Question What caused the Great Depression, and
why did it spread?
The World in Prosperity & Depression
Europe changed drastically after WWI Imperial governments were gone New countries emerged: Poland,
Czechoslovakia, Hungary, Yugoslavia, & the Baltic States
Russia was in the middle of a civil war
Reconstruction & Prosperity
In Europe, first years after war were tough
Central Europe – Famine caused by wartime blockade of food
Soldiers returning home from war faced unemployment
Next 5 years spent rebuilding & recovering from the war
The German Economy The Treaty of Versailles forced Germany to
pay huge amounts in reparations to France & Britain
This slowed the recovery of their economy Printed extra money to pay the debt, which
resulted in hyperinflation Hyperinflation – A decrease in the value of
currency resulting from printing too much money. Prices increase in the affected area, so it takes more money to purchase things.
The U.S. Economy America emerged as world’s greatest economic
power Britain & France owed the U.S. a large amount of
money – Bought war supplies on credit Americans bought mass produced goods made in
American factories Automobile was most important factor in prosperity
– Sold to Americans & Europeans Americans invested overseas, especially in Germany Women had more freedom (Voting, College) because
they worked in place of men during the war
The Great Depression Stock market crash in New York sent
world economy into a Great Depression Depression – Economic downturn in
which a large number of businesses fail & workers are unemployed
Prices of stocks started falling, & people scrambled to sell before they lost too much
The Great Depression People who lost money quit buying goods Banks & investors recalled loans from
Europe – Caused depression to spread worldwide
40,000,000 workers became unemployed Farmers could no longer sell cash crops
Causes of the Great Depression
Prosperity was due to stock market & real estate over speculation
Over Speculation – People spend money they don’t have yet, assuming they will earn the money from what they are buying
Overproduction – More goods were produced than consumers could buy
Relationship of loans & debts between Europe & America ensured the recession would spread
Causes of the Great Depression
Government leaders quit spending, tightened credit, & cut off international trade
This made the recession worse People had no security net, like
unemployment insurance & social security, if they lost their job & savings
Franklin Roosevelt elected President in 1932 – Created New Deal to try to provide jobs for unemployed citizens
