Great Depression in Europe

1
Great Depression in Europe

• By Maxwell Studley, Courtney Adelman, Cassidy
  Sullivan

2
Introduction to the Great Depression of the
Interwar Period

• Lasted 1919-1939
• The great depression during this time period
  would result in economic crisis and political
  change.
• Conditions of the Depression would bring people
  to reconsider, the effectiveness and
  sustainability of democratic institutions.
  Digital History Reader
• Events of the Depression would show how
  interconnected and dependent economies had become
  upon one another
• It is commonly agreed on that the Great
  Depression in Europe was a result primarily due
  the factor of the American stock market crash
  which would move o the rest of the world
• All major factors contributing to the
  depression can be traced back to the United
  States of America. Dietmar Rothermund

3
Factors of the Beginning

• The great depression would come to affect Europe
  as a result of the interaction of complex
  political, economical, and social factors
• 1. Economic impact of the Great War WWI
• The events of the war led to the disruption of
  normal actions of domestic, international trade,
  and the undermining of the economic financial
  strength of the old world of Europe. Countries
  methodized the printing of money in order to
  charge war efforts. However, this led to high
  inflation and rising prices. These complications
  would leave the governments of Europe in a
  position where they would have to act in order to
  instill means of deflation to preserve their
  countries finances.
• 2. Economic and Geo-Political dislocation caused
  by the war
• Major components of this factor would include
  the Russian Revolution, the collapse of the
  Ottoman Empire, and particularly the incidents
  that affected the Austro- Hungarian Empire. This
  led to major economic dislocation and political
  instability. Originally newly forming nations
  where used as free trading zones along the
  continent however, this was diminished after
  those particular nations set up barriers in
  order to instill customs of trade and certain
  restrictions.
• 3. Collapse of the Gold Standard
• During WWI countries printed money in order to
  fund their war efforts. As result of printing
  money they had to in return back up the value to
  the quantities in the reserves. This is what led
  to inflation of the prices. As a result
  governments where forced into a position where in
  order to return to the gold standard they had to
  deflate the prices by lowering them. Overall, the
  restriction of the gold standard resulted in the
  lack of foundation of Europe to pursue best
  economic avenues of prosperity for all nations.
  Instead nations acted towards only their best
  interest.
• 4. Global financial imbalances and German war
  reparations
• It is argued that the winners of WWI should have
  established operations that would function
  towards the restoration of balance in the
  continent by supporting economic reconstruction
  and cooperation for the greater good of all. In
  reality European victors of the war demanded that
  it was the losers responsibility to fund the
  operations to repair the damages caused. However,
  these countries such as Germany didnt have
  sufficient funds to put towards these demands.
• 5. U.S. stock market bubble and crash of 1929
• In accordance with the events of WWI America had
  become the financial pillar, in which the world
  had become dependent on. With the banks being
  unable to provide credit without demanding extra
  the economy came to a slowdown. On the morning of
  October 29th 1929 the Dow Jones Industrial Index
  plunged. As business were forced to sell for less
  they consumed capital that was intended for
  Europe to cover losses and reparations of the war
  which would devastate the economies heavily
  dependent on this variable.
• 6. Lack of global financial leadership and
  application of mistaken economic policies
• This can be summarized into two components
• 1st what wasnt done by the victors or they
  lack of initiative to enact means of restoration
  upon Europe.
• 2nd what wasnt done by Britain and U.S. in
  response to the crash of the stock market and
  when economic activity started to decline

4
France

• Conditions of France as a result of the Great
  Depression in Europe during the interwar period
• Lasted form about 1929 to 1939 or 1940
• They had an difficulties in recovering war
  reparations after WWI from Germany.
• France was one of the last countries to become
  afflicted by the impact of the Great Depression.
  This was a result of Frances self-sufficient
  derived from its ability to rely on the
  agricultural base of the economy.
• By 1929 had become recognized as, island of
  prosperity, this was a result of three
  particular factors.
• 1st Frances tradition of being wary of big
  companies and trusts relationship where
  prosperity is held by over party for benefit of
  another
• 2nd The economy of France was founded on small
  and medium sized businesses not financed by
  shares or investors.
• 3rd French invested little on stock exchange and
  put their confidence in the gold
• With the signing of the Treaty of Versailles in
  1919 France would begin to receive war
  reparations from Germany.
• 1927 worlds largest holder of gold 18 billion
  Francs in 1927 to 80 billion Francs in 1930
• As a result of the American stock market crash in
  1929 tourism began declining in France
• 1930 France would become the worlds leading
  producer in iron
• When French workers lost jobs they found other
  means of producing income commonly by working in
  agriculture
• 1932 sharp increase of unemployment out of 40
  million less than ½ million found themselves
  without work even at the worst of times.
• Pierre Laval installed provisionally deflationist
  policy 1935 to reduce salaries in effort to
  lessen unemployment
• The reduction of salaries resulted in a decrease
  of activity in small businesses
• February 6th 1934 fall of old government, now
  Socialist Popular Front Government governs
  France. They were officially established in 1936
• President Lebrun called Edouard Daladier to form
  new government without socialists that relied on
  liberal economics
• Defaulted war debts primarily with the united
  states in 1934

5
Germany

• Weimar Republics or Second Reichs economy was
  heavily dependent on the huge loans provided by
  the U.S. These loans where outlined in the Dawes
  Plan in 1924 and the Young Plan in 1929. These
  funds were introduced into the economy by paying
  off war reparations and helping reconstruct the
  nation.
• By the end of 1929 the government was bankrupt
  and incapable of lending money
• Unemployment affected nearly every German family
  just six years after the last major economic
  disaster
• With no means of providing for their families the
  majority of those who were unemployed the men
  sought assistance and was provided with means of
  guidance from the Nazi and Communist Parties of
  Germany.
• 1922, hyperinflation crisis as Germany printed
  more money pay reparations the value of that
  money went down forcing them to pay more money.
  This is a cycle that would continue and repeat
  itself.
• As a result of hyperinflation the German Marks
  became practically worthless money.
• Prices for everyday items skyrocketed
• Actually fed fireplaces to cook and heat with the
  worthless bank note
• Layoffs as German businesses couldnt maintain
  staff and loss profit from sales
• Collapse of German banks in 1931 acted as the
  initiation of the depression
• 1932, Germany defaulted on war reparations

6
Great Britain

• Known as The Great Slump
• Broke out as still trying to recover from WWI
• Economic output fell 25 between 1918 and 1921
• Lasted 20 years from 1918 to 1938
• By funding war effort of WWI with foreign assets
  net loss of 300 million pounds
• Had to operate merchant operations with only 60
  of original merchant feet after losses of WWI
• British products in the motor and electrical
  industries were not good enough to challenge
  others like them in the market
• Little chance of Britain being able to gather
  capital in order to recharge the overseas
  investments
• 1921 began slow process of economic recovery
• April 1925, Winston Churchill restored the Pound
  Sterling and rate of 4.86 U.S. dollars
• However this made British exports more expensive
  on world markets
• Britain would recovery slowly from the depression
• May 1926 General Strike people were unhappy as
  their wages were trying to be cut to compensate
  for high exchange rate
• Throughout 1920s unemployment stayed steady at
  one million
• By the end of 1930 unemployment had more than
  doubled from 1 million to 2.5 million 20 of
  workforce
• Exports fell in value by 50
• Industrial areas hardest hit northern England ,
  South Wales, and central Scotland also included
  coal mining, London and Southeast were impacted
  the least.
• 1933 30 of Glaswegians citizens of the largest
  city in Scotland Glasgow were unemployed due to
  decline in large industry
• Sept 10th 1931 in order to balance budget issued
  an emergency budget, public sector wages and
  unemployment pay were cut by 10

7
Austria

• The crisis began when Boden-Kredit Anstalt also
  referred to as the Creditanstalt, or the most
  important bank in Austria and Eastern Europe had
  to merge with Oesterreichische-Kredit-Anstalt
  after attempts of the banks redemption by both
  the the Austrian government and other banks had
  failed.
• March 1931, Austria claimed customs union with
  Germany, but as a result the French ordered that
  they were entitled for there banks redemption
  and as a result the bank collapsed.
• Austria declared national bankruptcy by deciding
  to leave the gold standard.
• It is considered that the collapse of the
  Austrian banks is what was the spark that ignited
  the Depression in Europe.

8
Italy

• After 1929 was affected by slowdown in economic
  activity.
• 1931, unemployment had reached significant
  levels.
• Even with events of the Depression the regime was
  not weakened as a result.
• 1937, Economic activity recovered but their were
  still high amounts of unemployed citizens.

9
United States of America

• Began with the stock market crash of the New York
  Stock Exchange in October 1929
• Lasted from 1929 until 1939
• 1932, U.S. stocked had reached a level where the
  stocks had dropped to only 20 of their values
• Banks were forced into insolvency
• 1933, 11,000 of 25,000 of American banks failed
• With a reduced level of spending in 1932 U.S.
  manufacturing fell to 54, unemployment had risen
  to 12 and 15 million or 20-35 of the work
  force.
• Human conditions that were affected in the Great
  Depression were homelessness, unemployment,
  hoovervilles, shack villages, named after Hoover
  who they believed was responsible for their
  condition Dust Bowl, starvation, and illness
• No food was being rationed for people who
  couldnt afford it.

10
Conclusion

• The end of the global depression was a result of
  capitalist societies reforming to incorporate
  socialistic practices. These included welfare and
  government stimulus programs.
• As WWII drew closer nations managed to stimulate
  economic activity as the governments worked to
  increase their militarys strength with armament
• It can noticed that all the nations suffered
  from conditions that resemble one another
  throughout Europe during this time period
• This is the movie it shows some of the
  conditions of the Depression http//www.youtube.co
  m/watch?vv85I0qOI7wAfeatureBFalistPLD6E1A9C85
  B77EC1C

11
Questions

1. What were the factors that led to the depression
   affecting Europe?
2. What were at least three reasons that France was
   among the last nations to be affected by the
   depression?
3. What made Germany so heavily dependent on U.S.
   loans?
4. Name the top three worst economic conditions in
   Great Britain during the depression.
5. What happened in Austria that was viewed as a
   spark of the depression?
6. Why was Europe affected by the stock market
   crash?

12
Bibliography

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