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/