ECONOMY in the INTERWAR Period [AP World History] Unit 7 Topic 4 (7.4) [REUPLOAD]

Summary

In this video, Heimler discusses the economic struggles during the interwar period following World War I. Nations, including Germany, the Soviet Union, Mexico, and the U.S., faced severe economic downturns, leading governments to step in with various intervention strategies. Key figures like John Maynard Keynes, Franklin D. Roosevelt, and Joseph Stalin introduced policies such as deficit spending and industrialization plans. The video also explores the rise of fascism in Italy, Germany, and Brazil, where governments took strong control over their economies. Ultimately, these economic challenges set the stage for further global tensions leading into World War II.

Takeaways

• 😀 After World War I, global economies struggled due to war expenses and lost workforces, leading to a widespread economic downturn.
• 😀 Germany was particularly impacted by the Treaty of Versailles, having to pay massive reparations, which led to hyperinflation in the early 1920s.
• 😀 By 1923, the value of the German mark plummeted, with 1 dollar being exchanged for 4.2 trillion marks, and everyday goods like bread becoming unaffordable.
• 😀 The global economic crisis was compounded by the United States' stock market crash in 1929, which triggered the Great Depression worldwide.
• 😀 Economists like John Maynard Keynes argued that government intervention was necessary to stimulate economies, rather than relying on the self-correction of markets.
• 😀 Keynes advocated for deficit spending to 'prime the pump' of the economy, meaning governments should borrow money to jumpstart economic recovery.
• 😀 In the U.S., President Franklin D. Roosevelt’s New Deal implemented government-funded public works to create jobs and combat the Depression, though its exact effectiveness remains debated.
• 😀 In Russia, Lenin introduced the New Economic Plan to revive the economy by reintroducing private trade, which was later abandoned after his death.
• 😀 Joseph Stalin continued state intervention in the economy, launching Five Year Plans focused on industrialization, but this came at a heavy human cost, with millions starving due to collectivized agriculture.
• 😀 In Mexico, the Institutional Revolutionary Party (PRI) nationalized industries, like oil, and successfully guided the economy through the post-revolutionary period.
• 😀 Fascist governments, like Mussolini's in Italy and Hitler's in Germany, used heavy state control over the economy, with Italy focusing on corporatism and Germany utilizing deficit spending for military and infrastructure projects.

Q & A

What economic struggles did countries face after World War I?

After World War I, many countries, especially those in Europe, faced severe economic struggles. The Allied Powers lost significant portions of their workforce and spent vast amounts on the war effort, while the Central Powers, like Germany, suffered even more from war reparations and a weakened economy.

What were the consequences of Germany's reparations as outlined in the Treaty of Versailles?

Germany was forced to pay reparations for the war, which were enormous and in the billions of marks. These reparations, along with Germany's war debts, led to a financial crisis, and the government resorted to printing more money, causing hyperinflation.

How did hyperinflation affect Germany in the early 1920s?

Hyperinflation in Germany led to the devaluation of the German mark. For example, by November 1923, 1 U.S. dollar exchanged for 4.2 trillion German marks, and prices skyrocketed, such as a loaf of bread costing 200 million marks, compared to just 160 marks a year earlier.

What was John Maynard Keynes' solution to economic depression?

Keynes argued that governments should intervene to stimulate the economy through deficit spending, rather than waiting for the economy to correct itself naturally. This approach aimed to mitigate the suffering of people during economic downturns.

What was the metaphor Keynes used to explain his economic theory?

Keynes used the metaphor of 'priming the pump,' where the government injects money into the economy (deficit spending) to stimulate economic activity, similar to adding water to a dry pump to get it working.

How did Franklin D. Roosevelt's New Deal reflect Keynesian economic principles?

Franklin D. Roosevelt's New Deal involved large-scale government spending to create jobs and infrastructure projects in order to lift the United States out of the Great Depression, in line with Keynes' belief in government intervention to stimulate the economy.

Did the New Deal alone solve the U.S. Great Depression?

It's debated whether the New Deal alone solved the Great Depression. Many historians argue that U.S. involvement in World War II played a larger role in ending the Depression, though the New Deal's programs did provide significant relief.

What economic policies did Lenin introduce to help Russia after the revolution?

In 1921, Lenin introduced the New Economic Plan, which temporarily rolled back strict communist policies and allowed private trade to boost the Russian economy, but it was short-lived, as it ended with Lenin's death in 1924.

How did Joseph Stalin's Five-Year Plans impact the Soviet economy?

Stalin's Five-Year Plans aimed to industrialize Russia quickly, but they relied on harsh policies like collectivizing agriculture. This led to widespread famine and the deaths of millions, though industrialization did progress in certain sectors.

How did fascist governments like Mussolini's Italy and Hitler's Germany intervene in their economies?

Fascist governments, such as Mussolini's in Italy and Hitler's in Germany, used heavy government control over the economy, often through corporatism or direct state intervention, including massive deficit spending to stimulate industrial growth and military expansion.

What was the impact of the PRI's rule in Mexico on its economy?

Under the PRI's leadership after the Mexican Revolution, the economy improved, especially through the nationalization of the oil industry, which had previously been controlled by foreign investors. This policy helped Mexico strengthen its economy.