Post War EconomicsBritain & France owed huge war debts to the U.S.

Both relied on reparation payments from Germany to pay back loans

Crushing reparations ($30 billion / $2.7 trillion today) devastated Germany’s economy

Britain Faced Serious Economic ProblemsDeeply in debt

Factories out of date

Severe unemployment

Low wages

1926 – General strike = strike by many workers in many different industries at same time

Lasted 9 days – involved 3 million workers

French Economy Recovered Rapidly

Financial reparations & territories gained from Germany helped

Economic swings did occur = unstable political scene

The United States Booms

U.S. emerges from WWI as world’s leading economic power

Affluent middle class enjoyed benefits of capitalism

U.S. loans & investments backed recovery in Europe

When American economy prospers = global economy remains stable

BUT …… prosperity did NOT last!

Wealth in U.S. not shared evenlyFarmers & unskilled workers were on losing endDemand for raw materials / agriculture skyrocketed during warDemand fell & prices dwindled after warFarmers, miners, suppliers of raw materials sufferedWorkers earned less = they bought less

Factories produce more faster = OVERPRODUCTION = condition in which the production of goods exceeds the demand for them

Demand slows = factories produce less = workers lose jobs

Crash and CollapseCrisis in FINANCE was happening = management of money matters: circulation of money, loans, investments, banking

NYSE @ all time high

Many acquired stocks through risky measures_____________________

To slow run ----Federal Reserve (central banking system of U.S.) raised interest rates in 1928 & 1929 – backfired……people worried about borrowing & investing

Crash and Collapse

Autumn 1929 - Jitters caused many people to sell all their stocks at once

PANIC set in!!!!

"Black Tuesday", October 29, 1929, Stock prices CRASHED!!!

Wiped out fortunes for many investors - run on banks – most lost everything.. All their savings – two more lines for depression – save room

The Great Depression had begun

The Great Depression = a painful time of global economic collapse

1931 – Federal Reserve raised interest rates again – even MORE disastrous!

People bought & invested even less

Businesses & banks failed

Jobless could not buy goods = more factories close = ever increased unemployment

Vicious cycle!!!!

People slept on park benches & in the street - lined up to eat at soup kitchens

Depression quickly spread around the world

American banks stopped making loans abroad & demanded repayment of foreign loans

No U.S. support = Germany suffers

Germany couldn’t make reparation payments = France & Britain can’t make their loan payments to U.S.

U.S. imposed highest tariffs in its historyPolicy backfiredOther nations retaliated by raising their tariffs1932–1933 global trade sank to 1900 levelGreat Depression spread misery from industrial world to Latin America, Africa & Asia

Britain provided some unemployment benefitsBy 1931 one in every four British workers was unemployed

By mid-1930s France had decreased production and high unemployment

France passed some social legislation but radicals not satisfied – strikes occurred

Roosevelt Offers the United States a New Deal

1932 – President Franklin D. Roosevelt introduced the new deal_____________________________NEW DEAL – a massive package of economic & social programsGovernment takes active role in combating the Great Depression

Under the New Deal:Federal government more directly involved in peoples’ lives

Laws regulated stock market & protected bank deposits

Government programs created jobs & gave aid to farmers

New Social Security system protected pensions for the elderly & other benefits

Just as New Deal took effect – Natural Disaster --- THE DUST BOWL --- hits central states

Many years of drought, over-farming & huge winds across the central plains

Winds picked up & carried away the topsoil exposed by erosion – creating the DUST BOWL

Storms destroyed crops, land, equipment.

Farmers lose their land – became homeless – migrated to cities in West – looking for work & new life

Horrible hard times

New Deal failed to end the Depression – BUT - it did ease the suffering for many

STILL --- some critics fiercely condemned FDR’s expansion of role in government

The debate about the size & role of the Federal Government continues to this day

As Depression Went On……

Many people lost faith in democratic governments to solve problems

Postwar disillusionment turned into despair in Europe

Misery & hopelessness created fertile ground for extremists with radical solutions