Interwar Period Flashcards
The Interwar Period
A period of uneven prosperity in the decade following World War I the 1920s (“Roaring 20s”) was followed by worldwide economic depression in the 1930s
Europe Following World War One
Across the fronts of battle, Europe was left devastated
Much of the infrastructure within France, Belgium, Germany, and beyond was destroyed in the war
Reminder: who would be responsible for paying for ALL of the damages?
Influenza Pandemic (aka The Spanish Flu)
Pandemic from 1918-1920 that infected 1⁄3 of the World population
● Killed ~50 million people (2x the amount killed in WWI)
Problems in Europe during the Interwar Period
● Only Japan and USA in better shape after WWI
● New democracies formed after WWI not in good shape
● France has 40 government changes between 1919 -1939
People are suffering and dissatisfied with their governments responses because of this people are open to new approaches to governing
The Weimar Republic
Democratic republic established following the fall of the German Monarchy
Plagued by unstable governments and economic issues
Germany’s Economic Woes
The punishment of Germany goes too far and cripples their post-war economy
Hyperinflation occurs
German money is worthless (when the general price level rises, each unit of currency buys fewer goods and services)
Hyperinflation
Rapid, excessive, and out-of-control price increases in an economy
Leads to simple goods beings sold for extraordinarily high prices
● $200 Billion loaf of bread
Who feels the largest impact of hyperinflation?
It’s “everyday” people!
People’s life savings rapidly become worthless
Imagine that you were saving up to buy a house… suddenly you can barely buy any food with that money
Germany’s Economic Woes
● Weimar Republic formed in Germany
● Blamed for defeat in WWI and signing of
Treaty of Versailles
● Germany owes $33 Billion in war
reparations
● People’s life savings are now worthless
● US bails Germany out with the Dawes Plan-
US loans to Germany
● Problem— when US $ goes away?
Germany’s Economic Woes
US bails Germany out with the Dawes Plan- US loans to Germany
● A new currency, the Reichsmark, was introduced
● Reparation payments are temporarily lowered while German
economy recovers
● US loans money to Germany to rebuild economy and pay
reparations
Problem: What happens if US loans disappear?
Meanwhile in the United States…
● 1920s are “roaring”
● Time of great prosperity
● Many cultural changes occur
○ (Certain) women attain the right to vote
○ Consumer-oriented economies and mass entertainment take hold
Roaring Economy
● Stock market is strong
● Get rich quick schemes
● 80% of population has no savings
● The economy looks like it will never stop growing…
What Could go Wrong?! The Hidden Economic Dangers
● Banks are uninsured
● No government agencies monitor banks or the Stock Market
● Market value based on borrowed $ and over speculation
instead of real value
● Increase in personal debt – (Credit debt and installment plan
debt)
Buying Stocks on Margin – borrowed money from Stock Broker to purchase Stocks
The Great Depression
The stock market crash was just one cause of the global economic downturn which became known as the Great Depression
Other causes included:
● Overproduction
● The expansion of credit
● The linked economies due to war
reparations
The Great Depression
Economic issues are compounded by crop failures in the prairies
Huge growth in unemployment and homelessness
● “Shantytowns”
