After four years at war, the worlds' economy had been drained. Britain, whose economy had relied on trading, faced serious economic problems. 40% of its merchant fleets had been destroyed by German submarines in the war, making it difficult to export goods. Other countries imposed high tariffs on imports to protect their own industries, but this hurt Britain's economy. Britain's old and outdated factories, machines, and mines also hurt its industries.
Germany was also hit hard by the aftermath of the war. In an attempt to find money to pay its $33 billion debt in reparations, Germany printed an abundance of paper money. However, this merely led to severe inflation. In 1923, the value of German money dropped so significantly that one had to fill a wheelbarrow with cash simply to buy a loaf of bread (p 649, Beers).
In 1921, Warren Harding became the new president of the United States. Under Harding, America's unemployment rate plummeted from 11.7% to 2.1% between 1921 and 1923. Technology was booming: electrical appliances and packaged food maid daily life easier, while radios, movies, air travel, international airmail,and automobiles all became more common. American farmers, however, were not faring well as crops were being cheaply imported from Europe again. There was no longer a high demand for American crops as there had been during the war.
America's economy took a turn for the worse in October 1929 when the stock market crashed. This caused The Great Depression: a time of slow business, high unemployment, low prices, and low wages (p 656, Beers). As 85,000 businesses failed, unemployment shot up from 3.2% in 1929 to 23.6% in 1932 (p 656, Beers). Banks were forced to close as they had loaned money to European and American businesses and didn't have enough money to honor the deposits.
