To what extend did WW1 contribute or cause the Great Depression? Flashcards
1
Q
To what extend did WW1 contribute or cause the Great Depression?
A
- War-Induced Economic Instability
o debt accumulation due to financing war
o heavy reparations - Germany - pay massive reparations through borrowing and defaults, and hyperinflation = created instability - Weakening of GS
o Rise of US as creditor after WW1 - europeans owed a lot to the US so strained Euro economies when US started recalling loans in 20s
o Trade imbalances and protectionism - to shield their economies after WW1 distrupted global trade - worsened situation - Post-war Economic policies and financial fragility
o Dependence on US capital and loans - Europe depended on US capital to stabilise its finances - US tightening mon pol made credit less available so financial instability
o fragile banking systems - due to war debts and inflation - Psychological and Social Effects of the War -
o loss of confidence and social upheaval - weakened consumer confidence and disrupted labour markets
o Political Radicalism and Instability - due to economic hardship, and worsened Great Depression
