Instability After World War I

1. Instability After World War I State Standard W.37 Describe the collapse of international economies in 1929 that led to the Great Depression, including the relationships that had been forged between the United States and European economies after World War I. State Standard W.38 Gather information from multiple sources describing issues of overproduction, unemployment, and inflation. E. What led to new problems in the years after World War I? F. What triggered the Great Depression? G. How did attitudes toward democracy dictate legislation passed between the wars?

2. E. What led to new problems in the years after World War I? • Inflation in Germany • German citizens resented the French presence in their country. German workers went on strike while demanding better treatment. • Germany was ordered to pay 132 billion German marks (33 billion dollars) for reparations. That was about 2.5 billion marks per year. • Germany began to print more money but that made their money worthless – • 1914 – 4.2 marks = 1 dollar • 1923 – 4.2 trillion marks = 1 dollar • Dawes Plan – A plan created to allow Germany to reduce the amount of money they had to pay in reparations. This plan allowed the U.S. to give the German government a $200 million loan.

3. E. What led to new problems in the years after World War I? • The Treaty of Locarno: pact between 65 countries that locked current border between Germany and France. Served as an example of a diplomatic solution to war.

4. F. What triggered the Great Depression? • Depression: period of low economic activity and rising unemployment. • Two major factors played a role in the depression: • 1. Series of downturns in all European countries in the late 1920’s • Wheat was over produced, causing agricultural prices to drop • Oil and Hydroelectricity emerged too quickly, causing a drop in coal production • 2. The U.S. stock market • U.S. stocks were becoming so valuable that investors were pulling money out of Germany to put into stocks. In October 1929, the stock market crashed. • Understand: The crash may or may not have directly caused the depression, but it did cause business owners to become hesitant when investing in their money, and investors to withdraw money from European markets.

5. G. How did attitudes toward democracy dictate legislation passed between the wars? • With over 25% unemployment in many European countries, citizens were looking to political leaders that offered solutions in return for authoritarian power. • Germany • Rise of extremist party views – Nazi and Hitler • France • Although France remained democratic, the Popular Front government emerged. This government consisted of extreme leftist politicians that incorporated socialist and communist economies.

6. G. How did attitudes toward democracy dictate legislation passed between the wars? • Great Britain • Remained democratic and relied on traditional economic policies. Relied on Keynes's idea of deficit spending, or that the government should continue pumping money into the economy, even if it means accruing more debt. • The United States • Franklin D. Roosevelt created his New Deal policy. The New Deal would focus on public works, hiring people to build roads, airports, bridges, etc. • Roosevelt also established a social welfare system and the Social Security Act to provide pensions for the elderly. • It is likely that Roosevelt’s actions prevented a social revolution in the U.S.

7. Quiz • How did WWI and the Treaty of Versailles hinder the German economy? • What happened as a result of Germany not being able to pay their reparations? • List two factors that led to the Great Depression. • How did the Germans and French respond the to depression? • How did the British respond to the depression? • How did the United States respond to the depression?