History - War at a Glance

Wheelbarrows of Money The Roaring Twenties ended in financial disaster. There has been a worldwide tendency for agricultural overproduction that, combined with a decline in international trade, leads to protectionist measures. The economic system has been unbalanced by the reparations and other war debts. The debts have been largely covered by loans from the United States but, because of protection, other countries have been unable to sell in the United States and therefore have had to borrow still more. This borrowing now abruptly comes to an end. These economic factors begin to affect the world's financial markets. On October 23, 1929, stock prices on the New York Stock Exchange begin a freefall. By the final bell, the market has lost almost 25 percent of its value. In the days and weeks ahead, heavy selling continues. Despite a few rallies, the market, reflecting world economic conditions, continues its slide into the 1930s. Because of unsecured or poorly secured loans, many banks become illiquid, which leads to "runs" on banks (demands from depositors for their cash), which in turn lead to more closed banks and more lost savings. This lack of capital to operate the economy leads to severe unemployment25 percent in late 1931and lack of demand for agricultural and manufactured goods. In 1932, Franklin Delano Roosevelt campaigns for the U.S. presidency using the poor economy as a backdrop and easily defeats incumbent Herbert Hoover. In Germany, economic conditions following World War I are volatile. Jobs are scarce, increased agricultural production leads to lower prices, and then waves of monetary inflation sweep the country. Inflation is so bad that workers are paid daily and it takes a wheelbarrow of money to buy a loaf of bread. See Next The Rise of Nationalism Spanish Guns Pacific Intrigues Room for Growth