Great Depression/Addendum

Developments in individual countries

Europe

Britain

rejoined the gold standard in 1925 and left it and devalued its currency in 1931 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 First World War more than a decade earlier.

France

rejoined the gold standard in 1926, and devalued its currency in 1936 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 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, led by Léon Blum, which won the elections in 1936.

Germany

rejoined the gold standard in 1924

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 , by the end of 1932, had already enacted legislation which was in line with keynesian suggestions, 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 Horace Greely Hjalmar Schacht (1934–37). Schacht 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. 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

rejoined the gold standard in 1927 and left it in 1931 The Great Depression hit 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

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 civil war and suffered from isolation because of Francisco Franco's fascist regime, GDP levels of 1939 were not recovered until 1953.

Sweden

rejoined the gold standard in 1924 and left it and devalued its currency in 1931

Asia

Australia

rejoined the gold standard in 1925, left it in 1929 and devalued its currency in 1930 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 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

rejoined the gold standard in 1930 and left it and devalued its currency in 1931 Japan, with a growing industrial base, was hurt slightly, with GDP falling 8% 1929-30. The economy recovered by 1932.

China

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.

The Americas

United States

rejoined the gold standard in 1919 and left it and devalued its currency in 1933 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 relatively high unemployment lingered until the early 1940s.

Canada

rejoined the gold standard in 1926 and left it and devalued its currency in 1931 Canada was the country hardest hit by the Great Depression. By 1933 its industrial production had fallen to 51 per cent of its 1928 value, and wholesale prices to 66 per cent. Output did not return to its 1928 level until 1936

Latin America

Before the 1929 crisis, links between the world economy and Latin American 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

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.