1930s Great Depression Europe

1930s Great Depression Europe

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During the 1930s, the combination of the Great Depression and the memory of tragic losses in World War I contributed to pushing American public opinion and policy toward isolationism. Isolationists advocated non-involvement in European and Asian conflicts and non-entanglement in international politics. Although the United States took measures to avoid political and military conflicts across the oceans, it continued to expand economically and protect its interests in Latin America. The leaders of the isolationist movement drew upon history to bolster their position. In his Farewell Address, President George Washington had advocated non-involvement in European wars and politics. For much of the nineteenth century, the expanse of the Atlantic and Pacific Oceans had made it possible for the United States to enjoy a kind of "free security" and remain largely detached from Old World conflicts. During World War I, however, President Woodrow Wilson made a case for U.S. intervention in the conflict and a U.S. interest in maintaining a peaceful world order. Nevertheless, the American experience in that war served to bolster the arguments of isolationists; they argued that marginal U.S. interests in that conflict did not justify the number of U.S. casualties. In the wake of the World War I, a report by Senator Gerald P. Nye, a Republican from North Dakota, fed this belief by claiming that American bankers and arms manufacturers had pushed for U.S. involvement for their own profit. The 1934 publication of the book Merchants of Death by H.C. Engelbrecht and F. C. Hanighen, followed by the 1935 tract "War Is a Racket" by decorated Marine Corps General Smedley D. Butler both served to increase popular suspicions of wartime profiteering and influence public opinion in the direction of neutrality. Many Americans became determined not to be tricked by banks and industries into making such great sacrifices again. The reality of a worldwide economic depression and the need for increased attention to domestic problems only served to bolster the idea that the United States should isolate itself from troubling events in Europe.

The Great Depression of the 1930s was not the only one in America's history. In fact, it was the third depression of the modern era, following previous economic collapses in the 1840s and again in the 1890s. During the depression of the 1890s unemployment was widespread and many Americans came to the realization that in an industrialized society the threat to economic security represented by unemployment could strike anyone--even those able and willing to work. Protest movements arose--the most quixotic and notable being that of "Coxey's Army."

Also, in contrast to the relatively brief economic "panics" of the past, the Great Depression dragged on with no end in sight. As the depression deepened, it had far-reaching political consequences. One response to the depression was military dictatorship--a response that could be found in Argentina and in many countries in Central America. Western industrialized countries cut back sharply on the purchase of raw materials and other commodities. The price of coffee, cotton, rubber, tin, and other commodities dropped 40 percent. The collapse in raw material and agricultural commodity prices led to social unrest, resulting in the rise of military dictatorships that promised to maintain order. A second response to the Depression was fascism and militarism--a response found in Germany, Italy, and Japan. In Germany, Adolph Hitler and his Nazi Party promised to restore the country's economy and to rebuild its military. After becoming chancellor in 1932, Hitler outlawed labor unions, restructured German industry into a series of cartels, and after 1935, instituted a massive program of military rearmament that ended high unemployment. In Italy, fascism arose even before the Depression's onset under the leadership of Italian dictator Benito Mussolini. In Japan, militarists seized control of the government during the 1930s. In an effort to relieve the Depression, Japanese military officers conquered Manchuria, a region rich in raw materials, and coastal China in 1937.A third response to the Depression was totalitarian communism. In the Soviet Union, the Great Depression helped solidify Joseph Stalin's grip on power. In 1928, Stalin instituted a planned economy. His First Five Year Plan called for rapid industrialization and "collectivization" of small peasant farms under government control. To crush opposition to his program, which required peasant farmers to give their products to the government at low prices, Stalin exiled millions of peasant to labor camps in Siberia and instituted a program of terror called the Great Purge. Historians estimate that as many as 20 million Soviets died during the 1930s as a result of famine and deliberate killings.A final response to the Depression was welfare capitalism, which could be found in countries including Canada, Great Britain, and France. Under welfare capitalism, government assumed ultimate responsibility for promoting a reasonably fair distribution of wealth and power and for providing security against the risks of bankruptcy, unemployment, and destitution.Compared to other industrialized countries, the economic decline brought on by the Depression was steeper and more protracted in the United States. The unemployment rate rose higher and remained higher longer than in any other western society. European countries significantly reduced unemployment by 1936. However, the American jobless rate still exceeded 17 percent as late as 1939, when World War II began in Europe. It did not drop below 14 percent until 1941.The Great Depression transformed the American political and economic landscape. It produced a major political realignment, creating a coalition of big city ethnics, African Americans and Southern Democrats committed, to varying degrees, to interventionist government. The Depression strengthened the federal presence in American life, producing such innovations as national old age pensions, unemployment compensation, aid to dependent children, public housing, federally subsidized school lunches, insured bank deposits, the minimum wage, and stock market regulation. It fundamentally altered labor relations, producing a revived labor movement and a national labor policy protective of collective bargaining. It transformed the farm economy by introducing federal price supports and rural electrification. Above all, the Great Depression produced a fundamental transformation in public attitudes. It led Americans to view the federal government as the ultimate protector of public well-being. PreviousNext

Economic Background While the United States was still struggling to emerge from the Great Depression at the end of the 1930s, and would do so partly because of the war, Japan had emerged from its own period of depression, which had begun in 1926, by the mid-1930s. Many of the young soldiers mobilized into the Japanese army by the early 1930s came from the rural areas, where the effects of the depression were devastating and poverty was widespread. Their commitment to the military effort to expand Japanese territory to achieve economic security can be understood partly in these terms. The depression ended in the mid-1930s in Japan partly because of government deficits used to expand greatly both heavy industry and the military. Internationally, this was a time when "free trade" was in disrepute. The great powers not only jealously protected their special economic rights within their colonies and spheres of influence, but sought to bolster their sagging economies through high tariffs, dumping of goods, and other trade manipulation. The Japanese, with few natural resources, sought to copy this pattern. They used cutthroat trade practices to sell textiles and other light industrial goods in the East Asian and U.S. markets, severely undercutting British and European manufacturers. They also developed sources of raw materials and heavy industry in the colonies they established in Korea, Taiwan and Manchuria. Japan used high tariffs to limit imports of American and European industrial products.

But behind this mistake was another, earlier miscalculation. Ever since Commodore Perry's fleet opened Japan in 1853, in an era of great colonial expansion, the Japanese had watched the European powers dominate East Asia and establish colonies and trading privileges. China, Japan's neighbor, was carved up like a melon as Western powers established their spheres of influence on Chinese territory. After an amazingly short time, Japan was able to develop the economic and military strength to join this competition for dominance of the Asian mainland. Japan defeated China in 1895 and Russia in 1905, in battles over who should dominate Korea. Japan joined the allies against Germany in 1914-18 in a struggle to control a portion of China and then conquered Manchuria in 1931 in an effort to secure a land area rich in raw materials. The Japanese nation and its military, which controlled the government by the 1930s, felt that it then could, and should, control all of East Asia by military force.

Understanding the Great Depression has never been more relevant than in today's economic crisis. This edited collection provides an authoritative introduction to the Great Depression as it affected the advanced countries in the 1930s. The contributions are by acknowledged experts in the field and cover in detail the experiences of Britain, Germany, and, the United States, while also seeing the depression as an international disaster. The crisis entailed the collapse of the international monetary system, sovereign default, and banking crises in many countries in the context of the most severe downturn in western economic history. The responses included protectionism, regulation, fiscal and monetary stimulus, and the New Deal. The relevance to current problems facing Europe and the United States is apparent.The chapters are written at a level which will be comprehensible to advanced undergraduates in economics and history while also being a valuable source of reference for policy makers grappling with the current economic crisis. The book will be of interest to modern macroeconomists and students of interwar history alike and seeks to bring the results of modern research in economic history to a wide audience. The focus is not only on explaining how the Great Depression happened but also on understanding what eventually led to the recovery from the crisis. A key feature is that every chapter has a full list of bibliographical references which can be a platform for further study. 2b1af7f3a8