World War I

Germany, Austria-Hungary, and the Ottoman empire ( also known as the central powers) fought against Great Britain, France, Italy, Russia, and Japan (known as the Allied Power). Was sparked WWI was the assassination of Franz Ferdinand. This set off a list of events like Austria-Hungary, like other countries, blamed the Siberian government for the attack. They waited to declare war until Germany confirmed they would fight with them. Siberia ended up becoming allies with Russia, Belgium, France, and Great Britain which began WWI. Germany had a great strategy where they started to fight on two fronts by invading France to get to Belgium from the west and attacking Russia from the east. They used the most powerful weapons destructing anything in their way including civilians and priests. For several years the Russian armies mounted several offences on the eastern front but were unable to break through the German lines. This led to the Russian Revolution where Lenin called a halt on the war. The gave Germany a chance to fight on the western side. WWI took the life of 9 million soldiers and 21 million were wounded.

German War Respiration

After the war Germany was forced by the Paris Peace Treaty to pay the respiration's. Large parts of Belgium and France were so destroyed by trench warfare. All the damage costed roughly $63 billion, although this was later reduced to $33 billion. In 1924, an American banker named Charles Dawes outlined what came to be known as the Dawes Plan — a new reparations agreement under which U.S. banks such as J.P. Morgan issued bonds to private investors on behalf of Germany, which agreed to pay them back when the money became due. When Hitler came to power he cancelled the reparation. Later an international meeting was made called the London Agreement. This is when Germany slowly began to bay back the bonds.

Inflation and Unemployment

Germany's economy began to face economic problems that were caused by the War. To pay expensive from the war Germany decided to simply print money. Eventually the paper money lost its value which begin the inflation. They needed more and more money for trade and basic goods. Germany begin to question their democratic government.

Overproduction and Underconsumption

By 1929, factories were turning out half of the worlds industrial goods. But the wealth was not being distributed evenly. People were becoming too poor to afford the products that were being produced. This led to factories not making enough money so they had to cut down workers because they could not pay them properly. Now families were buying fewer goods because they could not afford them. This led to overproduction from mostly the agriculture field. They weren't making money so they could not pay the loans they had for their property.

Stock Market Crash

This all began in 1929 on Wall Street, New York which was the financial capital. Money was booming in stocks which made people want to buy them. They bought more and more because of the money they wanted to make. The socks were raising at one point but began to fall because investors could not pay their loans off. Then they stared to question the high rise on stocks. They hoped the prices would go down by selling their stocks, but they were wrong. Everyone wanted to sell and not buy. Then the prices were lower than before which led to 16 million stocks being sold. Soon enough the stocks crashed.

Banks Collapse

Banks struggled to give money/loans to farmers and businesses. It became so bad that 70 banks were failing each year nationally. They began to put restrictions on how much money people could take out of the banks. Austria's largest banked failed and products to other counties stopped transporting. People who had money deposited in the bank lost about $140 billion. Franklin D. Roosevelt made a 3 day holiday for banks so people could not withdraw money from the bank. The reason he did that was because people went into panic and withdrew all their money. Over the years many acts were passed by congress to save the banks.

Effects in the US

The US had to go through a big recovery after the Great Depression. They elected President Franklin D Roosevelt because he had great confidence that appealed to the Americans. He was the one to restore faith in the people. The economy shifted from one based almost entirely on the free market to a mixed economy. They made the mistake in believing that spending money on the military was good for the economy.

Effects on Germany

Because Germany depended on American loans, they had a hard hit. They could not deal with the economic crisis after the war. Germany in the 1920s remained politically and economically unstable. Unemployment hit millions of Germans, as companies shut down or downsized. Others lost their savings as banks folded. The conditions of the early 1930s led many German voters to abandon political parties and look to different parties, such as Adolf Hitler and the Nazi Party. The German economy was not resilient enough to withstand significant withdrawals of cash and capital. Germany also struggled with goods and other products. There was many unemployment and people could not pay for food and Germany had a hard time supplying it.

Effects in one other European country

There was also a great in Europe. One great impact was in Italy. The economy went down after the Wall Street Crash. They needed help from America but they were also struggling. Many people were becoming unemployed and could not pay for goods or food.

The New Deal

Franklin Roosevelt's speech gave many people confidence that they’d elected a man who was not afraid to take bold steps to solve the nation’s problems. He fist begin to give the banks a 3 day holiday so people would not withdraw money for those couple days. Then in August, FDR signed the Social Security Act of 1935, which guaranteed pensions to millions of Americans, set up a system of unemployment insurance and stipulated that the federal government would help care for dependent children and the disabled. He was then voted for the Second term. President Roosevelt announced a plan to add enough liberal justices to the Court to neutralize the “obstructionist” conservatives. From 1933 until 1941, President Roosevelt’s programs and policies did more than just adjust interest rates, tinker with farm subsidies and create short-term make-work programs.

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