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Weimer Republic- Germany’s democratic government that was established after WWI.
Inflation- When the value of a currency decreases.
Black Tuesday- Oct 29, 1929, the day the NY Stock Exchange crashed.
After WWI, European Nations were rebuilding their war-torn economies. Only the United States and Japan had come out in better financial shape. The United States offered loans and aid to the war-torn countries of Europe.
New Governments• From 1914-1918,
Europe’s last absolute rulers were abolished.
• They were replaced with Democracies These democracies
functioned as Multi-Party Systems
This made it difficult to solve problems
Voters instead turned to Dictatorships
Germany’s new Democratic Gov’t• Many weaknesses
Lacked strong democratic tradition
Many political parties Blamed for defeat in
WWI and Versailles Treaty
Inflation• Value of German
currency plummeted
Causes:1. Uneven distribution of
wealth Working class Americans could
not afford to buy goods being produced
Unable to sell goods, store owners cut back on orders
Factories laid off workers Cause economic spiral
downward
2. Overproduction of agriculture
Technology increased crop yields driving profits and prices down
Farmers couldn’t pay off their loans forcing banks to close
3. Stock Market Crash In 1929, Wall Street was the
financial capital of the world U.S. Economy was booming
sending stock prices soaring
Many people bought stocks on margin (only paying for % of stock)
Worked if prices kept rising Sept. 1929 investors
thought prices were too high and began to sell stock
By Oct 24th, panic resulted, everyone wanted to sell stock and nobody wanted to buy.
“Black Tuesday” Oct. 29, 1929 The Market Collapsed
The result was the collapse of the American Economy• Thousands of businesses
failed and banks closed• People lost their life
savings because banks had no money
• Stocks bought at high prices were now worthless
• By 1933, ¼ of Americans were unemployed
Global Depression• Investors withdrew their
money from Europe• Worldwide trade came to
a halt because of high import tariffs
• Countries who depended on the U.S. for loans were particularly hard hit Germany
The Depression confronts democracies with serious challenges
Britain, France and the United States were able to create programs that slowly helped improve the economy
Other countries however, turned to an extreme form of government called Fascism
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