9-1 The Futile Search for Stability

PROBLEMS AFTER THE WAR

1. border disputes among new and existing countries (Eastern Europe)

2. Germans bitter about the terms of the Treaty of Versailles
3. The economy was bad
1. Inflation
2. Depression
3. Trying to recover from war

LEAGUE OF NATIONS

• Started by Woodrow Wilson

• Supposed to be used to keep peace

• It was a weak organization

– The US decided not to join (wouldn’t sign the Treaty of V)

– Wouldn’t or couldn’t use force against those who broke international law

FRENCH DEMANDS

• France’s goal: make sure they would be secure

– This was done by making sure the TofV was followed

• Allied Reparations Committee: decided how much Germany owed

– Germany had to pay France 2.5 billion marks a year

– After the first year, Germany was broke

THE RUHR VALLEY

• When Germany couldn’t pay any more, France got mad

• They sent troops in to take over the Ruhr Valley

– This was where all the big factories and mines were

• This way, they could make the money that Germany owed them

GERMANY AND INFLATION

• INFLATION: when prices rise

• In Germany, inflation had begun before the war ended

• After the French took their money and the Ruhr Valley, the German workers went on strike

• To pay the salaries of the workers, the government printed more money

• Money is usually backed by Gold. Because the country was broke, they didn’t have gold to support their money, so when they kept printing more, it became worthless.

• In 1919, one dollar was worth 9 marks.

• By 1923, it took 4.2 trillion marks to buy 1 dollar

• As money became worth less, the prices began to rise even more

HELP IS ON THE WAY

• THE DAWES PLAN

– An international commission create this plan to help save Germany

– It reduced reparations

– Made plans for payments that Germany could deal with

– Gave a $200 million dollar loan

*led to increased investment in Europe, and a period of economic prosperity

TREATY OF LOCARNO

• France and Germany came together to decide their borders

• It was seen as “the beginning of a new era of cooperation”

• Led to Germany joining the League of Nations

• The problem? No country except Germany was really reducing their armies or doing any of the peace time things everyone was expected to do – and Germany only did because they had to.

THE GREAT DEPRESSION

What is a depression?

• A period of low economic activity and rising unemployment

• Basically, it’s when there isn’t enough business to keep people in jobs, and overall the economy is bad.

• Overall, the economy is most countries wasn’t doing that well.

CAUSES OF THE DEPRESSION

1. Overproduction=lower prices; less money is made

2. The Stock Market crash of 1929

• US loans to other countries helped them out

• US investors start putting more money into the stock market than other countries

• After the crash, investors pull out even more money out of Europe

• Banks everywhere collapsed

THE DOMINO EFFECT

• When the US economy goes, we pull our money out of other countries, and we demanded that other countries pay us back.

• Those countries had depended on our money to keep their economy up

• So when ours goes, theirs goes too.

• Banks closed, businesses closed, so millions were out of work.

RESPONSES TO THE DEPRESSION

• People began looking for a strong leader that would solve their problems

• Governments created programs to boost the economy and create more jobs

– Government got more involved, raised wages, imposed tariffs.

– None of it really worked

• Communism and Marx’s ideas began to look very good to many people

• FDR started the New Deal, a program to fix the economy

• It provided job training and government jobs, along with social security and welfare.

• In the US, the depression was made worse by droughts and over farming