After World War 1 Germany was hit with a three year period of hyperinflation during the reign of the Weimar Republic which started in 1921 and ended in 1924. Hyperinflation meant that the money was virtually worthless therefore prices shot up. Workers needed wheelbarrows to carry their notes as there was so much of it. Wages began to be paid daily instead of weekly. In this essay I will discuss if hyperinflation was completely caused by the Treaty of Versailles (1918-19).
Before we can explore causes, we first need to define what we mean by The Great Depression The Great Depression was a global economic crisis that may have been triggered by political decisions (war reparations post-World War I), protectionism (Congressional tariffs on European goods) or by speculation .Worldwide, there was increased unemployment, decreased government revenue, a drop in international trade. Its kickoff in the U.S. economy was “Black Thursday," October 24, 1929. That's when 12.9 million shares of stock were sold in one day. It was triple the usual amount. At the height of the Great Depression in 1933, more than a quarter of the US labor force was unemployed.
As well as this, an end to prohibition would eliminate the costs required to enforce it – an extra expenditure the government could not afford at this time. Economically, an end to prohibition would help strengthen the unstable situation in America: ending unproductive government spending as well as bringing new money into the system. Repeal of the Eighteenth Amendment would also meet social demands brought about by the crisis. Those facing hard times wanted to drink, and wanted an end to the law to allow them to do so more easily; thus the Great Depression added to the support for social groups already campaigning for its repeal. Both the economic and social effects of the Depression make it an important reason for the repeal of the Eighteenth Amendment, a concept supported by historian Joseph Gusfeld.
However, when Harding became the President, increased tariffs were in extremely high demand and he thus made an emergency tariff in May 1921. It was made to increase duties on food and goods imported from other countries. This shows that America’s government wanted their citizens to spend money on USA’s own supplies and hinder economic cooperation
The imbalance of trading caused deficits and upset the foreign exchange market, especially against America. After the World War II, American political leader committed to promoting international trade by supporting for multilateral organizations such as General Agreement on Tariffs and Trade. They made the international currency markets the Breton Woods system. However, since the Japanese economy grew so fast, the United States was worried to lose the leadership to Japan, which linear projections called as the “superstate”, the world’s largest capital market to boot. On the other side, the United States government was complained by its domestic industry companies during its recession period since Japanese products was very competitive.
The middle class was nearly non-existent. This occurs often in the world, but the Great Depression was the worst economic downfall in the history of the U.S. It spread and affected all of the industrialized world. The depression began with Black Tuesday, and lasted for nearly a decade. According to Paul Alexander Gusmorino, the main cause of the drastic downfall was the combination of unequal distribution of wealth and the extensive stock market speculation that took place in the later years of that decade.
Should the government allow the peso to fall even farther to stimulate exports? Why or why not? The fall in the value of the peso led to hyperinflation and bank collapses, adversely affecting business ventures for companies in Argentina. As a direct result, trust in the peso diminished and companies invested in the US dollar because of its widely trade availability. It is not surprise that
Many banks declared bankruptcies because they could not get back their money from stock investors. Thousands of banks failed to keep the money from flowing to the market that resulted in a widening circle of bankruptcies and job layoffs.Democrat Franklin D. Roosevelt won the presidential election by a landslide over Herbert Hoover in November 1932 and was inaugurated the following March. He had the first presidential speech when “the stock market was down eighty percent from its 1929 high, almost half the banks had failed, the GDP was down fifty percent, and unemployment stood at twenty five percent” (79). Franklin D. Roosevelt expressed the problems that Americans needed to overcome, and gave out the New Deal programs started from1933 to 1939 that were successful in addressing the Great Depression. The first phase of the New Dealwas called relief that helped millions of suffering Americans as soon as possible.
However, there was no unilateral view on how to tackle the Depression and so the Weimar Governments between the years of 1928 and 1933 went through 4 different Chancellors before Hitler and his Nazi Party finally took over in January 1933 with public support. During the Depression, millions of people lost their jobs and there was poverty, hunger and homelessness. Carr writes that “unemployment grew by leaps and bounds” whilst Lacey and Shephard note that “for the unemployed this was a time of extreme poverty”. Betwen 1930 and 1932, 18,000 farmers and 50,000 businesses had gone bankrupt. The depression reminded H. Hauser “of the war, of the worst period of starvation in 1917 and 1918, but even then people paid for potatoes”.
However after the petrol crises the world economic status has dramatically changed. Central Banks of the industrialized countries started to perform disinflationary policies and the interest rates that were even negative in real terms prior to the petrol shocks has increased considerably. In this regard global recession emerged which resulted immense decrease in export income of developing countries meaning that increasing balance of payments problems occurred. Thus developing countries has faced difficulties in new borrowing and even defaulted. In this context developing countries became dependent to the Bretton Woods Institutions like WB and IMF.