WH+13.2+A+Worldwide+Depression+Lecture

13.2 A WORLD WIDE DEPRESSION

  • Post WWI Economic Issues

    • Major European countries nearly bankrupt after World War I, struggled with debt payment.

    • United States rises to economic dominance; European nations unable to produce goods.

    • New democracies formed in postwar Europe, replacing absolute rulers.

  • Weimar Republic Formation

    • 1919: Weimar Republic established in Germany after Kaiser Wilhelm II abdicated.

    • Democratic government faced challenges due to lack of democratic experience and economic instability.

    • Friedrich Ebert, first president, criticized for signing the Treaty of Versailles, labeled "November Criminal."

Economic Hyperinflation in Germany

  • Hyperinflation Overview

    • Inflation: Continuous increase in prices, leading to decreased money value.

    • Hyperinflation occurs when prices rise more than 50% within a month.

    • Post-WWI economic policies led to excessive money printing by Germany to pay reparations.

  • Impact of Hyperinflation

    • Money became so devalued that it was used as kindling or wallpaper.

    • Economic crisis resulted from excessive money printing, coupled with previous tax policies that did not generate revenue during the war.

Attempted Economic Stability

  • Dawes Plan

    • International committee led by American banker Charles Dawes aimed to stabilize German economy.

    • Loan of $200 million from American banks to help stabilize currency and create a more realistic reparations schedule.

U.S. Economic Problems Leading to the Great Depression

  • Financial Collapse

    • Weaknesses within the U.S. economy include uneven wealth distribution, overproduction, and decreasing consumer purchasing power.

    • Stock market crash on October 29, 1929, triggered by rapid stock selling as investors panicked over inflated stock prices.

The Great Depression

  • Economic Decline

    • Characterized by long-term high unemployment, reduced business activity, and a drop in industrial production by half.

    • 25% unemployment rate with approximately 15 million people out of work by 1932.

    • Significant farm crop losses due to the Dust Bowl worsening economic conditions.

Recovery Efforts in the U.S.

  • New Deal

    • Franklin D. Roosevelt's presidency (1933) marked significant changes in economic policy.

    • Introduced programs to provide employment and financial aid, departing from previous laissez-faire policies.

    • Implemented large public works projects and established various government agencies to assist the unemployed and stimulate the economy.

  • Key New Deal Programs

    • Agricultural Adjustment Act (AAA): Launched in 1933 to stabilize crop prices.

    • Civil Works Administration (CWA): Created jobs for millions in 1933.

    • Social Security Act: Established in 1935 to provide pensions and insurance for unemployed and vulnerable populations.

    • Works Progress Administration (WPA): Employed millions in construction and artistic projects.

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