Unstable Governments &Weak Democracies
• Fall of Kingdoms/Empires new democracies in Europe.
• Ruled by others for centuries: don’t know how to rule themselves.
• Frequent changes in government = instability
• 1919 Weimer Republic: Germany’s gov’t with a lot of weaknesses.
German Inflation/Attempts
to Stabilize• War Debt
• Inflation=Cost more than it’s worth.
• The new concept of “credit” people didn’t have $, but they were spending
• Germany prints own money=WORTHLESS!
• Loans from the U.S.
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Continued Why was this bad?
• Credit system– People didn’t really have
the money they were spending
• WWI– The U.S. was a major
credit loaner to other nations in need
– Many of these nations could not pay us back
Efforts At A Lasting Peace• Treaty of Versailles – Good start but
weak no enforcement• Germany signed peace treaty w/ France Kellogg-Briand Pact
• Many nations renounced war (not U.S)• League of Nations = FAILED• We didn’t join!
Flawed U.S. Economy• Europe’s lands = Trashed by war
• Good for U.S. factories = 50% industrial goods produced at home
• Uneven wealth: $ goes to factory owners NOT workers
• Farms: produce too much food lose $
• Banks closing!
Stock Market Crash & Global Depression
• People buying stocks on margin (credit)
• 1929: Stock Market Crashes: Banks, Margins, BAD loans, back loans
• Tariffs: stop buying each other’s goods; world trade drops 65%
• European banks = NO $
• Can no longer support Mandates (colonies)
• MAIN CAUSE closing of banks
The Stock Market• People bought stocks
on margins– If a stock is $100 you
can pay $10 now and the rest later when the stock rose
• Stocks fall– Now the person has
less than $100 and no money to pay back
And then….
• With people panicking about their money investors tried to sell their stocks– This leads to a huge decline
in stocks– Stocks were worthless now
• People who bought on “margins” now could not pay
• Investors were average people that were now broke
• Farmers were already feeling the effects– Prices of crops went down– Many farms foreclosed
• People could not afford luxuries– Factories shut down– Businesses went out
• Banks could not pay out money• People could not pay their taxes
– Schools shut down due to lack of funds
• Many families became homeless and had to live in shanties
• Herbert Hoover was president at the start
• Philosophy: We’ll make it!
• What He Did: Nothing
• The poor were looking for help and no ideas on how to correct or help were coming
“Hooverville”• Some families were
forced to live in shanty towns– A grouping of shacks
and tents in vacant lots
• They were referred to as “Hooverville” because of President Hoover’s lack of help during the depression.
The World Responds• Britain: Very industrial, depression hit hard.
– High tariffs; increased taxes; regulated $, led to slow recovery.
• France: self-sufficient, agriculture economy, less foreign trade = weak depression
• Socialist govt’s: heavy govt. involvement & taxes (still today) = no depression
• United States: – Hoover: did nothing to help the depression.– 1932: Franklin Roosevelt elected & starts New Deal,
brings $ to U.S. & creates jobs
*FDR*• When he was
inaugurated unemployment had increased by 7 million.
• Poor sections (like Harlem) had 50% of the population unemployed
• Created the “New Deal”
http://www.youtube.com/watch?v=JDcR-ZS5fyw&safety_mode=true&persist_safety_mode=1&safe=active