Economic Transformation: The Roaring Twenties to the Great Depression
The Roaring Twenties: Post-WWI Economic Shifts
Unequal Economic Growth & American Dominance
After World War I, the USA emerged as the global economic powerhouse. In Europe, the destruction caused by the war led to widespread inflation and high unemployment. The crisis was especially severe in Germany, where the mark was extremely devalued, and the country experienced hyperinflation. From 1924, the standard of living improved across Europe, though less significantly than in the USA. Thanks to this economic dominance, the “American way of life” spread throughout the world.
The Rise of Mass Society & New Freedoms
Alongside industrialization and urbanization, society underwent significant changes. In cities, great masses of people worked in factories and gained new rights through the protests led by the labor movement. For example, these included:
- Improved salaries
- The establishment of the 8-hour workday
- Sunday as a free day
With more leisure time, new entertainment options became very popular, especially football and cinema. Initially enjoyed only by the bourgeoisie, these activities later became accessible to workers.
International Politics & Post-War Diplomacy
In the 1920s, tensions increased between France and Germany. Germany failed to pay reparations to France, leading to France’s occupation of the Ruhr, Germany’s main coal and steel region. Germany’s military had been reduced, rendering it incapable of resisting. To improve Germany’s economy, the USA lent money to Germany through the Dawes Plan. The Treaty of Locarno was also signed to normalize relations between the European powers, leading to a brief period of peaceful intentions.
The Fight for Women’s Rights & Suffrage
The suffrage movement began in the 19th century, when suffragettes started organizing demonstrations to fight for their right to vote. They faced boycotts from anti-suffragettes and the police. Their status changed significantly with World War I, when they played a key role performing work previously considered suitable only for men. After World War I, women’s right to vote was recognized in many countries.
The Great Depression: Causes, Impact, & Recovery
Causes of the 1929 Stock Market Crash
The crash was primarily caused by overproduction and excessive speculation. Post-World War I economies did not adapt well to the new situation, which led to excess supply. At the same time, banks lent money to businesses and individuals, who invested heavily in the stock market. Due to this, stock market values rose significantly, not reflecting economic reality. Ultimately, when companies needed to cover their debts, they sold their stocks. Mass selling began on Black Thursday (October 1929). Stocks lost all their value, leading to widespread bankruptcy for companies and investors.
The Great Depression & Roosevelt’s New Deal
The Great Depression was an extreme economic crisis triggered by the crash. Banks failed because customers withdrew their money and many loans went unpaid. Many companies closed, and numerous farmers went bankrupt. Unemployment rose sharply. The crisis spread around the world, especially as the USA withdrew investments from Europe. Consequently, numerous industries and banks failed due to their dependence on the USA. In order to recover from the crisis, USA President Roosevelt launched the New Deal program, establishing state intervention in the economy through:
- Public works projects
- Subsidies
- Improved working conditions
This plan increased consumption and stimulated the USA economy.