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==International Trade
==Developments in individual countries==
===Europe===
====Britain= ===
the gold standard in 1925 at its prewar parity with the dollar
The World Depression broke at a time when Britain was still far from having recovered from the effects of the [[World War I|First World War]] more than a decade earlier.
====France ====
{{main|Great Depression in France}}
The crisis affected France a bit later than other countries, around 1931. As in Britain, France was recovering from World War I, trying without much success to recover the [[World War I reparations|reparations]] from Germany. This led to the [[occupation of the Ruhr]] at the beginning of the 1920s, which failure in turn led to the implementation of the [[Dawes Plan]] of August 1924 and the [[Young Plan]] of 1929. However, the depression had drastic effects on the local economy, and partly explains the [[February 6, 1934 riots]] and even more the formation of the [[Popular Front (France)|Popular Front]], led by [[Section française de l'Internationale ouvrière|SFIO socialist leader]] [[Léon Blum]], which won the elections in 1936.
====Germany ====
====Germany ====
The Great Depression hit [[Germany]] hard. The impact of the [[Wall Street Crash]] forced American banks to end the new loans that had been funding the repayments under the [[Dawes Plan]] and the [[Young Plan]]. In 1932, 90% of German reparation payments were cancelled. Widespread unemployment reached 25% in Germany, as every sector was hurt. The [[Weimar]] government, under Kurt von Schleicher <ref name=SCHLEICHER>[http://en.allexperts.com/e/h/hj/hjalmar_schacht.htm Hjalmar Horace Greeley Schacht]</ref>, by the end of 1932, had already  enacted legislation which was in line with [[keynesians|keynesian]] suggestions (and which even came to influence some of  Rooselvelt's [[New Deal]] ideas), but failed to implement it for fears that such a high-spending policy could lead to a return of the [[hyperinflation]] that had affected Germany in the years immediately after World War I. This failure to deal with the depression crisis caused both the general public and the German elites to completely lose  confidence in the Weimar government and  played a significant role in the election of [[Adolf Hitler]] and in the ascention of his [[Nazi Party]]. Once in power, Hitler's appointed as his economy minister [[Hjalmar Schacht|Horace Greely Hjalmar Schacht]] <ref name=SCHACHT>[http://pdftohtml.markoer.org/pdf2html.php?url=http://www.people.fas.harvard.edu/~jfrieden/Selected%20Articles/Books/GlobalCapitalism/EconomicPrincipals.pdf  WARSH, David; Editor. ''Hjalmar Horace Greeley Schacht and Other Citizens of the Twentieth Century''.<small> in: www.people.fas.harvard.edu; April 9, 2006</small>]</ref> (1934–37), the same banker who had been responsible for ending Germany's hyperinflation some years earlier. Schacht <ref name=SCHACHT>[http://pdftohtml.markoer.org/pdf2html.php?url=http://www.people.fas.harvard.edu/~jfrieden/Selected%20Articles/Books/GlobalCapitalism/EconomicPrincipals.pdf  WARSH, David; Editor. ''Hjalmar Horace Greeley Schacht and Other Citizens of the Twentieth Century''.<small> in: www.people.fas.harvard.edu; April 9, 2006</small>]</ref> applied vigorously the new ideas Keynes had been defending, almost simulteanously with Roosevelt's [[New Deal]]. Under the command of Schacht, who run deficit spendings of up to 5% of  Nazi Germany's GNP, unemployment was completely ended in Germany by 1937, without any significant increase in inflation. Three years after Schacht took office, [[Keynes]] would publish ''The General Theory of Employment, Interest and Money'' <ref name=GENERAL>[http://cepa.newschool.edu/het/texts/keynes/gtcont.htm KEYNES, John Maynard. ''General Theory of Employment, Interest and Money, The''. London: Macmillan Press; New York: St. Martin's Press; 1936]</ref>, the book which would elaborate the theoretical framework which explained those [[Keynesians|kenesian]] measures that were already being implemented, by politicians of various ideologies around the world, just a couple of years before Keyne's book publication,  . 
:''(with supplementary material from Hans-Joachim Braun (1990) <ref> Hans-Joachim Braun: ''The German Economy in the Twentieth Century'',Routledge 1990  (Questia [http://www.questia.com/read/109044109?title=The%20German%20Economy%20in%20the%20Twentieth%20Century]) </ref>).
 
Hitler followed an economic policy of autarky, creating a network of client states and economic allies in central Europe and Latin America. His economic policies kept as much German money as possible in Germany, and otherwise built a system of satellites with differential exchange rates: Hungary, Romania, Bulgaria, Yugoslavia, Greece and Turkey. Large scale military spending did began in 1933 and played a major role in recovery.
====Italy====
The Great Depression hit [[The Italian economy under Fascism, 1922-1943#The Great Depression|Italy]] very hard. As industries came close to failure they were bought out by the banks in a largely illusionary bail-out - the assets used to fund the purchases were largely worthless. This lead to a financial crisis peaking in 1932 and major government intervention. The [[Industrial Reconstruction Institute]] (IRI) was formed in January 1933 and took control of the bank-owned companies, suddenly giving Italy the largest state-owned industrial sector in Europe (excluding the USSR). IRI did rather well with its new responsibilities - restructuring, modernising and rationalising as much as it could. It was a significant factor in post-1945 development. But it took the Italian economy until 1935 to recover the manufacturing levels of 1930 - a position that was only 60% better than that of 1913.


====Spain ====
The severe depression faced by the German economy in the 1930s was partly due to the problems of recovery from the war. War expenditure had been almost completely financed by loans and the money supply had been quadrupled in the period from 1914 to 1918. Inflationary pressures that had started during the war, intensified year by year and culminated in the disastrous [[German hyperinflation]]  of 1922-233 <ref>[http://www.usagold.com/germannightmare.html. ''The Nightmare German Inflation'', Scientific Market Analysis, 1970.]</ref>. By the time that prices were stabilised  by Hjalmar Schacht's establishment of the "rentenmark" <ref>[http://www.econ.puc-rio.br/gfranco/Ch10.PDF R. Kuczynski "The Rentenmark Miracle and the German stabilization"]</ref>, extensive damage had been done and the banking system had been seriously weakened. In 1923, shortfalls in Germany's payments of reparations had prompted French, Italian and Belgian governments to attempt to seize resources by occupying the Ruhr. The dispute was eventually settled by acceptance of the Dawes Plan <ref>[http://www.u-s-history.com/pages/h1371.html ''The Dawes Plan'' NW travel Magazine online]</ref> of 1924, under which payments would be rescheduled and Germany would be provided with massive loans, mainly from the United States. American financier J. P. Morgan floated the loan on the U.S. market, which was quickly oversubscribed. Over the next four years, U.S. banks continued to lend Germany enough money to enable it to meet its reparation payments to countries such as France and the United Kingdom. These countries, in turn, used their reparation payments from Germany to service their war debts to the United States.
Subsequent  recovery had been heavily dependent on imported capital.


[[Spain]] had a relatively isolated economy, with high protective tariffs and was experiencing other economic problems with the need for land reform, overall development, and better education levels. It was not one of the main countries affected by the Depression. However, because the country was destroyed by [[Spanish Civil War|civil war]] and suffered from isolation because of [[Francisco Franco]]'s fascist regime, GDP levels of 1939 were not recovered until 1953.
It was in late 1926 that the German authorities decided to restrain the subsequent expansion of economic activity. According to Peter Temin  the President of the Reichsbank, Hjalmar Schacht, became worried about stock market speculation and took action that was more severe than that undertaken by the United States' Federal Reserve Bank in 1928, by withdrawing tax exemption from foreign holders of German bonds and forcing banks to reduce discounting. The German stock exchange crashed in 1927, and when the the downturn of economic activity in the United States started in 1929, economic activity in Germany was already declining.


===Asia===
In 1930 the wartime allies agreed to the Young Plan <ref>[http://www.bartleby.com/65/yo/YoungPla.html ''The Young Plan'', The Columbia Encyclopedia, 2001-7]</ref>, that rescheduled Germany's reparation payments, but gave priority to the repayment of debts to the United States. Hjalmar Schacht resigned in protest and, in an article in a London magazines, John Maynard Keynes commented that it would " weigh on Germany much more heavily than the Dawes Plan, which it was agreed she could not support"<ref name=Keynes30>[http://www.gutenberg.ca/ebooks/keynes-slump/keynes-slump-00-h.html John Maynard Keynes: ''The Great Slump 1930'', London and Atheneum magazine 1930]</ref>.


====Australia ====
In order to stay on the gold standard action  was taken in 1930 to stem the outflow of gold and correct a persistent balance of payments deficit. The Reichsbank raised its discount rate to well above British and American rates and there was a sharp reduction in the money supply<ref> There is a detailed account of monetary developments at the time on page 150 of Ben Bernanke: ''Essays on the Great Deflation'', Princeton University Press, 2004 </ref>, and for the next two years (according to Temin (1989) page 31, Chancellor Brüning pursued a relentless policy of highly restrictive budgets.
[[Australia, history|Australia]], with its extreme dependence on exports, particularly primary products such as wool and wheat, is thought to have been one of the hardest-hit countries in the Western world along with [[Canada, history|Canada]] and [[Germany, history|Germany]]. [[Unemployment]] reached a record high of 29% in 1932, one of the highest rates in the world. There were also incidents of [[civil unrest]], particularly in Australia's largest city, [[Sydney]].


====Japan====
From April to June 1931, as a result of three years of deflation and the withdrawal of American funds many banks found themselves with insufficient reserves to pay  depositors. In June, President Herbert Hoover  announced a one year moratorium on international payments-reparations and war debts-and also provided a $150 million credit to the Reichsbank, but withdrawals continued.
  with a growing industrial base, was hurt slightly, with GDP falling 8% 1929-30. The economy recovered by 1932.


====China==== was the only country on the silver standard in an international monetary system dominated by the gold standard.  Fluctuations in international silver prices undermined China’s monetary system and destabilized its economy. In response to severe deflation, the state shifted its position toward the market from laissez faire to committed intervention. Establishing a new monetary system, with a different foreign-exchange standard, required deliberate government management; ultimately the process of economic recovery and monetary change politicized the entire Chinese economy.


===America===
The Reichsbank's  discount rate  was raised to 15% in July to little effect and there was a run on the German banks and savings banks followed. After a few hours the banks paid out only 20 per cent of the sums demanded by customers; and the government announced a two day bank holiday. A "credit crunch intensified the depression which continued until the Nazi party came to power in 1933


===United States ===
{{main|Great Depression in the United States}}


The Great Depression had a significant impact on the economy and people of the [[United States]] and began to fully affect the country late in 1930 and early in 1931. The official beginning and ending dates for the economic decline according to the National Beureau of Economic Research were from September of 1929 to March of 1933. At the depth of the downturn, the unemployment rate exceeded 20% and the index of industrial production dropped about 50%. Real or inflation/deflation adjusted gross domestic product ("GDP") grew rapidly after 1933 and surpassed the 1929 high by 1936. There was also a decline or recession from June of 1937 through June of 1938, but real GDP remained above the 1929 high. Employment was much slower to recover. The number of non farm jobs did not surpass the 1929 high until 1939 and the number of total jobs did not surpass the 1929 high until 1941. President [[Herbert Hoover]] was widely blamed, and he was defeated in 1932 by [[Franklin D. Roosevelt]].  Roosevelt launched a [[New Deal]] designed to provide emergency relief to upwards of a third of the population, to recover the economy to normal levels, and to reform failed parts of the economic system.  Although F.D.R. reduced unemployment by over 5 million in his first term <ref name=>[http://www.schillerinstitute.org/fid_97-01/002-3_fdr_new_deal.html CRAMER, Hartmut. ''F.D.R.’s 'New Deal': An Example of American System Economics''.<small>This speech opened the third panel of the conference, “On the Subject of Startegic Method, in Bad Schwalbach, Germany on May 28, 2000. Footnotes have been added.</small>]</ref> relatively high unemployment lingered until the early 1940s.
Lausanne Conference <ref>[http://www.associatedcontent.com/article/735145/the_lausanne_conference.html Marquis Cannaby ''The Lausanne Conference'', Associated Content Society, 2008]</ref>




===Latin America ===
On an index of 1928 = 100,consumer prices fell to 77 in 1933; and industrial production rose to 110  in 1929, fell to 59 in 1932. Unemployment rose from about 5% in 1929 to 30% in 1932 and did not return to 1929 levels until 1936, and industrial unemployment averaged about 22% compared with France's 10% and The United States' 26% .
{{main|Great Depression in Latin America}}


Before the 1929 crisis, links between the world economy and [[Latin America]]n economies had been established through American and British investment in Latin American exports to the world. As a result, Latin Americans export industries felt the depression quickly. World prices for commodities such as wheat, coffee and copper plunged. Exports from all of Latin America to the US fell in value from $1.2 billion in 1929 to $335 million in 1933, rising to $660 million in 1940.


But on the other hand, the depression led the area governments to develop new local industries and expand consumption and production. Following the example of the New Deal, governments in the area approved regulations and created or improved welfare institutions that helped millions of new industrial workers to achieve a better standard of living.


===South Africa ===
<ref>[http://www.ata.boun.edu.tr/ehes/Istanbul%20Conference%20Papers-%20May%202005/adalet.pdf Mäuge Adalet: ''Fundamentals, Capital Flows and Capital Flight: The German Banking Crisis of 1931'' 2005]</ref>
{{main|Great Depression in South Africa}}
 
The Great Depression had a pronounced economic and political effect on [[South Africa]], as it did to most nations at the time. As world trade slumped, demand for South African agricultural and mineral exports fell drastically.  Many historians think that the social discomfort caused by the depression was a contributing factor in the defeat of [[Barry Hertzog]] and his [[National Party (South Africa)|National Party]] in the 1933 general election.




<ref> Peter Temin: "Transmission of the Great Depression",
''The Journal of Economic Perspectives'', Vol. 7, No. 2. Spring, 1993 [http://www.fcs.edu.uy/multi/phes/Temin.pdf]</ref>
==References==
==References==
 
{{reflist}}
<references/>

Latest revision as of 15:23, 3 March 2013

Germany

(with supplementary material from Hans-Joachim Braun (1990) [1]).

The severe depression faced by the German economy in the 1930s was partly due to the problems of recovery from the war. War expenditure had been almost completely financed by loans and the money supply had been quadrupled in the period from 1914 to 1918. Inflationary pressures that had started during the war, intensified year by year and culminated in the disastrous German hyperinflation of 1922-233 [2]. By the time that prices were stabilised by Hjalmar Schacht's establishment of the "rentenmark" [3], extensive damage had been done and the banking system had been seriously weakened. In 1923, shortfalls in Germany's payments of reparations had prompted French, Italian and Belgian governments to attempt to seize resources by occupying the Ruhr. The dispute was eventually settled by acceptance of the Dawes Plan [4] of 1924, under which payments would be rescheduled and Germany would be provided with massive loans, mainly from the United States. American financier J. P. Morgan floated the loan on the U.S. market, which was quickly oversubscribed. Over the next four years, U.S. banks continued to lend Germany enough money to enable it to meet its reparation payments to countries such as France and the United Kingdom. These countries, in turn, used their reparation payments from Germany to service their war debts to the United States. Subsequent recovery had been heavily dependent on imported capital.

It was in late 1926 that the German authorities decided to restrain the subsequent expansion of economic activity. According to Peter Temin the President of the Reichsbank, Hjalmar Schacht, became worried about stock market speculation and took action that was more severe than that undertaken by the United States' Federal Reserve Bank in 1928, by withdrawing tax exemption from foreign holders of German bonds and forcing banks to reduce discounting. The German stock exchange crashed in 1927, and when the the downturn of economic activity in the United States started in 1929, economic activity in Germany was already declining.

In 1930 the wartime allies agreed to the Young Plan [5], that rescheduled Germany's reparation payments, but gave priority to the repayment of debts to the United States. Hjalmar Schacht resigned in protest and, in an article in a London magazines, John Maynard Keynes commented that it would " weigh on Germany much more heavily than the Dawes Plan, which it was agreed she could not support"[6].

In order to stay on the gold standard action was taken in 1930 to stem the outflow of gold and correct a persistent balance of payments deficit. The Reichsbank raised its discount rate to well above British and American rates and there was a sharp reduction in the money supply[7], and for the next two years (according to Temin (1989) page 31, Chancellor Brüning pursued a relentless policy of highly restrictive budgets.

From April to June 1931, as a result of three years of deflation and the withdrawal of American funds many banks found themselves with insufficient reserves to pay depositors. In June, President Herbert Hoover announced a one year moratorium on international payments-reparations and war debts-and also provided a $150 million credit to the Reichsbank, but withdrawals continued.


The Reichsbank's discount rate was raised to 15% in July to little effect and there was a run on the German banks and savings banks followed. After a few hours the banks paid out only 20 per cent of the sums demanded by customers; and the government announced a two day bank holiday. A "credit crunch intensified the depression which continued until the Nazi party came to power in 1933


Lausanne Conference [8]


On an index of 1928 = 100,consumer prices fell to 77 in 1933; and industrial production rose to 110 in 1929, fell to 59 in 1932. Unemployment rose from about 5% in 1929 to 30% in 1932 and did not return to 1929 levels until 1936, and industrial unemployment averaged about 22% compared with France's 10% and The United States' 26% .


[9]


[10]

References

  1. ↑ Hans-Joachim Braun: The German Economy in the Twentieth Century,Routledge 1990 (Questia [1])
  2. ↑ The Nightmare German Inflation, Scientific Market Analysis, 1970.
  3. ↑ R. Kuczynski "The Rentenmark Miracle and the German stabilization"
  4. ↑ The Dawes Plan NW travel Magazine online
  5. ↑ The Young Plan, The Columbia Encyclopedia, 2001-7
  6. ↑ John Maynard Keynes: The Great Slump 1930, London and Atheneum magazine 1930
  7. ↑ There is a detailed account of monetary developments at the time on page 150 of Ben Bernanke: Essays on the Great Deflation, Princeton University Press, 2004
  8. ↑ Marquis Cannaby The Lausanne Conference, Associated Content Society, 2008
  9. ↑ Mäuge Adalet: Fundamentals, Capital Flows and Capital Flight: The German Banking Crisis of 1931 2005
  10. ↑ Peter Temin: "Transmission of the Great Depression", The Journal of Economic Perspectives, Vol. 7, No. 2. Spring, 1993 [2]
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