A Global Depression

When the phrase "Great Depression" is used in modern society, images of families in the Oklahoma Dust Bowl, and long lines of people waiting for a bit of food from a soup kitchen are conjured. But something commonly overlooked is the global impact of the Great Depression. Yes, it hit America hard, but the economy of the world had been integrated together in proportions unseen until that time, so when one nation's economy fell, it began a domino effect on the rest of the industrialized nations. But how did Europe handle the Depression?  Were they able to weather the financial storm any better on their side of the pond?

It is relatively accepted that the Great Depression began in America, although the case could be made that the recession leading up to the Depression was started abroad. In the years following World War I, inflation was rampant, especially in Germany, and many European nations looked to America and her seemingly strong economy for help. Essentially the world's banker, America experienced a boom during the 1920's, and life seemed good. The astute observer would note that this was a shallow and false hope, however: farmers, used to overproducing food for the war effort, were faced with plummeting prices and huge loans for their new modern farm equipment as demand lessened and supply rose. Europe began to increase their production capabilities, but in combination with American imports, prices were again driven down, along with profits, making debts of any kind more difficult to repay. But the deeper issue was merely pushed to the background during these Roaring 20's, and coupled with eased reparation payments and new inventions like the radio and automobile, seemed like the United States could be a bastion amidst the financial storm. But it was not to last, as the American economy entered its own recession in April of 1929, culminating in the collapse of the stock market in October 1929. This sent shockwaves throughout the world, as people everywhere had invested in the stock market and uninsured banks and lost their entire life savings virtually overnight.

Officially beginning in the United States, the Great Depression rapidly spread into a worldwide economic crash, with nation after nation collapsing under the weight of its own debts, as the world's economies had been forged into a delicate web between the US and Europe after WWI. Once the American's economy caved in, however, the ripple was felt all across that web, with the nations deepest in debt to the US – namely Great Britain and Germany – feeling the hardest hit. Germany alone saw her unemployment rise harshly in 1929, until unemployment hit 25% by 1932, which equated to roughly 6 million workers. A panic began to spread amongst the politicians of the effected nations as well, with lawmakers passing legislation to attempt to protect their respective nations. They raised existing tariffs, drafted and imposed new ones, and even went so far as to require quotas set on the number of foreign imports, such as with the Smoot-Hawley Tariff, and by 1932 – when Germany reached 25% unemployment – foreign trade had fallen by nearly 50%. Another foolhardy attempt by the politicians to salvage the American economy was a failed repeal of the McFadden Act of 1927, which – in essence – limited the growth of banks by forcing them to stay in their home state. Ironically, the Canadians, who didn't have this restriction, managed to keep a single bank from going bankrupt, whereas the United States lost over 9,000. (Weatherby, 2012) American banks, terrified of the economic climate and more concerned about their own survival, stopped approving loans in an attempt to keep their own proverbial heads above the water. However, there were a select few economies who were buffered from feeling the full effects of the Depression; the Soviet Union, for example, had cut off nearly all their ties with the western nations, save a few rather insignificant ones. This placed a huge strain in the Russian people during Stalin's rapid industrialization, but it protected them from feeling the same, sobering effects of the Depression.

However, the severing of ties was not a viable option for many countries, and they were forced to find other ways of coping with the Depression. The French and British opted to adopt multi-party systems and radical economic ideas that were unheard of in their pre-War nations, and other nations – like the Italians and Germans – moved into a organized, violent and ruthless system of government, falling into the grasp of Mussolini's Fascists and Hitler's National Socialist Party. These men brutally eradicated the obstacles in the way of their respective nations recovering again, whether or not the opponents were real or figments of their imagination. Japan was another nation brutalized by the Depression, because they were so heavily dependent on their import and export trades, receiving raw materials and fuel in exchange for silk and other items of luxury. By 1931, the value of Japanese exports had plunged to 50%, almost a full year before Europe's exports reached that level, with over 3 million people unemployed. Those factors, when coupled with the droughts and bad harvests, left the majority of the Japanese islands in a state reminiscent of the Oklahoma Dust Bowl.

The Great Depression was quite literally hell on earth. Massive unemployment, governmentally meddling, unseen droughts would all combine to make one of the hardest times to survive in modern history, but before the lessons of the Great Depression could be completely grasped, Europe, Asia and eventually America found themselves involved in yet another global  war that would prove longer and even more destructive than the first.

References

About the Great Depression. (2008, August 27). Department of English, College of LAS, University of Illinois. Retrieved from http://www.english.illinois.edu/maps/depression/about.htm

Pearson-Prentice Hall (1995). Europe and the Great Depression of the 1930s. The Western Heritage. Retrieved from http://wps.prenhall.com/hss_kagan_westheritage_8/11/2878/736876.cw/index.html

Rothermund, D. (1996). Read The Global Impact of the Great Depression, 1929-1939 by Dietmar Rothermund. | Questia, Your Online Research Library. Questia, Your Online Research Library. Retrieved from http://www.questia.com/read/103606166/the-global-impact-of-the-great-depression-1929-1939

The Great Depression. (n.d.). World History International: World History Essays From Prehistory To The Present. Retrieved from http://history-world.org/great_depression.htm

Weatherby, E. (2011, February 27). Causes of the Great Depression « Pipe N' Slippers. Pipe N' Slippers. Retrieved from http://pipenslippers.wordpress.com/2012/02/27/causes-of-the-great-depression/