Treaty of Versailles:
• A war guilt clause placed total blame for the war on Germany.
• Germany was assigned reparations payments of $33 billion.
• Germany lost its colonies.
• Alsace and Lorraine were returned to France.
• Germany’s military power was severely limited.
• The coal-rich Rhineland was demilitarized.
• A League of Nations was established to work for international peace. The dream of U.S. President
Woodrow Wilson, the League’s future impact was weakened when the United States refused to join.
(The United States later signed a separate peace treaty with Germany.) Also, Germany and Russia
were forbidden to join the League.
Other Outcomes of World War I
Because of World War I:
• An entire generation of young European men was almost wiped out.
• Italy and Japan were angered at not receiving additional territory.
• The Ottoman Empire was reduced to the area of present-day Turkey.
• China lost territory to Japan and became a virtual Japanese protectorate.
• The Austro-Hungarian Empire was dissolved.
• The new nations of Yugoslavia, Hungary, and Czechoslovakia were formed from Austria-Hungary.
All three nations contained within their borders a variety of ethnic groups with their own
Nationalist aspirations.
• Russia lost territory to Romania and Poland. Finland, Latvia, Estonia, and Lithuania gained their
independence.
• Poland was restored to the European map. A Polish Corridor was created to give Poland an outlet to
the Baltic Sea.
• The Ottoman Empire was divided into mandates with Great Britain controlling Iraq and Pakistan,
and France acquiring Syria and Lebanon.
Great Depression
The cost of war in Europe devastated the economies of European nations on both sides of the conflict.
When Germany announced it was unable to make its reparations payments to the former Allies, Great
Britain and France were unable to fully honor repayment of their war debts to the United States. The
agricultural sector in Europe and the United States suffered from overproduction that resulted in a
decline in farm prices. Farmers in Western Europe and the United States borrowed to purchase
expensive farm equipment. Overproduction also resulted in lower prices on plantation-grown crops
in Africa and Latin America.
As the economic situation in Europe worsened, banks began to fail. In 1929, when the economy
and banking systems in the United States also crashed, the United States was unable to continue its
loans to European nations. Global trade diminished, creating massive unemployment not only in
Europe and the United States but also in Japan and Latin America.