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.