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Futile Search for Stability

Futile Search for Stability. 17-1. Uneasy Peace, Uncertain Security. Weak League of Nations US Senate refused to approve League members disagreed on using force French Demands Strict enforcement of Treaty of Versailles Desired security and demanded reparations

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Futile Search for Stability

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  1. Futile Search for Stability 17-1

  2. Uneasy Peace, Uncertain Security • Weak League of Nations • US Senate refused to approve • League members disagreed on using force • French Demands • Strict enforcement of Treaty of Versailles • Desired security and demanded reparations • 132 billion German marks = $33 billion • Germans can’t pay  French occupy RuhrValley

  3. The Weimar Republic • German government • Established in 1919 • Serious weaknesses • Germany lacked strong democratic tradition • Several major political parties • Many minor ones • Blamed for defeat in WWI and humiliation of Treaty of Versailles • Wartime leaders excused

  4. Inflation Causes Cri$i$ • Enormous economic problems • Didn’t increase wartime taxes • Printed more $ • $ lost value after war • Had to pay reparations • Printed more $ • 1914 – 4.2 $1 • 1923 – 4.2 trillion marks $1

  5. Cost of goods rose • bread in 1918 – less than 1 mark • 1922 – 160 marks • 1923 – several billion marks • People questioned value of democratic gov’t

  6. Attempts at Economic Stability • Dawes Plan - 1924 • $200 million loan from US banks • Stabilize German currency • Strengthen economy • Realistic schedule for reparations payments • Helped slow inflation • 1929 – German factories producing at pre-war levels

  7. Efforts at a Lasting Peace • Treaty of Locarno - 1925 • France and Germany ban war forever • Germany agreed to respect borders of France and Belgium • 1926 - Germany admitted to League of Nations

  8. Kellogg-Briand Pact • 1928 • Pledge to renounce war as an instrument of national policy • Signed by 62 nations • Treaty had no way to be enforced • League of Nations had no armed forces

  9. Financial collapse • By 1920s, American economic prosperity sustained world economy • If US economy weakened, whole world system might follow • 1929 – US Economy Crashes

  10. A Flawed US Economy • Uneven distribution of wealth • Overproduction • Underconsumption

  11. Stock Market Crashes • Stock • Share of ownership in a company • Pay money to company so it can operate • Receive interest on money • Middle-income people bought stocks on margin • Paid a % of the price as a down payment • Borrowed from stock brokers • Works if prices rise

  12. September 1929 • Investors sell stocks • Lowers prices of stock • October • Prices slide too far down • Panic sets in and everyone tries to sell stocks • October 29 – Stock Market Crashes

  13. The Great Depression • Stocks became worthless • Industrial production, prices, and wages declined • Unemployment rose • 1932 – factory production cut in half • 1933 – ¼ of American workers had no jobs

  14. A Global Depression • Collapse of American economy impacted world • Bankers demanded repayment of overseas loans • American investors withdrew $ from Europe • Market for European goods dropped • Congress used tariffs to keep $ in US • Countries that depended on exports to US suffered • World trade dropped by 65%

  15. Great Britain

  16. Great Britain

  17. What did they do? • National Government – coalition government made up of Labour Party and Conservatives • Passed high protective tariffs • Increased taxes • Regulated the currency to avoid inflation • Lowered interest rates

  18. Results by 1935 • Industrial production returned to 1929 levels • 10% Unemployment • Preserved democracy

  19. John Maynard Keynes • Unemployment came from decline in demand • Not overproduction • Increase jobs through deficit spending • Government goes into debt to create jobs

  20. France

  21. France • More agricultural, less dependent on foreign trade • 1 million unemployed by 1935 • Political leaders stressed patriotism – warned against Marxist and socialist ideas

  22. What did they do? • Economic crisis led to political instability • 1936 - Popular Front – coalition government made up of moderates, Socialists and Communists • Passed reforms to help workers • 40 hr workweek, minimum wage ***Still preserved democratic government***

  23. Recovery in the US • 1932 – Franklin Delano Roosevelt elected • Confident manner appealed to millions

  24. The New Deal – Sound familiar? • Large public works programs to provide jobs • Gov’t agencies give $ to farms and businesses • $ for welfare programs • Gov’t spending would create jobs and start a recovery • Reformed stock market and banking system

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