The Roaring Twenties

Supply of food, arms and industrial goods War Loans Possession of half the world's reserves Dollar: strong currency and the Bank of America was the world's main investor USA: world's leading economic and financial power

Prosperity in USA Linked to Second Industrial Revolution New Energy sources New industries Taylorism Creation of a consumer society Mass consumpt ion American way of life It became a model for the world

EUROPE

Problems High unemployement Rising prices War loans Germany was unable to pay war compensations: oMassive inflation oUnemployement oDecline in the population’s standard of living

SOLUTIONS Daws plan: Loans to Germany Locarno Treaties: oRenegotiation of Germany’s debts oSet up the borders of Europe

The Great Depression The 1929 stock market crash Stock Market Speculation Over production

Great Depression o Overproduction. The production increased a lot since Europe imported American goods in WWI.  However, after its end the demand decreased, although the production did not.  Prices and profits halted in 1926, but the production went on. o Low prices of agricultural products. Many farmers went bankrupt and could not buy anything. o Speculation. Profits had been really high between 1921 and  Many people bought shares since it could not be invested in industry since there was overproduction.  The quote of shares was did not match their actual worth.  Loans were easy to get. Hence, more shares were bought.

Great Depression Why? Share’s prices were higher than their real value

Great Depression

People were panicked since they could not buy any share in the New York Stock Exchange. o On Black Thursday (24 October) shares were massively sold in that marketplace. o On Black Tuesday (29 October) the sale of shares was complete and economy collapsed:  More than 5,000 banks had to close due to those loans they had previously granted and they could not get back. Moreover, many people withdrew their savings from the banks.  Industry was severely affected since demand decreased and they had lots of stocks; hence prices decreased.  Many people went unemployed and many farmers were completely unable to pay back their loans.  The most affected countries by the Crash were the USA, Germany, and Japan.

The Great Depression Results:  General Economic recession: Unemployement Consumption fell Companies closed down

The Great Depression International consequences: U.S. banks withdrew their money from Europe (they asked for their loans)

Solutions NEW DEAL Problems in Europe