Transcript Terms/concepts you need to know:

Terms/concepts you need to know:
• Economic terms/concepts
– free market (capitalism)
vs. command economy
– capitalism vs. socialism
– (shares of) stock
– corporation
– speculation
– stock market (ex. New
York Stock Exchange,
NYSE)
– Banks
– interest
– inflation and deflation
– recession and depression
– tariff
• Political terms/concepts
–
–
–
–
republic
parliament
Treaty of Versailles
coalition government
CHAPTER 31 SECTION 2
• The world from 1919-1939
– Political problems
– Economic problems
CHAPTER 31 SECTION 2
• I. Political problems
– A. The new European democracies (Ex. Austria,
Poland, Hungary, Czechoslovakia, Germany, etc.)
formed after the war are weak
• 1. Citizens have little experience with representative
government
• 2. Large number of political parties (leads to
formation of coalition governments [what are these?])
• 3. Frequent changes in government [why would this be
a problem?]
• 4. Slow recovery from cost and devastation of WWI
CHAPTER 31 SECTION 2
• I. Political problems
(cont.)
– B. The Weimar Republic
(Germany) [why is it called
the Weimar Republic?]
• 1. Problems:
– Many different political
parties
– Blamed for defeat in WWI
and signing Treaty of
Versailles
– Economic weaknesses:
inflation from printing
money, high taxes, huge
debts, reparations to Allies
– Growing power of
communists
How is the Weimar Republic structured?
CHAPTER 31 SECTION 2
• I. Political problems
(cont.)
– B. The Weimar Republic
(Germany)
• 2. Attempts at
recovery
– Dawes Plan: provided
loans from US to
Germany to halt
inflation and stabilize
economy
– By 1929, Germany
had increased
production and
decreased
unemployment
Charles Dawes
CHAPTER 31 SECTION 2
• II. Economic problems: the Great
Depression
– A. Causes of the Great Depression
• 1. Farmers over-produced during WWIfood prices
drop, farmers lose land and must borrow money
• 2. Despite high profits for businesses in 1920s, wages
for workers do not increaseworkers use credit to
purchase goods [why would this be a problem?]
• 3. To promote growth, the govt. (through the Federal
Reserve) and banks keep interest rates low [what would
be the effect of low interest rates?]
• 4. Speculation, optimism, and demand cause stock
values to increasepeople buy stocks on margin
CHAPTER 31 SECTION 2
• II. Economic problems: the
Great Depression (cont.)
– B. The Stock Market crash
(Oct. 24-29, 1929)
• 1. Investors grow nervous about
stock pricesbegin selling off
stock
• 2. Oct. 29, 1929 (“Black
Tuesday”): stock prices plunge
as people panic and sell stocks
(16.4 million)
• 3. Banks, companies, and
individuals wiped outleft with
huge debts that can’t be paid
• 4. Signals the beginning of the
Great Depression: long period of
high unemployment and low
production
CHAPTER 31 SECTION 2
• II. Economic problems: the
Great Depression (cont.)
– C. Effects of Great Depression
(in US):
• 1. Bank failures
• 2. Business failure and high
unemployment: Low wages, high
debt, loss of money in stock
marketdecreased demand for
goods and less
productionworkers laid
offless purchasing of
goodsmore workers laid off
– Gross National Product (GNP):
drops from $104 to $59
billion from 1929-1933
– Unemployment: 25% by 1933
(1 out of 4 Americans out of
work)
• 3. Govt. raises tariffs (SmootHawley Tariff, 1930) to
protect industries, but it
backfires [why would this not
work?]
CHAPTER 31 SECTION 2
• II. Economic problems: the
Great Depression (cont.)
– D. Effects of Great Depression (in
world): Collapse of American
economy devastates the rest of
the world
• 1. US banks stop new foreign loans
and demand repayment of existing
loans
– Germany suffers most from loss of
US investment
• 2. Raising of tariffs causes
worldwide trade to grind to a halt
– Nations dependent on exports (ex.
Japan, Brazil, Argentina) suffer
• 3. Unemployment soars in Europe
– By 1932, 30% of Germans are out
of work
CHAPTER 31 SECTION 2
• II. Economic problems: the Great Depression
(cont.)
– E. Responses to the Great Depression
• 1. Britain, France, and the United States
– People elect socialist leaders who form coalition govts. (ex.
Popular Front in France and National Govt. in Britain) and liberal
Democrats take power in US (Franklin D. Roosevelt elected in
1932)
– Expansion of govt. power and involvement in economy
– Govts. engage in defecit spending on public works and social
welfare programs (ex. New Deal in US) [why would govts. Do
this?]
– Recovery slow and unevenweakens faith in democratic govt.
• 2. Germany, Italy, and Japan
– New political parties emerge that combine intense nationalism,
socialist ideas, and strong dictatorial rule (ex. Fascists in Italy
and Nazis in Germany)