Global Economic Crisis: The Great Depression

The Great Depression: AP European History Study Guide

Welcome, aspiring historians! Today we’re diving into the Great Depression, a terrible economic slump that hit the 1930s like a wrecking ball. 😢 Swing on board as we explore how this global financial meltdown unfolded and shook the world more than any epic fail ever could!

Picture this: after WWI, Europe was like a high-stakes poker game where all the players ended up broke. Countries like Great Britain, France, Russia, Belgium, and Germany bore the heaviest economic burdens due to the war’s unprecedented destruction and the exorbitant cost of state-of-the-art weapons that blew more than just minds. The casualty of this frenzied fiesta? Nations deep in debt.

American loans became the crutch for many European nations. The Treaty of Versailles hit Germany with a $33 billion bill wrapped in a guilt trip. Germany, already in over its head with war debts, tried to print its way out, conjuring up more money faster than a magician at a child’s birthday party, resulting in hyperinflation. Germany’s currency soon became worth less than Monopoly money. 🎲💸

In steps Charles Dawes with his plan—an economic merry-go-round where the U.S. loans Germany money to pay its reparations. Germany then pays the Allies who, in turn, pay back the U.S. It was an international financial conga line until the music stopped.

WWI had turned the U.S. into an economic powerhouse. Factories were buzzing, and everyone looked to the 1920s for jazz, flapper dresses, and investment opportunities. People invested in the stock market with the enthusiasm of kids in a candy store, but many were playing the financial game on what’s called “the margin.” They paid only a fraction upfront, betting they’d win big and cover the rest with their gains.

That worked until it didn’t. When stock prices peaked, investors scrambled to sell off their stocks. The stock exchange was more volatile than a toddler with a sugar rush. On October 29, 1929—infamously known as Black Tuesday—the market crashed, wiping out dreams and fortunes faster than you can say “Jenga!” If people couldn’t make money, they couldn’t pay back their loans, leading banks to close faster than your favorite TV show’s cancellation. 📉

This catastrophe meant the U.S. couldn’t uphold the Dawes Plan, and the dominos of despair tumbled all over Europe, worsening their hyperinflation woes.

The Great Depression brought extreme poverty. People feared for their lives more than ever before, which made them turn to authoritarian leaders who had all the charisma of super-villains but were dressed as saviors. These leaders, mostly with military backgrounds, promised to fix everything that was wrong by preaching nationalism and self-sufficiency. Countries like Italy, Spain, Germany, and Russia fell under their spell. Europe was tightly dependent on the U.S. economy, but these nationalists insisted on cutting those ties and going solo. 🎤

Faced with economic Armageddon, people started thinking outside the economic box. New theories emerged to challenge classical economic models, setting the stage for some avant-garde economic musicians.

Keynesianism: The brainchild of British economist John Maynard Keynes. His idea was like adding a turbocharger to the government’s economic engine. Keynesianism argued that government intervention was critical to avoid economic nosedives. By investing in public works and other fiscal policies, governments could jump-start the economy. His theories later influenced leaders around the globe, including JFK in the U.S. Imagine the government as a superhero swooping in to save the economy from itself. 🦸‍♂️

Cooperative Social Action in Scandinavia: Scandinavia’s depression-era policy was the economic equivalent of a bromance between the government, employers, and workers. Countries like Denmark, Finland, and Iceland focused on cooperation to achieve social and economic equality. This model reduced poverty and encouraged social mobility faster than you could say “Lutefisk.”

Popular Front Policies in France: In France, the Popular Front was a left-wing superhero squad led by the PCF (French Communist Party). Their economic policies aimed to decrease poverty and promote equality through national industry control, a 40-hour workweek, and booster packs for social welfare programs. Basically, they made sure everyone got a bigger slice of the economic pie.

These economic theories were the direct responses to wartime tragedies, and many of these policies had an impressive half-life, lasting well into the late 20th century.

1. Authoritarian Leaders: Leaders who wield more control than a hardcore video game modder, often without consent.

2. Buying on the Margin: Like buying stocks with borrowed cash—think of it as financial gambling; if the stocks tank, so does your loan repayment plan.

3. Charles Dawes: American VIP who devised the Dawes Plan to help Germany manage its reparations. Basically, he played a giant game of economic Jenga.

4. Classical Economics: Economics focused on laissez-faire and self-regulating markets. Think of it as “the market knows best” approach.

5. Consumer Economy: An economy driven by consumer spending. Imagine shopping sprees fueling the economic engine.

6. Cooperative Social Action in Scandinavia: Scandinavian teamwork to create an equal society, like a democracy-powered assembly line.

7. Dawes Plan: Charles Dawes’ blueprint for global debt repayment post-WWI with the US loans acting as economic life support.

8. French Communist Party: France’s communism-loving political group aiming for public ownership and social equality.

9. German Marks: Germany’s old currency that went through severe inflation post-WWI, making it cheaper to wallpaper a room with bills than buy actual wallpaper.

10. Great Depression: The worldwide economic nightmare of the 1930s starting with the stock market crash, spreading financial gloom like a contagion.

11. Heterodox Economists: Economists with alternative ideas challenging mainstream views. Think of them as economic mavericks.

12. Hyperinflation: The maddest kind of inflation where the currency’s value drops faster than ice cream in July.

13. John Maynard Keynes: The British economist whose interventionist ideas reshaped government economic policy-making.

14. Keynesianism: Government-driven economic stabilization policies. It’s like the government playing economic doctor.

15. New Economic Theories: Fresh takes on economic doctrines aiming to update or replace old-school ideas.

16. Popular Front Policies in France: French left-wing coalition’s policies focusing on social reform and anti-fascism.

17. Rise of Extremism: The surge of radical political or religious views, often leading to chaos and conflict.

18. Treaty of Versailles: The 1919 treaty ending WWI, penalizing Germany, and unwittingly setting the stage for future conflict.

19. US Stock Market Crash: Also known as Black Tuesday, the 1929 financial catastrophe that hit America's stock market and plunged the world into economic darkness.

20. War of Attrition: Military strategy aimed at wearing down the enemy through continuous losses. Think of it as the war equivalent of an endurance test.

So there you have it! The Great Depression was more than just a financial pothole—it was a full-on sinkhole that swallowed economies, gave rise to dictators, and ushered in new economic doctrines. 🌌 Now, grab your study notes, sharpen your pencils, and ace that AP European History exam!

Good luck, and may the economic forces be with you! ⚡📘