E period Gihoon and Wonseok
hee-jeong&stacy

A Global Depression



Notice



European countries, during this time, were regaining their "health" from the war economically. They had borrowed money from United States of America. In US's shoes, they were booming right now! They are confident that their great economies will grow forever, but the American market had an Achilles' heel that would flip their world upside down.


European Countries After the Great War


World War 1, also know as the Great War had left Europe bankrupt. Only the non- European countries, United States and Japan, had financial goodies, where the reason was simple. Neither countries were hosts of this crazy warfare. And this war gave them better trade routes. In contrast, Europe was where the party took place, its domination has declined, and most of its resources have been absorbed.
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(After the war)

Are New Democracies Reliable? (1914~1918)


As the war ended, many new democratic parties got higher in the level and overthrew their leaders. The leaders being traditional monarchs, kings and queens, and some emperors as well.

Some of the first "governments" were formed in Russia, but got overtaken by the Communist party.

But there was a problem. No one really had any idea of the government since it was always a monarchy that ruled them. So the small parties became one allied party for the time being- it was known as a coalition government. They had lots of arguments so these groups asted pretty short. France, for example, endured some 40 changes of government from 1919 to 1939.

The frequent changes of leadership was chaotic. So no long term promises were made, so the country couldn't advance. So more voters wanted strong totalitarianism than democracy.


Weimar Republic, Poor People. . . .


Weimar Republic, this is the name of the Germany's newest government. This government had many serious problems. They lacked strong traditions of any kind. It was made of many big and small parties. The worst fact was that the citizens blamed it for the defeat of the Great War. It was somewhat understandable since it was the Weimar Republic who signed the Treaty of Versailles.

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(Weimar Republic)

(This is the video on the Weimar Republic at this time.For better quality, look here.)

Germans in trouble!


Thanks to the Treaty of Versailles, Germany was in huge dept. But the government did not put heavy taxes on the citizens, they just simply printed more money. Due to this, the value of German money called Marks lost its worth gradually. So the Allies wanted more. But as the value of the currency goes down the cost of the object goes up. So here is an example: In 1918, a Berlin bread was worth less than a mark, by 1922 the same bread now cost 160 marks, and by 1923, the bread is now 200 billion marks.

As a result, for the people who saved money for a long time, their wealth basically disappeared. So the Germans wanted a new leader.

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German Economical Stability


In 1923, thanks to Charles Dawes, an American banker, Germany solved its financial problems. The Dawes Plan provided a $200 million dollar loan so Germany's economy can be stabilized. It was a win- win situation. Germany got better and Dawes' company attracted more customers in US.

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Charles Dawes
(The American banker that saved Germany)

Peace, a Hard Goal


The German Foreign Minister Gustav Stresamann and French Foreign Minister Aristide Briand tried to make France and Germany to have a better relationship. In 1925, the 2 ministers accompanied by the officials from Belgium, Italy, and Britain promised and signed a treaty saying that they would never have war against each other. Germany would now respect the borders between Belgium and France. Then, the treaty was passed to the League of Nations.

In 1928, to advance the "Locarno treaty", there was the Kellogg- Briand peace act. Frank Kellogg, the US Secretary of the State, arranged this act with Briand, which basically all the countries signed. This treaty was to renounce war as an instrument of national policy.

Too bad this treaty did no good. The League of Nations had no armed forces to back them up, and it was also weakened when US refused to join it. And England was so happy about its economical boom thanks to American investment.

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The Great Depression that ruined People's Lives


By 1920s, the world's economy depended on the American economy, if they fell, the world would collapse, and it did in 1929.



(Above is the effects of the Great Depression. For better quality, look here.)



US Economy's Weak Points



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There were 3 cracks in the dam called US economics. First, the gap between the wealthy and the poor. Second, overproduction by business and the farmers. Third is the lessening demands for the produced goods. The dam is about to leak soon.

It is a chain of doom. As told above that the poor and the rich had a huge gap. Since only the top thirty percent had most of the money, and the 70% is poor, less product would be sold. Then the shop owners would demand less products from the factories. And the factories will produce less items, and cuts will be made. So the workers get fired and their family goes poor and the chain of doom restarts.

There is another chain of doom, agriculture. This is how it works. The farming technologies were better than before. So the farmers produced surpluses of their crops. But not all gets sold. So they have debt because they have to pay for their machinery and no one is buying their crops. So in debt, the bank forces them to be closed forever. So they get ruined.

Stock Market Screws up People's Lives

In 1929, in a place called Wall Street, this was where the wealth of the world balanced. In here, banks and investment companies were common as there are leaves on a tree. Everyone believed that the booming economies will last forever, so the stockowners raised the prices of their stocks real high. So the average income people had to buy those stocks to get in the competition. So the people paid little of the stock, if it failed, the investors had no money to pay off the debt.

One day, the investors felt that the stocks were way too high that it was unstable. So they started selling them a lot, they believed that it would go down only a bit, but it was exaggerated. It was a downfall, so the investors panicked. Everyone wanted to sell the stocks, but the problem was that no one wanted to buy them. There was this event called the "weird roar". In this chaos, 1000 brokers and their helpers did Stock Exchange, and it was the world record of selling stocks. Over 16 million stocks were sold, as result the market fell.

In this whole mass, the value of "paper money" disappeared. No one could pay the debt they owed, so everyone basically became poor. The stocks they had were now garbage, due to all this, lots of people were unemployed. This was the Great Depression. By 1932, it was like hell--the factories were cut in halves, thousand of companies shattered, many banks failed--over 9 million people lost their savings and the bank could not pay any of them.

By 1933, only three quarters of the population of entire Americans had managed to have jobs.

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The Destructive Global Depression


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The destruction in US has created more chaos around the world. The American investor in U.S. wanted the money back from someone that is on the other side of the world. The U.S. got money back from Europe, but the European goods in US began to fall. The U.S. government started to put high tariffs on European goods, so the American dollars do not leave the country. The U.S. government supported the people so they would buy more products that said "made in U.S.A." But this was actually a bad choice for U.S. This made the other countries raise their tariffs too, which in turn raised competition. Because of all these high prices, the world trading rate descended by 65%. Thanks to this, more people were unemployed .

America had lots of trouble, so did Germany and Austria. There was a financial crisis in Austria in 1931 because their biggest bank collapsed and Europe was in hell. And their economy was plunging.

Asia also suffered from the Depression as well, especially the Japanese. In Japan, 1931, the crops failed and people starved to death. So the families had to eat bark and roots from trees to survive. Since the high tariffs, and the export fell by 50%, the city workers suffered and had no choice but to return to the rural areas.

Latin America also got hit by the sparks from the flame of hell. As we know, Latin America was known for crops, sugar, beef, copper, and tin. During the 1920s, many nations had lost their interest in them. So the costs of these goods dropped a lot. And to make it worse, the imported products were now expensive. They had debts that they could not afford to pay off.

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World Makes a Come-Back!


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Britain Returns


The Depression was a huge scar on the British economy, since their economy was depending on the exports. So to deal with this, a National Government was formed, this group was made to be the heroes. What it did was going to do was create a strong protective tariff like the US, so their money stayed in the country. And with low interest, the industries grew a lot. It was a slow, steady, and strong progress. By 1937, half of the unemployed were now employed. England was resurrected!

France's Turn


Since France was more inland than England, it got a smaller scar, but still great enough. The politics in France were unstable. The leaders stood and fell. So Popular Front seized the power. Popular Front was a coalition between the moderates, Socialists, and the Communists. With them in power, France got better. They gave the workers more money, they gave holidays with payment, and they had 40 hours a week working policies. This was a great plan, it worked well for a few years, then the prices went up and offset wage gains. But after all this, there were still lots of unemployed people. So France's comeback was less effective than the English's.

Socialist Government Does something Different


This took place in Scandinavian countries of Denmark, Sweden, and Norway. The Socialist Government took care of their crisis fairly well. It was a cooperative community action which was based on their traditions. Sweden was in charge of making more people employed. All the countries helped in aiding the elders, giving unemployment insurances, housing, and solving other financial problems. To afford the money for this, they just taxed their people.

Rebirth of United States


Franklin D. Roosevelt was the new president of US, he was the first voted after the Depression began. He was voted for his confidence and manner which lots of people loved. The New Deal was the name of the project that would restore United States. It was created by Roosevelt. This project started by taking in all the public money and using the money for welfare and relief. Roosevelt and his team expected that if the government spent money, new jobs would be created. They made rules and stock markets and banks were brought back to their feet. Even though this project was slow, it was successful and Roosevelt was famous for it.
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President Franklin D. Roosevelt

(He was the one that was in charge of the New Deal project)