Great Depression: Economic Turmoil & Global Politics

Great Depression The Depression and international politics: Introduction: ● Started on 29th October, 1929. ○ It started with the Wall Street Crash. ● 1 day, 13 million shares were sold as people attempted to sell before prices dropped too low. The economic impact of the Depression: ● Canadian grain prices fall. ● Japanese silk trade was devastated. ● Malaysian tin and rubber prices fall. ● Australian and New Zealand wood prices fell. ● Argentinian beef prices fell. ● Trade in Brazilian coffee beans collapses. ● Sale of African raw materials declines. ○ The above all occurred because America was a key consumer of the said goods, without the US consumer demand simply collapsed and as demand fell so too did the prices. ● American loans to European businesses were recalled, causing many firms to go bankrupt. ● Many governments made this worse by putting up import taxes (protectionism) to discourage import and so bring their nation’s Balance of Payments account back to health. The Depression and the USA: ● Prior to the Depression USA produced more manufactured goods than Britain, France, Japan, Italy, Germany and the USSR put together. ● National income in the US fell by 50% (1929-32) ● Car exports fell from $541 million (1929) to $76 million (1932) ● Wheat exports fell from $200 million to $5 million. Isolationism: ● Politicians became only interested in rebuilding the US economy: ○ The government became more isolationist. ● 1932, F.D. Roosevelt came to power: ○ He needed the support of extreme isolationists in the US congress for his New Deal policy. ○ New Deal policy was based on the government spending on public projects and providing help for businesses and farmers. ● The situation of white men during this time was not nearly as bad as that of black men. ○ Some white men were even positively wealthy. ● Roosevelt believed that establishing a strong national economy was more important than good international relations. America and the dictators: ● American politicians all said that if another war was to break out they should remain neutral. ● This encouraged: ○ Britain and France to be cautious. ○ Germany to think that she could be more aggressive without risking war with the US. ○ This was further supported by the lack of action taken by the Americans in the Abyssinian Crisis (1935): ■ They only criticized Mussolini for his actions. ■ US firms even allowed a massive increase in the sale of American oil to Italy. The Depression and Germany: ● In Europe the Depression hit hardest in Germany: ○ 33.3% unemployment rate by 1932. ○ Income of German famers fell by 50%. ○ Factory output fell by 60% in 1932 when compared with figures from 1928. ● Political crisis: ○ The Democratic government had already been under fire for years. ○ The army disliked the rule of the parliament. ○ Emergency powers were given to the president since 1930 in the attempt to avert the crisis: ■ This limited the power of the Reichstag. Hitler’s Luck: ● The Depression gave the public the impression that democracy was weak and lent extremist like Hitler support. ○ The public and turned to communists and fascists who wanted to destroy democracy as they had lost faith in democracy. ○ The depression reinforced the resentment against the ToV and Weimar Republic. ● In 1928 the Nazi party had only won 12 seats in parliament: ○ But in September 1930 the Nazis won 107 and became the second largest party in Germany. ● As unemployment increased, violence between Nazi and Communist gangs increased. ● In July 1932 the Nazis won 230 seats and became the largest party in the Reichstag. ○ Because many people were impressed by Hitler’s appeal which called for ‘work, freedom and bread’. Hitler Takes Over: ● November 1932 elections set the Nazis back a little but they were still in the majority in the Reichstag. ● 30 January 1933 Hitler became the Chancellor: ○ He did not win an outright majority but did deals with other parties instead. German Rearmament: ● October 1933 Hitler withdrew Germany from the LoN and the Disarmament Commission: ○ Showed his contempt for the LoN and the ToV. ● In the following two years he concentrated on rearmament and strengthening his own position. ● February 1933 Hitler told General von Fritsch to end German disarmament and ‘create an army of the greatest possible strength.’ ○ By July 1933, Germany was producing tanks. ○ By 1934, Germany was making warships and aircraft. ■ Aircraft production rose from 36 planes in 32 to 1938 planes in 34 and 5112 planes in 36. ○ Hitler introduced conscription thus greatly increasing the size of the German army. ● The limits on German military power as imposed by the ToV had been completely cast away. The Depression and Britain: ● Depression wrecked traditional manufacturing industries: ○ Textiles production fell by 66.6%. ○ British shipyards were producing only 7%, in 1932, of what they produced in 1914. ○ Steel production halved between 1929 and 1932. ● London was the most important financial center in the world then. ● The pound was the most traded currency in the world. ● The pound’s value was linked to that of gold. ● But the value of the pound fell and it could no longer be linked to the price of gold. ○ This was a huge blow to British pride. ● The Labor Party (the government then was Labor dominated): ○ A split formed and Ramsay MacDonald (PM) set up a coalition government with mainly conservative support. ● They became less able to take firm action against aggressive nationalism such as that of Hitler and Mussolini. Caution and cuts in defense: ● There was not enough money for the British to fight Germany whilst fighting Japan and protecting its empire: ○ The empire was top priority so they took a cautious approach to Germany as they did not want to war with her. ● MacDonald cut public spending in response to the depression. ○ Caused a dramatic reduction in defense spending. ○ Not until 1936 did defense spending rise again. ○ And not until 1938 did full scale rearmament occur. ○ This weakened them greatly and made them less able to stand against Hitler. ● Cuts in defense spending in Britain coincided with increases in the same in Germany: ○ 1936, the German air force was quickly overtaking the British air force in size. ○ British military leaders had pessimistic views about how well Britain would do in a war against Germany. The Depression and France: ● Depression took longer to have an effect as France depended less on international trade. ● However effects lasted longer, starting in 1933 the effects lasted until 1938 and even then France had still been unable to restore the level of national income to that of the 1920s. ● Military spending: ○ With large war debt and war pensions the French government could not pay for adequate weapons for its troops. ○ In 1937, France produced 370 military aircraft whilst Germany produced 5606. ● Economic problems added to social division between extreme left and right wing supporters: ○ Unemployment trebled between 1931 and 35 at the same time membership of the French Communist Party rose greatly. ○ Communist party began to do very well in elections. ○ Support for right wing extremists also rose. ○ A right wing demonstration during February 1934 turned into a riot with 14 people killed. ● Political tensions prevented France from standing up against Hitler. ● They became less able to take firm action against aggressive nationalism such as that of Hitler and Mussolini as well as Japan. Italy and Japan: ● They were anxious to win new territory to offset the negative effects of the Wall Street Crash. This was one of the reasons why they wanted to expand and take more territory. The same was the case with Hitler.