Great Depression, 1929-1933

In October 1929 the New York Stock Exchange experienced the worst crash in history - the WALL STREET CRASH. Stock prices fell dramatically, for some surviving papers by as much as 90 %. Companies suddenly went bankrupt, banks defaulted. US banks withdrew their money invested in Europe. Many European companies went bankrupt, European banks defaulted, unemployment increased sharply.

The impact on Europe's economies varied. The SOVIET UNION was virtually unaffected, as it's economy was state-planned, and to only a small degree interconnected with the world economy.
The French economy did not show immediate signs of collapse, as a recent devaluation of the Franc had boosted French exports.
The Italian economy, organized along the lines of the CORPORATE STATE, similarily showed limited immediate impact, but like in the case of the French economy, in the coming years the economic depression set in.
Hit worse were industrialized countries which attempted to stick to the Gold Standard, such as Britain, the Netherlands, Belgium. Many companies went bankrupt; unemployment rose sharply.
Hit worst were the economies of the industrialized countries which lost World War I - Germany and Austria. Unemployment went up sharply; there was a general sense of insecurity.

In most countries, the governments pursued a policy of AUSTERITY, believing that at some point of time the economy would enter a new phase of growth and heal itself. This austerity only resulted in the reduction of the number of state employees - thus raising the numbers of the unemployed even more - and in cuts in unemployment benefits (Britain, Netherlands etc.).
Other policy pursued were PROTECTIONISM, meant to protect the domestic industry against foreign competition and CURRENCY DEVALUATION; Britain reluctantly devalued the Pound Sterling in 1931.
Exponents of a policy of Austerity were Germany's HEINRICH BRUENING, and the Netherlands' HENDRIK COLIJN.
In many countries, the populace grew very impatient with it's politicians, the result being frequent changes in government. The non-democratic parties (communists, fascists etc.) gained; the moderate parties found it increasingly difficult to establish majorities by forming coalitions. The means to ensure that governments could continue to function was found in emergency legislation, which permitted the prime minister/chancellor to temporarily cancel the constitution and RULE BY DECREE. This, however, only solved the momentary government crisis, not the general economical and political crisis.

The Great Depression by Country

Britain Netherlands Germany France Italy


This page is part of World History at KMLA
Last revised on February 16th 2002

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