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The economy in the inter-war years - Coggle Diagram
The economy in the inter-war years
During the period between the First World War and the Second World War
the economies of
the United States
went through various phases
recovery in the 1920s
recovery in the 1920s
post-war crisis
recovery in the 1920s
European countries
POST-WAR CRISIS
between 1918 and 1923
Europe experienced a significant economic crisis
a shortage of products
due to the destruction of
areas of agricultural land
factories
transport systems
as a consequence
an increase in prices
high levels of debt
because of loans from the United States intended to pay for the costs of war
such as food and military equipment
when the war ended
the loans had to be repaid
Germany
had to
pay war reparations
suffer the crisis
As a solution
German government circulated large quantities of bank notes
although they were worth practically nothing because Germany had no gold
that meant that the German people
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In 1923
France
realised that it would not receive the reparations
to help rebuild its economy
which it needed from Germany
decided to occupy the
richest
most industrialised
area of Germany, the Ruth
the loss of this territory
made the economic crisis in Germany worse
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RECOVERY IN THE 1920S
The United States and Japan
the first countries to recover from the crisis
because their industries had not been devastated by war
This situation enabled the United States to
help European countries come out of the economic crisis
In 1924
the United States applied the Dawes Plan in Germany
This was a series of economic measures
which involved
loans
with the aim of increasing the value of the German mark
American investment in German industry
it also
revised
war reparations payments
reduced
France agreed to abandon the occupied areas of the Ruhr
in August 1925
From 1925 on
Germany's economy began to recover
It was able to pay reparations to the victorious European countries
The United States also helped other European countries
by giving them loans
selling the consumer goods they lacked
by the mid-1920s
the world economy began to recover and grew steadily
a prosperous time
known as the roaring twenties
With economic prosperity
society changed
the suffering of the war years had passed
life was focused on enjoyment
new forms of entertainment
ballrooms
radio shows
music-halls
cinema
cabarets
Famous Hollywood film stars emerged
Greta Garbo
Charlie Chaplin
Rudolph Valentino
Consumerism grew again
sales of consumer goods
such as
cars
increased
household appliances
The car industry
were the driving forces behind the economic recovery
the development of the production of electricity
Consumers also bought shares in companies on the stock market
because they paid large profits in a short period of time
THE WALL STREET CRASH OF 1929
In 1929
the Wall Street stock market in New York collapsed
the beginning of a major economic crisis
leading to the Great Depression of the 1930s
The causes
Agricultural overproduction
during the war
the American agricultural system had increased its production
possible due to
the cultivation of more land
the mechanisation of agriculture
the tractor
harvester
threshing machine
After the war
European countries
began to produce their own agricultural products again
but the level of American agricultural production was maintained
The result was a surplus of production
which caused prices to fall
due to factories closing
unemployment increased
the situation was made worse
also the demand for agricultural products decreased
also farmers were ruined
Speculation on the stock market and excessive bank credit
during the period of prosperity
companies
individuals
bought shares in companies on the Wall Street stock market
because they offered guaranteed profits
both
people
obtained credit or loans from the banks
To buy
houses
machinery
shares
land
companies
Industrial overproduction
during the First World War
American industry had increased production in order to supply Europe
After the war
European industry started to recover
so European countries bought less from the United States
However
American industry did not reduce levels of production
The result was that
the number of products available
was greater than the number of products that were sold
The unsold products accumulated in warehouses
Companies lost money and some even had to close down
Unemployment rose
so people had less money to buy consumer goods
consumption decreased even further
The increasing demand for shares
led to a rise in share prices
which caused stock market speculation
shares were bought in order to make quick profits
despite the fact that the share value
did not reflect the real value of the companies
which were
bankrupt
in financial crisis
When companies that sold shares
began to have problems
shareholders wanted to sell their shares
on the stock market
On 24 October 1929
thirteen million shares went up for sale
which caused share value
to fall dramatically due to oversupply
This was the Wall Street Crash
The stock market crisis
spread to banks
Banks found themselves without liquidity
because the investors
did not have the money to pay back their loans
who could not sell their shares
people tried to withdraw their savings from the banks to avoid losing them
The banks collapsed
millions of citizens were ruined
became a financial crisis
THE GREAT DEPRESSION OF THE 1930S
consequences
There was a decrease in the standard of living
generating discontent with
the liberal capitalist system
which most people blamed for the crisis
Companies closed
due to a fall in sales and a lack of credit
Banks collapsed
because of a lack of liquidity
The world economy was affected
Other countries
adopted protectionist measures
increasing taxes on foreign products
to save national production
because the United States reduced imports
Wages fell and unemployment increased
Millions of people were forced to live off
government support
charity
The crisis soon spread to Europe and other parts of the world
because the United States
asked other countries to repay the loans they had received after the war
stopped investing
it began with the Wall Street Crash of 1929
This economic crisis
put an end to the prosperity of the roaring twenties
led to a fall in prices
and continued for a decade