Complete the account of the depression and the gold standard.
Recovery after 1924 rested on American ______, which stopped after the crash of 1929. German unemployment reached around ______ million by early 1932. Eichengreen showed that countries which abandoned the gold ______ earlier recovered earlier, because the gold link forced ______ on economies that needed the opposite.
Word bank: lending · six · standard · deflation · reparations · inflation
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- The recovery of the mid-1920s depended on capital from one country.
- A currency pegged to gold cannot be expanded when demand collapses.
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Recovery after 1924 rested on American lending, which stopped after the crash of 1929. German unemployment reached around six million by early 1932. Eichengreen showed that countries which abandoned the gold standard earlier recovered earlier, because the gold link forced deflation on economies that needed the opposite.
The gold-standard argument is the strongest single explanation for the timing of recovery across countries, and it reframes the politics: governments were not merely choosing austerity out of conviction but were locked into it by a monetary commitment, and the countries that broke the commitment first came out first.
Practise The First World War and the Interwar Collapse
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