ECONOMY in the INTERWAR Period [AP World History] Unit 7 Topic 4 (7.4) [REUPLOAD]

ECONOMY in the INTERWAR Period [AP World History] Unit 7 Topic 4 (7.4) [REUPLOAD]

ECONOMY in the INTERWAR Period [AP World History] Unit 7 Topic 4 (7.4) [REUPLOAD]

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In this video Heimler walks you through the economic depression that struck the world from 1918-1939. As a result of provisions in the Treaty of Versailles Germany slid into an extreme case of hyperinflation. And because they couldn’t pay their reparations, Britain and France struggled to repay their war debts as well. Russian people suffered starvation under the newly formed Bolshevik government. And the United States entered the Great Depression after the stock market crash of 1929.

What’s common to all of these scenarios is that governments stepped in to address these economic woes. From Roosevelt’s New Deal to Lenin’s New Economic Plan, government intervention in the economy became the norm.

If you have any questions, leave them below and Heimler will answer forthwithly.


Content

0.11 -> Hi and welcome back to Heimler’s History.
1.17 -> Now we’ve been going through Unit 7 of AP World History, and in the last video we talked
3.999 -> about how World War I was carried on.
5.86 -> Now that war ended in 1918, and not to spoil stuff or anything, but another world war is
9.69 -> going to erupt in 1939.
11.46 -> But in this video we’re going to talk about economics during that interwar period.
14.949 -> Specifically, we’re going to see how worldwide economies were struggling during this period
18.66 -> and how governments stepped in to address those economic woes.
21.58 -> So if you’re ready to get your brain cows milked, you know I am—let’s get to it.
25.02 -> So as I said, after World War I, many worldwide economies got on the struggle bus and headed
29.35 -> right down to depression town.
30.74 -> The countries that made up the Allied Powers, while victorious in the war, lost huge amounts
34.9 -> of their workforce and they spent tremendous amounts of hooch on the war effort.
38.9 -> And therefore, they were not in the best economic position.
41.12 -> Now the countries who made up the Central Powers, in general, fared even worse.
44.76 -> And maybe the best example of this is Germany.
46.68 -> Now you may remember that as part of the Treaty of Versailles, Germany was blamed for the
50.27 -> entire war and made to pay reparations for all the damage they caused, which ended up
54.56 -> being somewhere in the neighborhood of billions of dollars, or marks, or whatever—it was
58.1 -> a lot of money.
59.4 -> Additionally, Germany paid for their part in the war on credit cards.
62.26 -> And they assumed that by winning the war and annexing resource rich lands, they were going
66.29 -> to pay back their debt.
67.58 -> But as it turned out, the winning part of that equation didn’t work out so well.
71.65 -> And that means Germany, in addition to paying reparations, was in debt up to their German
75.71 -> nose hairs.
76.71 -> And so in the face of such crushing expectations, the German government did what any rational
80.7 -> government would do: they started printing more money.
82.97 -> And when that happened, the value of the German mark plummeted precipitously, and that led
87.43 -> them into a situation called hyperinflation.
89.31 -> And let me try to illustrate how bad it got.
91.64 -> You know how like when you go to another country, and you have to exchange your money for their
94.92 -> money so then you can buy stuff in their country?
96.84 -> For example, if I went to Europe right now, I’d have to exchange my US dollars for Euros.
100.79 -> And the exchange rate as of this recording is one dollar to .91 euros.
105.759 -> That means one of my dollars would buy almost one euro.
108.83 -> Okay, so by November of 1923 if I went to Germany with this one dollar in my hand to
113.84 -> exchange it for German marks, I would have gotten back 4.2 trillion marks.
118.29 -> Or let me give you another example.
121.659 -> In 1922 a German could buy a loaf of bread for 160 marks.
125.86 -> But by 1923 that same loaf of bread cost 200 million marks.
130.429 -> Now this hyperinflation situation didn’t only affect Germany.
133.77 -> Remember, they owed money in the form of reparations to powers like France and Britain.
137.28 -> But when Germany couldn’t pay them, They in turn struggled to pay their debts to the
140.92 -> United States.
141.92 -> Add to that, the Soviets weren’t paying back their war debts either because they went
144.77 -> ahead and had themselves a communist revolution and the Bolshevik government decided that
148.22 -> old war debts did not belong to the new government.
150.55 -> And in further addition to all of this, colonial economies suffered too because they had come
154.9 -> to depend on their parent economies.
156.81 -> And so colonial governments in Africa, and Asia, and Latin America all got thrown into
160.93 -> this giant economic turd stew, and as my grandpappy used to say, once there’s a turd in the
165.94 -> stew, ain’t nobody gonna eat that.
167.4 -> And then in 1929 the United States stock market crashed and plunged it into a Great Depression
172.28 -> that affected every other country that I just mentioned.
174.379 -> So all this to say, in the interwar period, we got some economic problems to deal with.
178.98 -> So how do we fix it?
180.2 -> Well, the solution that many of these nations came up with is to call up big daddy government
184.269 -> and get him to step in and fix it.
185.73 -> Now, here’s where I introduce you to British economist John Maynard Keynes.
188.81 -> If you’ll recall, many of the European nations had transitioned into a more laissez-faire
193.08 -> type economy in which there was very little government intervention in the affairs of
197.05 -> the economy.
198.05 -> Now according to laissez-faire economics, the economy will always correct itself in
201.91 -> the long run.
202.91 -> Just give it enough time, and the economy will fix itself.
205.29 -> And you know what?
206.29 -> That’s true.
207.29 -> However, John Maynard Keynes reached in his back pocket, got the sauce out and said, “You
210.239 -> know what, in the long run, we’re all dead.”
212.68 -> What he meant was this: yes, the economy will correct itself in the long run, but while
216.68 -> that’s happening the people who live in that economy are suffering terribly.
220.53 -> So Keynes argued that we shouldn’t wait for the economy to correct itself.
223.87 -> Instead, the government should get involved and try to stimulate the economy back into
227.99 -> health.
228.99 -> And how would the government do such a thing?
230.04 -> Well, by spending money.
231.099 -> But wait, isn’t the whole point that these depressed governments don’t have any money?
234.44 -> How are they going to spend money if they don’t have any money?
236.44 -> And the answer is, borrow it!
237.98 -> And this is called deficit spending.
239.269 -> We can illustrate this with an old timey metaphor: priming the pump.
242.83 -> Now, back in the day before you could just go turn on the sink and get water out of it,
246.06 -> people had to get water out of wells.
247.5 -> In order to get that water, there was a pump.
249.739 -> And if you just started cranking the pump while it was dry, you wouldn’t get anything
253.25 -> out.
254.25 -> So you had to put a little water in the top of the pump to prime the pump in order to
257.409 -> get the water flowing.
258.409 -> So that was Keynes’s idea.
260.549 -> Prime the pump of a depressed economy with deficit spending and that’s how you get
264.839 -> the water, which is the money, to come out.
267.349 -> Now, over in the United States, American president Franklin Delano Roosevelt was a huge believer
271.56 -> in this idea.
272.56 -> And his flagship program to get the United States out of depression was called the New
275.811 -> Deal.
276.811 -> So the way the U.S. government stepped in to address their economic difficulties was
279.38 -> by borrowing money and putting millions of people to work on government projects.
283.349 -> Under the New Deal people got jobs building dams and public buildings and roadways.
287.639 -> Now it’s been a matter of long debate amidst historians whether or not FDR’s New Deal
291.43 -> actually helped the economy recover from the depression because once the U.S. got involved
295.55 -> in World War 2, that basically solved their economic problem.
299.009 -> Whether it was because of World War 2 or because of the New Deal, or some of both, is hard
302.629 -> to say for sure.
303.629 -> Okay, that was the United States, but we can also see government intervention in the economy
306.84 -> over in Russia as well.
308.249 -> During this time the Bolshevik government presided over a starving population and an
312.469 -> economy on the brink of collapse.
314.31 -> And so in 1921 Vladimir Lenin introduced what he called, the New Economic Plan.
318.71 -> Essentially it was a rollback of communist policies intended to spur the economy back
322.65 -> to health, by, among other things, reintroducing private trade into Russia.
326.93 -> Now, Lenin died in 1924 and the New Economic Plan essentially died with him.
331.599 -> But now I get to introduce you to our good buddy and ruthless authoritarian dictator
335.189 -> Joseph Stalin.
336.24 -> Just like Lenin, Stalin also got the government heavily involved in economic affairs.
339.999 -> And in order to do that Stalin introduced a series of Five Year Plans.
343.559 -> Now the goal of these was to further industrialize Russia so they could catch up with their European
347.999 -> counterparts.
348.999 -> The first step was to collectivize agriculture.
350.719 -> So the government confiscated private land and set agricultural quotas for the farmers
355.149 -> to meet.
356.149 -> Not surprisingly, this collectivization enraged the farmers whose land was seized.
359.9 -> And it’s easy to understand why: much of the food they grew was taken and sent to feed
364.039 -> people back in the urban centers.
366.059 -> And so their reaction was to burn their crops and kill their livestock.
369.189 -> So it probably won’t be much of a surprise to you to hear that Stalin’s series of Five
372.24 -> Year Plans was pretty much an utter failure.
374.58 -> Millions of people starved to death under these plans.
376.919 -> But, to be fair, you know while all those people were starving to death, at least the
380.249 -> industrialization part of the plan went pretty well.
383.409 -> Now over in Mexico, we have yet another example of big daddy government stepping in to correct
387.55 -> the economy.
388.55 -> So after the Mexican Revolution was over, one political party came to dominate Mexican
391.86 -> politics.
392.86 -> And they were called the Institutional Revolutionary Party (or the PRI).
396.08 -> And under the guiding hand of the PRI, the Mexican economy improved greatly.
400.629 -> For example, they nationalized Mexico’s oil industry, which heretofore had been largely
405.009 -> owned by foreign investors.
406.249 -> Alright, we also want to talk about this theme over in countries like Italy, and Germany,
409.599 -> and Brazil, but in order to do that I need to introduce you to the rise of a new kind
413.24 -> of government during this time, namely, fascist governments.
416.389 -> By definition, fascism is an authoritarian and nationalistic system of government and
420.53 -> social organization.
421.53 -> A chief characteristic of fascist governments is the glorification of military might and
425.86 -> the necessity of armed struggle.
427.58 -> Often fascist governments blamed their problems on the ethnic minorities that lived within
431.209 -> their borders.
432.209 -> And economically speaking, fascist governments wielded a heavy hand in the economy.
436.259 -> Okay, so Italy was the first proper fascist government in Europe during this time.
440.46 -> And for that, we have Benito Mussolini to thank.
443.029 -> Mussolini reorganized the Italian economy in terms of something called corporatism.
447.55 -> This meant that each sector of the economy was like different organs of the same body.
451.009 -> And each organ was free to organize itself in whatever way it wished just so long as
454.539 -> it served the purposes of the greater whole.
456.279 -> Now, that’s how it worked in theory.
457.569 -> But in reality, fascist Italy was a totalitarian state that essentially controlled every aspect
462.61 -> of the Italian society.
463.74 -> Now Mussolini had a great admirer over in Germany by the name of Adolf Hitler.
467.18 -> Hitler was the leader of the Nazi party, which he fashioned after the fascist Italians.
471.009 -> And once Hitler was in power, he addressed the severe economic depression in Germany
475.509 -> in the following manner.
476.619 -> He went ahead and cancelled all German reparation payments.
479.599 -> Additionally he led the German government into massive deficit spending to build up
483.179 -> the military and take on internal infrastructure projects.
485.879 -> And we’ll get back to them in another video.
487.479 -> Okay, that’s Italy and Germany.
488.529 -> Let’s go over to Brazil and see how this is working out over there.
491.379 -> Over in Brazil they had experienced a very slow transition from an agricultural economy
495.469 -> into an industrial one.
496.599 -> Now in 1930 a coup installed Getulio Vargas as president.
499.849 -> Now the people supported the installation of Vargas because they thought he’d bring
503.26 -> democratic principles to bear on Brazil.
505.429 -> But instead he went ahead and organized the Brazilian government in a similar fashion
509.629 -> as Mussolini’s Italian government.
511.309 -> Now under Vargas’s leadership, it’s true that industry grew rapidly, but he also consolidated
516.19 -> power by removing individual freedoms from the people.
518.86 -> For example, under what he called the “New State” program Vargas limited the freedom
522.409 -> of the press and imprisoned his political opponents.
524.86 -> Alright, that’s what you need to know about Unit 7 Topic 4 of AP World History.
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534.879 -> And if you want me to keep making videos for you, then subscribe and I will comply forthwithly.
537.768 -> Heimler out.

Source: https://www.youtube.com/watch?v=G3yRS09i70s