Chapter 26 q2

1.What does the "middle way" refer to regarding the Great Depression?

1. Scandinavia's welfare socialism was seen as an appealing middle way between sick capitalism and cruel communism or fascism.

1.What was the Dawes Plan and how is it important to this history?

1. The Dawes Plan was a war reparations agreement that was accepted by France, Germany, and Britain. It reduced Germany's yearly payments, made payment dependent on economic prosperity (output), and granted large U.S. loans to promote recovery. It promoted a circular flow of international payments: the U.S. would loan money to Germany who could then pay France, and Great Britain back, who could then pay the U.S. back. It facilitated a worldwide economy recovery in the late 1920's.

10.What did orthodox economists believe in the 1930s regarding economic growth?

10. The budget needed to be balanced, spending tightly controlled. Unemployed workers received barely enough welfare to live under the Conservative-dominated coalition government that followed orthodox economic theory.

2.Why was Britain more ready to conciliate Germany than France following the Versailles peace settlement?

2. A prosperous Germany was essential to the British economy. The British feared that an impoverished Germany due to drastically high reparations would increase economic hardship in all countries.

2.What were the main causes of the stock market crash of October 1929?

2. Many wealthy investors, speculators, and people of modest means bought stocks by paying only a small fraction of the total purchase price and borrowing the remained from their stockbrokers; such buying "on margin" (similar to buying on credit) was extremely dangerous. When prices started falling, thousands of people started selling all at once. Countless investors and speculators were wiped out in a matter of days or weeks.

3.What was the British political party that emerged during the 1920s as the main opposition to the Conservative party?

3. The Labour Party emerged as the determined champion of the working class and of greater social equality. They were committed to the kind of moderate revisionist socialism that had emerged before WWI. The Labour Party replaced the Liberal Party as the main opposition to the Conservative Party.

3.What did FDR's National Recovery Administration attempt to do?

3. The NRA attempted to reduce competition among industries by setting minimum prices and wages. It broke with the American tradition of free competitions. It aroused conflicts among business people, consumers, and bureaucrats and never worked will. It was abandoned and declared unconstitutional in 1935.

4.Who was John Maynard Keynes and what is his contribution to this history?

4. Keynes was an English economist who denounced the Treaty of Versailles in his book, The Economic Consequences of the Peace. According to Keynes, astronomical reparations and harsh economic measures would impoverish Germany, encourage Bolshevism, and increase economic hardship in all countries. Only a complete revisions of the treaty could save Germany and Europe. His attack became very influential. It created sympathy for Germany in the English-speaking world.

4.What did the Swedish response to the Depression involve?

4. Social Democrats had become the largest political party in Sweden. In the 1920's they passed important social reform legislation that benefited both peasants and workers and developed a unique kind of socialism that was flexible and non-revolutionary and grew out of a strong tradition of cooperative community action.

5.Why did the United States fail to ratify the Versailles treaty? What were the main points of contention?

5. The U.S. failed to ratify the treaty because of the League of Nations. Congress didn't like the idea of not having the right to declare war. Also, the US didn't want to ratify treaties that would form defensive alliances with France or Great Britain; the US became more isolationist after the first world war.

5.How do you account for the Great Depression not hitting Britain as hard as the U.S. or Germany?

5. The U.S. had erected high tariffs and tried to seal off national markets for domestic producers, which limited international trade. The U.S. also cut back on international lending which had damaging ripple effects. Germany had had only a shaky economic recovery and was still dealing with its vast reparation payments.

6.How did France and Belgium respond when Germany refused to make its second reparations payment?

6. French and Belgium armies occupied the Ruhr district, the heartland of industrial Germany, creating the most serious international crisis of the 1920's. They hope to paralyze Germany and force it to accept the Treaty of Versailles.

6.Why did Britain's abandonment of the gold standard not aid its recovery?

6. When Britain went off the gold standard in 1931, refusing to convert banknotes into gold, the value of their money was reduced. Their goal was to make its goods cheaper and more salable in the world market, but more than twenty other nations, including the US, also went off the gold standard, so few countries gained a real advantage from this step.

7.Why was the Great Depression slow to affect France?

7. France was less industrialized and thus more isolated from the world economy. Once it came, it stayed.

7.What were the consequences of the German government's printing of money to pay unemployment benefits to striking workers?

7. Inflation rose drastically. Prices soared as German money rapidly lost all value. Catastrophic inflation mocked the old middle-class virtues of thrift, caution and self-reliance as savings were wiped out. Many Germans felt betrayed and blamed the Western governments, their own governments, big business, the Jews, the workers and the communists for their misfortune. Hitler and the Nazi Party capitalized on the widespread discontent.

8.What is "buying on margin"...how is that reflected in this history?

8. Buying "on margin" is similar to buying on credit; you pay some now and the rest later.

8.What are the main characteristics of the Kellogg-Briand Pact?

8. War was renounced as an instrument of international policy, and the signing states agreed to settle international disputes peacefully. Made no provisions of action in case war actually occurred and could not prevent WWII. Fostered a cassations optimism and encouraged the hope that the US would accept its responsibilities as a great world power by contributing to European stability.

9.Who was Gustav Stresemann and what is his contribution to this history?

9. In August 1923, as the money lost value and unrest spread throughout Germany, Stresemann assumed leadership of the government. Tried compromise. He called of passive resistance in the the Ruhr, and agreed in principle to pay reparations, but asked for a re-examinations of Germany's ability to pay. The French (Poincaré - French PM) accepted.

9.What did the Popular Front do after its 1936 victory in France?

9. The Popular Front made the only real attempt to deal with the social and economic problems of the 1930's i nFrance. It encouraged the union movement and launched a far-reaching program of social reform, complete with paid vacations and a 40-hour workweek. These measures were quickly sabotaged by rapid inflation and accusations from Fascists and frightened conservatives.