The Great Depression of the 1930’s

1. The Great Depression of the 1930’s

2. The severe damages of WW1 and the heavy monetary penalties put on Germany by the reparations of The Treaty of Versailles led to serious economic problems in Europe. • Nations were faced with the burden of rebuilding and the expenses and damages of the war were high even though the Allied nations were using the reparations from Germany. • Wartime spending had stretched many nations financially but the employment was kept high due to jobs created to maintain the militaries and the soldiers who had returned home from the war looking for work. • Due to these factors, unemployment continued to rise in many nations after the war.

3. Germany faced the greatest economic challenges because of the high reparations and the loss of some of its industrial land and resources imposed by the Treaty of Versailles. • Germany’s economic weaknesses actually hurt trade and production in Western Europe even though this was the goal of the post-war aims of the treaty. • 1923~France seized the Ruhr Valley or Rhineland (Germany’s main industrial region) which led Germany to begin printing money that had no value causing hyperinflation and the devaluing of $ across the continents. • All of these financial difficulties and the overall need to rebuild, nations stopped buying, selling and investing in foreign goods~ including goods from the U.S.

4. The Artificial “Boom” of the 1920’s

5. In the 1920’s Americans experienced an artificial “boom” as companies continued to produce goods at high volumes with an expected trade. • Farmers no longer had the market of growing crops for the Allied armies and were in a “depression” in the 1920’s. • Wages for industrial workers remained low. • Americans continued to buy goods on an installment plan but at the end of the decade, the buying power of the consumers was at the extent of its limit. • Because Americans were buying stock in companies hoping these good times would last….. But…….

6. Stocks were bought on “credit” and investments were risky because they relied on further business growth. Stock Increases = rising stock values (which made it appear that $ was there) and attracted more investors to the risky stock market Sales of goods slowed because European consumers couldn’t buy. American consumers slowed purchases and began a surplus of goods with a shrinking market. Creditors were now demanding payment for stocks bought on credit (or margin) but investors had no $ to make the payments…….

7. October 28, 1928 Black Tuesday

8. All of the earlier activities led to The Stock Market Crash known as “Black Tuesday” where the US experienced the biggest loss of financial worth in the stock market. • Companies laid off workers • Unemployment rose • …And things got worse….as layoffs escalated and sales decreased….. • People went to the banks to get their money, and it wasn’t there because as banks tried to repay their debts, the deposits of people who had not invested in the stock market, had been used. • Banks continued to collect loan payments causing citizens with mortgages and loans to begin losing their homes, property and collateral. • Unemployment continued, Homelessness rose, banks and businesses closed….and the US entered into an economic depression which intensified the worldwide depression.

9. U.S. calls on other nations to repay debts to the U.S.

10. U.S. had been a creditor of European nations which linked the economy of Europe to the U.S. • Europe needed the help of the U.S. after the war to rebuild and recover so they borrowed $ from the U.S. • Many other nations had also borrowed $ from the U.S. like Germany who had to pay high reparations imposed by the Treaty of Versailles. • As the economy of the U.S. worsened in the ‘20’s, the U.S. began calling for their loan payments from the European nations and discontinued loaning $ to other nations. • Germany suffered the most because their economy heavily relied on the U.S. loans. • Without these loans, the economies of the other nations began to also suffer causing a worldwide depression to happen.

11. Effects of the Worldwide Depression: • The effects of the depression caused a rise of totalitarian governments in some nations. • Some nations turned to isolationism and focused on solving their own nations economic problems. • Democratic nations worked to improve conditions through laws. • Totalitarian leaders used their power to begin imperializing for raw materials and markets which would help stimulate the economy…and would eventually lead to World War 2.

12. Franklin D. Roosevelt (FDR)…America’s Saving Grace!

13. America elected FDR in the 1932 election. • FDR proposed programs that became known as the “New Deal”. • The programs focused on relief and reform through public works programs to increase employment and to regulate the stock market, banks, business and agricultural productions. • The New Deal enhanced the national government’s role in the economy and the lives of individuals. • This was the first time in history the govt. had directly helped in the everyday life of citizens within the U.S.

14. Britain enacted protectionist policies and increased government ownership and the management of key industries. • Britain also raised taxes to help loan money to new businesses in order to help increase employment. • Germany provided an opportunity for radical groups to participate in the political process and saw a rise in the Nazi Party.

15. Adolf Hitler took advantage of the unstable economy, discontent and the structure of the German government and became the Chancellor in 1933. • He established a totalitarian hold over the government