II. The Global Great Depression
A. Causation
a. 1929 Stock Market Crash + new problems w/ industrialized + weak econ.
b. Inflation – prices of items go up, but value doesn’t
c. Overproduction of farm goods – cheap prices
i. Farmers buy more equipment, but…that’s bad ii. Market dies and then you have supply and demand issues iii. Third world countries push up production levels – prices drop again
1. So…they can’t buy industrial goods either
d. Reliance on US loans to Europe
i. Pays off debts, helps buy new products
e. Inability to look at the big picture, outside own country
i. Protectionism - High tariffs to protect home industry ii. Insist on repayment of debts
B. The Debacle
a. Stock Market Crash effects
i. Banks – lose money they had invested
1. Call in loans from Europe
a. Can’t pay loans, where’d they get the money from
2. Creditors have no money to invest ii. Investors lose money
b. No money to invest, no money to keep industry going
i. Employment falls, lower wages
c. Low wages > can’t buy goods…do you see the spiral
d. Unprecedented depression/recession
i. Global impact ii. Length – not until World War II pulled out
e. Social effects
i. Suicides ii. Educated can’t get jobs iii. Family roles disrupted – husbands can’t get jobs – kids/mom work
f. Popular culture
i. Women’s fashions more sedate ii. Escapist entertainment – Superman can save the day
g. So is Europe falling apart? Two crises in two decades
i. Economic system not the best ii. Parliamentary democracies can’t solve problems
h. And what about Russia?
i. Stays out of Depression – socialism in one country ii. Not a huge part of global trading world – doesn’t effect them
i. Other countries aren’t buying nations primary exports
i. Japanese silk industry ii. Latin American natural resources
j. And then things get worse?
i. Drought, poor harvest
k. How do nations solve the problem?
i. Latin American gov’t get more involved in economic decisions ii. Japan conquers region – West can’t be trusted iii. West – new welfare programs iv. Italy/Germany fascism
C. Responses to the Depression in Western Europe
a. Bad ideas – just protect self
i. High tariffs bad – other nations respond, stop buying ii. Gov’t cuts off funding of programs
b. Solutions – useless parliament or overturning of parliament
c. Struggling parliaments
i. Communist/socialist parties became more popular
1. France – they unite create Popular Front – wins 1936 ii. But…conservative Republicans hesitant to change iii. So…how about a welfare state
1. Scandinavian countries pump $ into social welfare programs
D. The New Deal
a. Hoover’s ideas failed – tariffs + debt repayment
b. Roosevelt’s New Deal
i. Provided jobs, unemployment insurance, social security ii. Economic planning – control rate of supply to regulate demand
c. Change for U.S. – government grows – later military grows
i. Doesn’t go as far as Scandinavia, but not revolution either
E. Nazism and Fascism
a. Why was life worse in Germany?
i. Shock of loss ii. Treaty arrangements – blame iii. Veterans of war attacked weak parliament
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