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C O U R S E 
A History of the World since 1300
Jeremy Adelman, Princeton University
C O U R S E   L E C T U R E 
1929 Economic Collapse
Notes taken on January 27, 2019 by Edward Tanguay
the Treaty of Versailles produced an unstable Europe
a goal of it was the rebuilding of a global economy
but many focused on establishing the economic world as it had existed before the war
the idea was that restoring the Victorian boom was a condition for the political peace
people looking for new coordinates began to be nostalgic for the old world
it was the crash of 1929 that would heighten the tensions within Europe
but the big question in 1919 was: how to rebuild
while Wilson and Lenin were looking forwards towards utopias, the economists and business people were looking backwards
Keynes argued that the Allies had made some fundamental mistakes
that Germany pay far too much in indemnity payments
that British economy could not sustain the &gold& standard
and Keynes argued that we needed
flexible foreign exchange rates
capital controls that would control money across borders
so that countries would not have to turn to nationalistic policies
Keynes saw this as the folly of the ruling classes
end the end, the crisis finally came, in 1929
but there was a pause for recovery in the 1920s
had less to do with the gold standard
had more to do with massive American lending to Europe
flow of capital to the United States
the largest borrower was Germany, to pay the other European countries
the United States was an immature lender
one that enjoys both trade surpluses and is an exporter of capital
gold flows in
the only way to keep the rest of the world expanding was to recirculate money to other destinations
it was a vulnerable system
as China is now
Britain before the war was a mature lender
the rest of the world was borrowing too much money
Germany had just recovered somewhat from the hyperinflation of 1923-1924
German and Austrian banks began to fail
they needed emergency loans from the United States
then came the crash on Wall Street in 1929
Vienna: The Credit Anstalt
a virus of bank failures across Europe
governments were too weak save them
1931 almost everyone had defected from the gold standard
1933 the United State joined getting off the gold standard
the world economy had lost its core
increasing protectionism
Reed Smoot / Willis Hawley
Smoot-Hawley Tariff
over 1000 economists signed an petition to denounce this
shrinkage in global trade
1928 world only reached 112%
in 1932 it was only 60% of 1929
factories shut down since they couldn't export to other markets
1932 there were 52 million workers were without a job
a destruction of the global system that had built up over centuries