WEEK XI
World War I and the Great
Depression
World War I - Causes
▪ New imperialism: a period of colonial expansion from the late 19th century
until the outbreak of WWI in 1914
▪ The search for new markets after the industrial revolution
▪ This expansion included not only the earlier colonial powers of western
Europe but also newcomers like Germany, Italy, Japan, Russia, the US
▪ Mass-produced steel, electric power and oil as sources of energy, industrial
chemistry, and the internal-combustion engine helped additional states to join
the colonial expansion
▪ The rate of new territorial acquisitions of the New Imperialism was almost
three times that of the earlier period
▪ In 1914, the colonial powers, their colonies, and their former colonies
extended over approximately 85% of Earth’s surface
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World War I - Causes
▪ This colonial rivalry brought an end to the relatively peaceful conditions of the
mid-19th century
▪ The polarization of Europe
▪ Germany allied with the Empire of Austria-Hungary and the Russian
Empire in 1873
▪ Germany then sided only with Austria
▪ Russia and France formed an alliance in 1894
▪ Great Britain joined the alliance of France and Russia in 1907
▪ Thus, by the turn of the 20th century, the great powers of Europe
became highly polarized
▪ Growth of nationalism
▪ The Turkish-ruled Ottoman Empire was slowly decaying
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World War I - Causes
▪ Greece, Bulgaria, Romania, Serbia, and other southern European
nations that had been under Ottoman rule became independent,
changing the balance of power in Europe
▪ The many ethnic groups of Austria-Hungary, inspired by these new
southern European nations, began to agitate for their own
independence
▪ The decline of the Ottoman Empire
▪ The power vacuum created by the decline of the Ottoman Empire
▪ Military technology
▪ Technological and industrial developments in Europe were advancing
with unprecedented speed
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World War I - Causes
▪ Military technology was at the forefront of this trend, and a horrible
war using these new weapons was both feared and seen as inevitable
▪ In the late 19th century, all the major powers were preparing for a large-
scale war although none expected one
▪ Tanks, airplanes, and submarines as new means to fight
▪ Other types of motorized vehicles, such as trucks, cars, and trains
enabled the easier deployment of troops and supplies
▪ New guns enabling armies to fire upon each other across long
distances
▪ Chemical weapons for the first time
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World War I - Causes
▪ The spark: Ferdinand’s death
▪ The assassination of Franz Ferdinand, heir to the Austro-Hungarian
throne, by Serbian militants in 1914
▪ WWI began on July 28, 1914, when Austria-Hungary declared war on
Serbia
▪ Soon, Germany, Russia, Great Britain, and France were all drawn into
the war, largely because they were involved in Treaties that obligated
them to defend certain other nations
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ALLIED CENTRAL
POWERS POWERS
Russia Germany
France Austria-
Britain Hungary
Belgium Bulgaria
Canada Ottoman
Greece Italy Empire
Japan
Romania
Who is fighting: Allied vs. Central Powers
▪ Allied Powers
▪ Originally consisted of Russia, France, and Britain
▪ Others including Belgium, Canada, Greece, Italy, Japan, and Romania,
joined later
▪ Although the US never joined the Allied Powers—preferring on principle
to fight the Central Powers independently—it cooperated closely with the
Allied Powers once it joined the war in 1917
▪ Central Powers
▪ Originally consisted of Germany and Austria-Hungary
▪ Others, including Bulgaria and the Ottoman Empire, joined later
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Economic aftereffects
▪ WWI was the first large-scale war between industrialized powers
▪ Military and civilian casualties: about 40 million
▪ WWI put an end to the free-trade policies of the industrialized nations: limits on the trade in key products
▪ Government intervention into the economy: much more than ever
▪ Governments controlled prices and production in key industries, controlled raw materials for production, and
engaged in manufacturing
▪ The volume of world trade fell during the war
▪ In foreign trade, the winner was the US, whose exports during the war far outpaced imports
▪ One other result of the war economy was the development of what has since been called the military-industrial
complex:
▪ industrial self-regulation by businesses and greater coordination between businesses and government, with the
aim of achieving victory in all-out war
▪ Enormous economic destruction: population loss, falling production, disruption of the volume of world trade,
and the return to protectionism, also debts and war reparations
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GREAT DEPRESSION
• Great Depression, worldwide economic
downturn that began in 1929 and lasted until
about 1939
• It was the longest and most
severe depression ever experienced by the
industrialized Western world
• Originated in the US, spread quickly to the rest
of the world
• Marked by steep declines in industrial production
and in prices, mass unemployment,
banking panics, and sharp increases in rates
of poverty and homelessness
• In the US, industrial production declined 47%,
and national income fell 30%, unemployment
reached 25%
• Almost half of US banks collapsed
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Causes…
▪ The US stock market crash of 1929
▪ Due to excessive speculation in the market, stock prices began to
decline, and in October 1929 (Black Tuesday), frightened investors
rushed to sell their stocks on the New York Stock Exchange, crashing
US markets
▪ Overproduction
▪ Mass production in the 1920s without sufficient consumer demand
▪ Leading to price decreases in agricultural and industrial goods
▪ Uneven distribution of income
▪ Decreases in consumption
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▪ High tariffs and protectionist policies (limits on trade)
▪ After WWI, most economies sought self-sufficiency by focusing on import
substitution industries (creating substitutes for products they would otherwise
have to import)
▪ Opposite of free international trade in the 19th century ▪ Decreases in export
sales
▪ Wartime debts and reparations
▪ Reparations: money that are paid after a war by the defeated country for the
damage and injuries it caused in other countries
▪ Return to the gold standard in the interwar years
▪ It is a monetary system where countries fixed the value of their currencies in terms
of a specified amount of gold
▪ But, currencies were overvalued, overvaluation led to decreases in exports, this led
to an unstable international economy
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