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Unformatted text preview: History 20 Lecture 7 The Great Depression I. Global issues at the end of World War I A. Economic concerns over the peace John Maynard Keynes, a British economist who accompanied Prime Minister Lloyd George to the peace conference at Versailles, was infuriated by the terms of the peace. He noted the failure of the victorious powers to develop an adequate economic rehabilitation plan for Europe after the war. In his 1920 work, The Economic Consequences of the Peace, Keynes discussed the dangers of governments not dealing more directly with economic recovery in Europe, making the following points: Internal productivity in Europe had fallen off dramatically during WWI and was continuing to do so after the war. Internal transport and exchange had broken down so that markets could not function effectively (in other words, the war had destroyed the possibility for the market forces of supply and demand to work efficiently). Europe had not been able to purchase what it wanted from overseas during the war. Keynes went on to point out that in the last phase of the war and afterwards: Governments responded incorrectly to inflation by printing more paper money and at the same time, failed to take appropriate measures to regulate supply of essential commodities. If these conditions persisted, only the rich would have the wherewithal to purchase much of anything. As a consequence, at present (in 1920): An inefficient, unemployed, disorganised Europe faces us, torn by internal strife and international hate, fighting, starving, pillaging and lying. B. Economic outcomes of Europes predicament included: The whole western world began to work on credit with the U.S. becoming The whole western world began to work on credit with the U....
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