The name for the economic collapse of the 1920's and 1930's was the Great Depression. The Great Depression occurred as overproduction of goods caused prices to fall in the United States. In response, manufacturers laid off workers which ultimately hurt the market for consumer and agricultural goods. The weaknesses in the United States economy came to a head on October 29, 1929, when the stock market crashed and the economy headed into deep recession.
Germany was crippled by the sanctions leveled against it by the Treaty of Versailles. World War I had plunged Germany into massive debt and the reparations from the treaty further harmed its economy. In response, they tried to solve their problems by printing more money. This effort resulted in massive inflation and rendered the German currency useless. American banks helped the Germans temporarily fix their economy with loans, but were no longer able to assist after the stock market crash. This caused further inflation and unemployment in Germany that the democratic government was unable to fix.
As a result of the economic despair that existed in Germany after World War I the people lost complete confidence in their new democracy. They looked for a strong leader with a plan for recovery. That leader was Adolf Hitler, a man that presented a brand of fascism known as Nazism. His oratory and organization skills convinced the German people that fascism would make Germany great again. Fascism in Germany and Italy developed as a response to the economic woes that existed in their respective nations.
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