The Roaring Twenties and the Great Depression

Economic Recovery (The 1920s)

Definition

Loans and investments in European industries were given by the American government. War reparations and payments were revised.

Aim

To increase the value of the German mark (currency).

Consequence

The United States also helped other European countries by giving them loans and selling the consumer goods they lacked. As a result, by the mid-1920s, the world economy began to recover and grew steadily. It was a prosperous time, known as the Roaring Twenties.

The Wall Street Crash of 1929

Industrial Overproduction

During World War I, American industry supplied Europe, so they produced more. After the war, European industry started to recover, and European countries started producing their own products.

Consequence

Europe bought less from the United States, so the US had a surplus.

Result

Companies lost money, closed down, and unemployment increased.

Agricultural Overproduction

During the war, the American agricultural system had increased production. The mechanization of agriculture, such as the tractor, harvester, and threshing machine, made this possible.

After the war, European countries began to produce their own agricultural products again. The result was a surplus of production, which caused prices to fall. The situation was worsened by increased unemployment due to factory closures. The demand for agricultural products decreased, and farmers were ruined.

Speculation on the Stock Market and Excessive Bank Credit

People were confident and consumed happily, so consumer goods were mass-produced. People asked for loans from banks to consume and buy shares on the market.

Confidence led to speculation. Prices of shares rose and had reached a point that nobody wanted to pay for them. Investors tried to "cash in" while prices were still high. Millions of shares were sold in a very short time, on October 24, 1929 (the crash), leading to the Depression of 1929.

The Great Depression of the 1930s

Companies closed, wages fell, the world economy was affected, and there was a decrease in the standard of living.

Authoritarianism and Totalitarianism

Stalinism in Russia, Nazism in Germany, Fascism in Italy, and Francoism in Spain.

Common Characteristics

• Authoritarian dictatorship
• A charismatic leader with absolute political power
• A single political party that stands for the regime
• Anti-democratic government (no trade unions, no free elections)
• Citizens’ rights were limited
• Foreign expansionist policy
• The state intervened in and controlled the economy; some companies were nationalized
• Almost all social classes supported them