Weimer Republic- Germany’s democratic government that was established after WWI.

Inflation- When the value of a currency decreases.

Black Tuesday- Oct 29, 1929, the day the NY Stock Exchange crashed.

After WWI, European Nations were rebuilding their war-torn economies. Only the United States and Japan had come out in better financial shape. The United States offered loans and aid to the war-torn countries of Europe.

New Governments• From 1914-1918,

Europe’s last absolute rulers were abolished.

• They were replaced with Democracies These democracies

functioned as Multi-Party Systems

This made it difficult to solve problems

Voters instead turned to Dictatorships

Germany’s new Democratic Gov’t• Many weaknesses

Lacked strong democratic tradition

Many political parties Blamed for defeat in

WWI and Versailles Treaty

Inflation• Value of German

currency plummeted

Causes:1. Uneven distribution of

wealth Working class Americans could

not afford to buy goods being produced

Unable to sell goods, store owners cut back on orders

Factories laid off workers Cause economic spiral

downward

2. Overproduction of agriculture

Technology increased crop yields driving profits and prices down

Farmers couldn’t pay off their loans forcing banks to close

3. Stock Market Crash In 1929, Wall Street was the

financial capital of the world U.S. Economy was booming

sending stock prices soaring

Many people bought stocks on margin (only paying for % of stock)

Worked if prices kept rising Sept. 1929 investors

thought prices were too high and began to sell stock

By Oct 24th, panic resulted, everyone wanted to sell stock and nobody wanted to buy.

“Black Tuesday” Oct. 29, 1929 The Market Collapsed

The result was the collapse of the American Economy• Thousands of businesses

failed and banks closed• People lost their life

savings because banks had no money

• Stocks bought at high prices were now worthless

• By 1933, ¼ of Americans were unemployed

Global Depression• Investors withdrew their

money from Europe• Worldwide trade came to

a halt because of high import tariffs

• Countries who depended on the U.S. for loans were particularly hard hit Germany

The Depression confronts democracies with serious challenges

Britain, France and the United States were able to create programs that slowly helped improve the economy

Other countries however, turned to an extreme form of government called Fascism

Why were democracies unable to solve the economic and political problems?

What was Germany’s gov’t called and what problems did it face?

What were the 3 main causes of the Great Depression?

Why was the United States so important to the worldwide economy?