Worldwide Economic Struggles in the Interwar Period

Summary

This video explores the global economic struggles during the interwar period, focusing on Germany's post-WWI financial crisis and the Great Depression. It covers Germany's hyperinflation, caused by war reparations and printing excess money, and the temporary relief brought by the Dawes Plan. The Great Depression, triggered by the 1929 U.S. stock market crash, spread worldwide, causing unemployment and economic downturns. Countries responded with policies like protectionism, increased regulation, and deficit spending. The video highlights how these efforts, including Roosevelt's New Deal, helped alleviate the crisis but only World War II ended the depression.

Takeaways

• 🌍 Germany faced severe economic challenges after World War I due to huge reparations payments, leading to hyperinflation.
• 💸 Printing more money to solve inflation worsened the value of the German mark, making it almost worthless by 1923.
• 🔥 In some cases, German citizens used money for fuel because it had become more valuable as material than currency.
• 📉 The Dawes Plan of 1924 aimed to ease Germany’s financial burdens by reducing reparations and providing American loans, leading to a short period of recovery.
• 📜 The Treaty of Locarno and Germany's entry into the League of Nations temporarily improved its international standing in the late 1920s.
• 📊 The Great Depression, beginning in the U.S. with the 1929 stock market crash, led to worldwide economic downturns.
• 🚜 Agricultural overproduction, particularly of wheat, drove down prices and contributed to the Great Depression.
• 📉 As U.S. investors withdrew capital from Europe, many banks and industries collapsed, deepening the depression.
• 🏛️ Governments responded to the crisis by increasing economic regulations, moving away from previous laissez-faire policies.
• 🇺🇸 In the U.S., Franklin Roosevelt's New Deal created programs aimed at economic recovery, although it was ultimately World War II that ended the Great Depression.

Q & A

What economic problems did Germany face after World War I?

Germany faced severe financial problems due to reparations payments required by the Treaty of Versailles, which amounted to the equivalent of half a trillion dollars in today’s money. This led to inflation and a devaluation of the German mark, making the currency nearly worthless.

How did Germany initially respond to its financial crisis in the early 1920s?

Germany responded by printing more money, which worsened the inflation problem. The German mark lost value rapidly, leading to hyperinflation where the currency became essentially worthless.

What was the Dawes Plan, and how did it help Germany?

The Dawes Plan was an arrangement where reparations payments were reduced, and loans were provided to Germany by American banks. This helped stabilize the German economy temporarily and allowed Germany to repay the Allies, who in turn repaid their debts to the United States.

What caused the Great Depression, and how did it spread worldwide?

The Great Depression was triggered by several factors, including economic downturns in individual nations, agricultural overproduction, and, most significantly, the U.S. stock market crash of 1929. It spread globally as U.S. investors withdrew their money from Europe, leading to bank collapses and economic declines in several countries.

How did countries attempt to respond to the Great Depression?

Countries responded by cutting costs, raising tariffs to encourage domestic production, and implementing greater government regulation. However, these measures often worsened the crisis, as international trade decreased, production declined, and unemployment rose.

What was the New Deal, and how did it aim to address the Great Depression in the United States?

The New Deal was a series of government programs introduced by President Franklin D. Roosevelt. It focused on government intervention, creating jobs, regulating businesses, establishing a social security system, and insuring banks to restore confidence in the financial system.

Why did the New Deal not completely end the Great Depression in the United States?

While the New Deal alleviated some of the pressures from the Great Depression, it did not fully resolve the crisis. It was only with the outbreak of World War II and the subsequent increase in production that the U.S. economy fully recovered.

How did the Great Depression influence political movements in Europe?

The Great Depression led to a loss of confidence in democratic governments, particularly in countries like Germany and Italy. As a result, people turned to political leaders who offered simple solutions to complex economic problems, such as Mussolini in Italy and Hitler in Germany.

What impact did the Great Depression have on agricultural production and prices?

Agricultural overproduction, particularly of wheat, caused prices to fall, leaving farmers unable to earn enough to sustain their operations. This further worsened the economic situation, especially in rural areas.

What role did the stock market crash of 1929 play in the onset of the Great Depression?

The stock market crash of 1929 was a key event that led to the Great Depression. The collapse in stock prices caused widespread financial losses, leading U.S. investors to pull their funds from Europe, causing banks to fail and exacerbating the economic downturn in both the U.S. and Europe.

Outlines

00:00

🌍 Economic Struggles in Germany After WWI

This paragraph discusses the economic challenges Germany faced after World War I, including paying massive reparations. In response to Germany stopping payments, France occupied the Ruhr Valley. Germany tried to manage its inflation by printing more money, which only worsened the issue. By 1923, the German mark had become almost worthless, leading to stories of hyperinflation, such as people burning money for warmth and using wheelbarrows to carry their salaries. The Dawes Plan, introduced by the U.S., helped reduce reparations and provided loans to Germany, leading to a brief period of recovery in the late 1920s.

05:00

📉 The Onset of the Great Depression

This paragraph introduces the Great Depression, a period of low economic activity and rising unemployment, which began in the United States and spread worldwide. Key causes include economic downturns in various nations, agricultural overproduction, and the 1929 U.S. stock market crash. As U.S. investors withdrew their funds from Europe, banks collapsed, trade declined, production dropped, and unemployment soared, leading to the worst economic depression in modern history. Countries struggled to respond, with many enacting policies that only worsened the crisis.

10:00

🛠️ Global Responses to the Great Depression

Governments around the world struggled to address the economic devastation of the Great Depression. Traditional approaches, like cutting costs and raising tariffs, only deepened the crisis. In response, many nations, including the U.S. under President Franklin D. Roosevelt, began regulating their economies more heavily. The New Deal in the U.S. introduced policies like public works programs and social security to restore confidence. Meanwhile, Marxist ideas gained traction among workers, and in countries like Italy and Germany, leaders like Mussolini and Hitler rose to power by offering simple solutions in exchange for authoritarian control.

🇺🇸 U.S. Efforts and the Rise of Deficit Spending

The final paragraph focuses on how different nations responded to the Great Depression. France experienced political instability, Britain saw the Conservatives take power, and the U.S. implemented Roosevelt’s New Deal. This program involved government intervention, such as creating jobs, setting up welfare, and establishing Social Security. While the New Deal alleviated some economic pressure, it didn’t fully end the Depression. It was the outbreak of World War II that ultimately pulled the U.S. out of the Depression as industrial production surged to support the war effort.

Keywords

💡Great Depression

The Great Depression was a severe worldwide economic downturn that began in the United States in 1929 and spread globally. It is marked by low economic activity and rising unemployment. In the video, it is explained how the stock market crash and other factors led to the economic collapse, and how different countries responded to it. The depression is central to the video's theme of economic struggles between World War I and World War II.

💡Reparations

Reparations refer to the payments Germany was required to make after World War I to compensate Allied nations for the damage caused during the war. In the video, these payments are described as a significant financial burden on Germany, contributing to its economic troubles. The difficulty in paying these reparations led to inflation and political instability.

💡Hyperinflation

Hyperinflation is an extreme and rapid increase in prices, causing a currency to lose its value. In the video, it is highlighted how Germany faced hyperinflation after World War I due to the excessive printing of money to cover war reparations. An example given is that by 1923, the German mark became virtually worthless, with people needing wheelbarrows of money to make basic purchases.

💡Dawes Plan

The Dawes Plan was a financial plan introduced in 1924 to help Germany stabilize its economy and manage its reparation payments. It involved reducing the payments and giving Germany loans from American banks. The video explains that this plan led to a temporary economic recovery in Germany and is an example of international efforts to alleviate the post-war economic crisis.

💡Stock Market Crash of 1929

The Stock Market Crash of 1929 was a key event that triggered the Great Depression. It refers to the sudden and severe fall in stock prices in the United States. The video emphasizes this crash as the monumental event that caused the U.S. economy to collapse, affecting global financial markets as investors pulled out of European economies, including Germany.

💡New Deal

The New Deal was a series of programs and reforms introduced by U.S. President Franklin D. Roosevelt in response to the Great Depression. The video explains that the New Deal aimed to stimulate economic recovery by creating jobs, regulating businesses, and establishing social welfare systems. While it helped alleviate some of the economic pressures, it did not fully end the Depression.

💡Laissez-faire

Laissez-faire refers to a hands-off approach to economic policy where the government does not interfere in the market. In the video, it is mentioned that many countries, including the U.S., practiced this policy before the Great Depression. However, during the economic crisis, governments shifted to more active intervention, as seen with Roosevelt's New Deal in the U.S.

💡Agricultural Overproduction

Agricultural overproduction occurs when farmers produce more crops than can be sold, leading to a drop in prices. The video discusses how this was one of the causes of the Great Depression, particularly in the U.S. where the overproduction of wheat led to falling prices. Farmers couldn’t earn enough to cover their costs, which contributed to the economic downturn.

💡Weimar Republic

The Weimar Republic was the democratic government of Germany after World War I, before Hitler’s rise to power. In the video, it is described as being politically unstable, facing leadership challenges, and struggling with economic problems, especially during the Great Depression. The Weimar Republic's inability to effectively manage these issues contributed to the rise of extremist leaders like Hitler.

💡Tariffs

Tariffs are taxes imposed on imported goods to protect domestic industries. The video explains how, during the Great Depression, many countries, including the U.S. and Britain, raised tariffs to encourage domestic production. However, this policy worsened the economic crisis by reducing international trade, leading to further economic decline globally.

Highlights

Germany faced severe financial problems after World War I due to reparations, leading to hyperinflation.

France occupied the Ruhr Valley in response to Germany stopping reparation payments, leading to tensions.

Germany attempted to solve its financial issues by printing more money, causing hyperinflation and rendering the German mark nearly worthless.

By 1923, the German mark had collapsed, with 120 billion marks equal to one U.S. dollar.

The Dawes Plan provided U.S. loans to Germany, helping it recover temporarily from the economic crisis.

Germany's temporary recovery in the late 1920s included joining the League of Nations and signing the Treaty of Locarno.

The Great Depression began with the 1929 U.S. stock market crash and spread worldwide, leading to rising unemployment and economic collapse.

Agricultural overproduction in the U.S. and other countries caused falling prices, worsening the economic downturn.

The U.S. stock market crash in 1929 triggered the withdrawal of investments from Europe, further destabilizing economies.

Countries responded to the Great Depression by cutting costs, raising tariffs, and increasing government regulation, but these measures often worsened the situation.

The New Deal in the U.S., led by Franklin Roosevelt, introduced government intervention in the economy to create jobs and establish social welfare programs.

The Great Depression led to renewed interest in Marxist ideologies and communism, especially among workers and intellectuals.

In countries like Germany and Italy, people supported political leaders like Hitler and Mussolini who offered simple solutions to the crisis.

The Weimar Republic in Germany faced economic and political instability during the Great Depression, leading to a crisis of confidence in democratic governments.

The New Deal did not fully end the Great Depression, but World War II eventually revived industrial production, helping the U.S. and other nations recover.

Transcripts

hey world civilizations mr lasseter with

you today

and we're going to be looking at

worldwide economic struggles in the

interwar period

basically this is a fancy way of saying

we're going to look at

economic problems and the great

depression

between world war one and world war ii

here are video goals for today we want

to look at what economic troubles face

germany after world war one

and also look at how they overcame them

albeit temporarily

we want to find out what the great

depression was and

more importantly how countries responded

to the great depression

take a look at our vocabulary we will

make sure we understand what all these

terms are by the end of the video

so let's start with economic troubles

that face

germany after world war one

keep in mind that germany had to pay uh

the equivalent of something like half a

trillion dollars in today's money

uh as reparations for the war and they

began

paying these in 1921.

understandably this caused severe

financial problems

and these were evident excuse me by the

next year

france in response to germany stopping

their payments decides

to occupy a part of germany called the

rural rur valley

uh and so they took over the mines and

factories there

in order to try to make some of the

money that reparations

uh should be should be sending their way

um and so this was this was kind of

controversial it was um

certainly not ideal in what

everyone wanted to be a peaceful world

germany dealt with some of their

problems and their

their in the inflation that was starting

in german they dealt with it by printing

more money um but hopefully you know or

maybe you'll know

now that printing more money does not

solve financial problems

in fact it makes the money that's

already out there worth

much less so pretty soon the german mark

which was their their uh form of the

dollar

was pretty much worthless and inflation

ran absolutely wild

in 1914 when world war one started

it took 4.2 marks to make one u.s

dollar so basically a mark was about

equal to a quarter

by 1923 it took a 120

billion marks to every u.s dollar

and by the end of that year it was

something like a trillion so

keep it basically was simply worthless

in fact in this image you can see a

woman

burning her worthless money for heat

because

it just simply won't buy anything

the note that you see at the bottom

there is a

50 million mark note but as we know by

the end of 1923 that would not even be

worth

one dollar there are also other stories

for example

people getting paid and having to carry

their pay home in wheelbarrows because

they had so many of these

marked notes um but they had to they had

to

um they were they were worthless so they

had paid so many more

it would just you know what have you um

there's another story

whether true or not i think it's a funny

story that a woman

uh was was paid had her money in a giant

bucket outside her house and just

left and left it there and when she came

back the money was still there but the

bucket was missing

because the bucket was more valuable

than the currency

but these economic troubles of course

are going to lead to political troubles

as well in germany

so the world kind of gets together and

some people in the united states come up

with

a plan to help germany and this becomes

known as the dawes

plan and it basically reduced

reparations

and planned out how germany could pay

back these other nations

it also provided loans from american

banks to germany

to help them through the situation and

you see here to the right

uh the dawes plan basically the allies

owed a lot of money to the united states

the united states then provided a lot of

loans to germany

who intend could pay back the allies um

so this was

this was the plan to kind of help

germany through the situation

and so it leads to a brief period of

recovery and prosperity in

in germany uh in the latter half of the

1920s

in addition to this germany and france

ended up signing the treaty of lucarno

which settled their western border

disputes

and germany even joins the united the

league of nations

and later 63 nations decide to renounce

war as an instrument of national policy

so these are all things that were

pointing to

to kind of what might be a really good

situation in the world

they had overcome some problems about

the end of the 1920s a decade after the

war

man things are looking good but that

prosperity is going to be short-lived

and the reason being is because on the

horizon is the great depression

now depression is a period of low

economic activity

and rising unemployment in a nation

um and usually it's kind of for a

prolonged time period

the great depression with capital g

capital d

here begins in the united states and it

will spread

worldwide and there are several major

causes which you need to know

first of all there are several downturns

in the economies of individual nations

so just struggles is

demand goes down for certain goods and

so people are not buying as much

and if people are not buying as much

then that might lead to a company

cutting jobs and more people becoming

out of work

secondly agricultural overproduction

especially of

wheat causes falling prices in the

united states and in other nations

and so farmers are not able to get the

prices they need

for their their uh for their uh

agricultural products

and when this happens that that can

cause an

even greater uh struggle is now the

farmers don't have enough money to buy

the things they need

and becomes a chain reaction but the big

monumental event that caused this great

depression

is the crash of the united states stock

market in 1929.

so the united states had kind of

believed in the stock market and that it

was going to keep going up and

up and up and up and then finally

it tumbles and so the u.s economy

crashes

and u.s investors then in order to try

to gain some money back

and help themselves out over here in the

u.s withdraw

their investments from germany and other

european states

and because these investments are

withdrawn those nations become

weakened major banks collapse in several

countries

including the united states people make

a run on banks and try to get all their

money out and they basically can't

and as a result of this we see all these

nations trying to take measures

to to fix the problem and so trade

decreases between nations

as they try to uh instead of importing

goods from other countries they try to

make them at home

production is going to decline because

people don't have the money to buy these

goods

and unemployment is going to rise

all of these things combined uh really

make the great depression the the worst

depression

in in history or in our

recent history so what were some of the

responses to the great depression

well for the most part countries in

europe and the united states had

experienced depressions before but they

had never

experienced one quite as bad as this and

so

governments didn't know how to deal with

this crisis they try to cut costs

they try to raise tariffs to encourage

goods being made

within their countries but that only

makes the economic

crisis worse so governments then begin

to

increase economic regulation and this

can be seen in the united states as fdr

passes or puts through the new deal and

creates policies for

regulation of businesses etc and this

was a big

change because for the most part many of

these european nations and the united

states had practiced

a hands-off laissez-faire policy

there was also in these countries a

renewed interest in those

marxist ideals of communism

um and so these march 6 marxist

doctrines um came about or

were especially championed by workers

and intellectuals

who hoped that this would create a more

equal society and solve the financial

crisis

and in some countries like italy and

germany

and argentina and brazil masses of

people begin to

follow political leaders who offer very

simple solutions

in return for a lot of power and this is

scene with mussolini

and hitler especially

so what of these democratic states after

world war one how did they deal with

this crisis and what was

what was happening um so in the 1920s

keep in mind europe seemed to be

returning to trends of parliamentary

democracies and the growth of individual

liberties

they kind of passed this time period of

kings and chancellors

and hugely large powerful leaders

and that journey was not an easy process

for example in germany the weimar

republic you see the the enzyme of it

there

faced a lack of leadership they had

didn't have really strong political

leaders

and of course all these economic

problems germany was hit hardest

by the depression in france they also

had many problems from this great

depression

in fact they had several reforms that

were pushed by communist socialists and

radicals in their country

they formed six different cabinets

trying to solve

economic issues and so it really leads

to a crisis of confidence

in those governments in great britain

the party in charge the labor party fell

out of favor and the conservatives come

into power in britain they try to

balance the budget

they set up protective tariffs and try

to wait out this depression

but the one you might be most familiar

with is the united states

whereas industrial production fell by 50

percent in

unemployment skyrocketed to about 12

million people

the united states turned to a democratic

president

franklin roosevelt who set up a program

of government intervention and this was

known as

the new deal it put people to work

and established a welfare system

established a social security system

it established bank holidays and it set

up insurance

for uh the elderly it set up bank

insurance to protect

uh people's money in uh in the banks so

the fdic which insured everyone's money

up to i think nowadays it's like 200 000

or something along those lines but this

was to get people more

confident in the government and to put

people to work

that was the big idea and so they

actually spent more money than than the

u.s had in his treasury it was called

deficit spending

we may talk more about that in the

future

so these all kind of alleviated the

pressure in the united states

from the great depression but it would

really take world war

ii to pull the united states out of the

depression completely

so the new deal does not end the great

depression but it kind of gets the us

through it when world war ii breaks out

production in the united states

will begin to grow again and the united

states

will exit world war ii along with many

other nations

exit the great depression excuse me here

are your video goals make sure you get

them

and have a good day