Western Democracies Stumble

Chapter 16 Section 2

Uneasy peace and uncertain security The Treaty of Versailles

Many borders were left disputed It was Germany that was determined to change

them They vowed to revise the terms of Versailles

League of Nations An organization of nations to maintain the peace However, they were unable to do so The U.S. never ratified the treaty – not a member Americans did not want to become involved in

European affairs League members were unable to agree on the use

of force against aggressors

The French The demanded the Treaty of Versailles be strictly

enforced The Germans

Major economic problems They were unable to pay the $33 billion owed to

France So, what was the solution to this problem?

France took over the Ruhr Valley Why? The French plan on taking the money by

operating German industries and mines themselves

German Inflation German strikes start because of the French

occupation of the Ruhr Valley Germany starts printing more money to pay

salaries This adds to inflation

1923- $1 U.S. equals 130 billion German Marks

Dawes Plan Initiated a $200 million loan for German recovery This plan opens the door for American

investments Prosperity followed but only for 5 years

Treaty of Locarno Guaranteed the new Western Borders of Germany

with France and Belgium People and nations thought this would finally bring

peace to Europe The Kellogg-Briand Pact

Signed by 63 nations It pledged to ‘renounce war as an instrument of

national policy’ Problem: This pact never stated anything about

violations to the pact

The Great Depression What is a Depression?

A period of low economic activity and rising unemployment

What caused the Great Depression Downturn of the economies in individual nations Prices of farm products, esp. wheat, were falling

from rapid over production Fall of the U.S. market

Much of the European prosperity from 1924-1929 came from U.S. Banks and loans

When the U.S. market failed so did the European economies

Responses to the Depression Cutting costs by lowering wages and raising tariffs This hurt the economies even more Some countries tried to increase govt. activity in

economics –businesses Communism began to gain strength

Marxist thought that capitalism and overproduction would destroy this system seemed to becoming true

Rise of Dictatorships Many nations led people/leaders who promised simple

solutions in exchange for dictatorial power

Democratic States after the War Germany

Weimar Republic – German Democratic State This republic had many problems

No good leaders Economic problems – end of 1930, German

unemployment = 4.3 million

France After the War, France was the strongest European

Power However, weak policies and failed economic

policies failed to solve any of France’s Depression

Great Britain Political leaders ignored the new ideas of John

Maynard Keynes The Theory of Employment, Interest and Money It argued that: 1. unemployment came from lack of demand; not

overproduction 2. Demand could increase work by building highways

and public buildings The U.S.

New Deal – economic policy Increases programs in public works Builds roads, buildings, post offices, airports, etc…