World War II

Title: Worldwide Depression

Review Aftermath WWI

• Allies are victorious – US, Britain, France, Russia, & Italy

• Paris Peace Conference (1919)– Treaty of Versailles– Germany assumes war guilt– Territorial Loses– Military Restrictions

• New nations are created• Europe left in ruins – Financially destitute – Literally destroyed

This chapter must be one of pessimism. The Treaty includes no provisions for the economic rehabilitation of Europe, - nothing to make the defeated Central Empires into good neighbors, nothing to stabilize the new States of Europe, nothing to reclaim Russia; nor does it promote in any way a compact of economic solidarity amongst the Allies themselves; no arrangement was reached at Paris for restoring the disordered finances of France and Italy, or to adjust the systems of the Old World and the New.

John Maynard Keynes: The Economic Consequences of the Peace, 1920

AftermathUS & Japan:

• United States & Japan only nations that emerge from WWI in better financial shape

• Roaring Twenties (US)-unprecedented financial growth and overall prosperity

• Political influence increased greatly

• US economy had unknown weaknesses

Europe:• Immense human and

economic loses• Almost every European

nation left bankrupt• European political power

decreased greatly• Absolute rulers overthrown• Rise in new democracies• Rise of ineffective coalition

governments

Paris 1915

The Weimar Republic

• Germany’s new democratic government set up in 1919

• Serious weaknesses from the beginning– Germany lacked a strong democratic tradition

(many political factions)– Germans blamed the Weimar Republic and not

the leaders for the country’s defeat and humiliation associated with the Treaty of Versailles

– Economic issues

Inflation in Germany

• Worthless paper money after WWI • To pay war reparations Germany simply

printed more money• Severe inflation set in-a general rise in the

prices of goods and services over a given period of time– Bread cost 200 billion marks (German currency) in 1923.

German woman burning the German Mark as opposed to firewood. The

firewood was more valuable than the German currency.

German children (and dog) playing with bundles German currency.

Dawes Plan

• Germany recovered from the 1923 inflation by the Dawes Plan:– An American banker provided $200 million loan to

stabilize Germany’s currency and strengthen the economy

– By 1929 Germany’s factors had resumed pre-war production levels

Lasting Peace?• Foreign ministers of both Germany and France

meet in Locarno, Switzerland and signed a treaty promising never to make war against the other again, “Spirit of Locarno.”

• 1928-US Secretary of State initiated the Kellogg-Briand peace pact with almost every nation in Europe including the Soviet Union to renounce war– Problem-unfortunately the treaty had no means of

enforcement because the League of Nations lacked a military force

The Great Depression • Prosperity of the 1920s in the US sustained the world

economy; however troubled loomed as unaware Americans invested and consumed based largely on speculation

• On October 29, 1929-Black Tuesday-the stock market crashed and the US economy toppled dragging the world’s economies down with it

• The Great Depression as it became known lasted until the outbreak of WWII and no nation was left untouched– Millions lost their jobs, possessions, and the world lost the US

consumer market

Worldwide Depression

Effects Around the World• Due to war debts and dependence on American loans and

investments Germany and Austria were especially hard hit• New democracies were challenged and often blamed for the

economic situation• Both Britain and France were able to maintain democratic

governments• In the US, President Roosevelt (FDR) enacted the New Deal in

order to help stabilize the American economy• Citizens in Germany and Italy lost faith in their governments

and turned to fascism• Opposing ideologies developed and it became clear that the

Treaty of Versailles would not be enough to maintain a lasting peace.

Future Fascist leaders

Benito Mussolini (Italy) Adolf Hitler

(Germany)