post war economics britain & france owed huge war debts to the u.s. both relied on reparation...
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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Factories out of date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
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