A Worldwide Depression

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A Worldwide Depression

• Objectives
• Describe the impact of World War I on postwar
  Europe.
• Identify problems faced by the Weimar Republic.
• Trace the events that led to the financial
  collapse of the US economy.
• Analyze the worldwide effects of the Great
  Depression.

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Unstable New Democracies

• At the end of World War I, new democracies arose
  from former monarchies
• Many of these countries had no experience with
  representative government
• Many governments were unable to obtain majority
  support
• Coalition Government Temporary alliance of
  several parties needed to obtain a parliamentary
  majority
• Weak in times of crisis

3
A New German Government

• Weimar Republic Democratic government
  instituted in Germany after World War I
• Plagued with problems
• Germany lacked a history of democracy
• Germans blamed the new government for their
  defeat and the postwar humiliation caused by the
  Versailles Treaty

Map of Germany showing territory loss as a result
of the Treaty of Versailles.
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Inflation Causes Crisis in Germany

• To pay the expenses of war, Germany printed more
  money
• Also printed money to make war reparations
• Caused massive inflation

Germany marks had lost so much value that they
were used as wallpaper (above), and as building
blocks for children (left).
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Financial Collapse

• By 1929, American factories were producing most
  of the worlds industrial goods
• Concentrated income in the richest 5 of the
  population
• Most families were too poor to buy goods
• Caused factories to reduce output and lay off
  workers
• Overproduction in the farm sector also caused
  problems
• Surplus of crops drove down prices

Crowd at New York's American Union Bank during a
bank run early in the Great Depression.
6
The Stock Market Crashes

• During the economic prosperity of the 1920s, many
  Americans invested in the stock market
• Speculation
• Buying Stocks on Margin
• Black Tuesday October 29, 1929

Crowd gathering on Wall Street after the 1929
crash.
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The Great Depression

• The Great Depression Prolonged economic slump
• Unemployment
• Diminished wages
• Bank and business failures
• A Global Depression
• The panic over the Great Depression had global
  effects
• American investors withdrew their money from
  Europe
• Decreased demand for foreign products
• Tariffs

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