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."
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.
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.
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.
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.
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.