Chapter 30 Outline

Outline
The Great Depression that began in 1929 ushered in a number of important developments. Among the continuities from World War I were the decline of European hegemony and instability of Western democracies. New developments included Fascist governments in Italy, Germany, Spain, and Japan and a police state in Stalin’s Soviet Union. China continued to turn away from democratization, while new authoritarian regimes arose in Latin America. The economic depression and the resulting radical political forms led to World War II.
The Global Great Depression. The Great Depression had worldwide causes and effects. Reactions to this economic earthquake were varied. The most startling change in western Europe was the rise of Nazism.

Causation. The Depression’s roots were long. The effect of World War I on Europe’s economy had a ripple effect around the world. Farmers in the West and in the colonies in Africa and Asia overproduced, causing prices (and therefore income) to fall. Governments provided little guidance at this time. Nations that had loaned money insisted they be repaid; tariffs reached all-time highs. By the late 1920s, employment in key Western industries was declining.

The Debacle. When the New York stock market collapsed in October 1929, the wheels came off the world’s economic wagon. U.S. banks failed, taking their depositors with them. Banks in Europe followed, industrial production fell, jobs and wages were cut. This downward spiral continued from 1929 until 1933 when the economic bottom was reached. Economic disaster was not a new phenomenon, but this one was the longest lasting and most far-reaching because of the West’s unprecedented global reach. The Great Depression was an enormous social and political event as well. It revealed the fragility of nineteenth-century optimism. Popular culture took on an escapist theme. Western democracies came under pressure to take a stronger role in their economies. In the Soviet Union, Stalin’s determination to create an industrial society manifested itself in a brutal regime, yet he succeeded in his goal. In Japan, the worldwide economic decline led to a political crisis.

Responses to the Depression in Western Europe. In western Europe, the Depression revealed that the economic and political achievements of the 1920s were not permanent. Early governmental responses were generally ineffective. In many countries, the economic collapse heightened political polarization. The Great Depression led to one of two effects: an incapacitated parliamentary government or the overturning of parliamentary government. France and England provided examples of the first pattern; Italy, Germany, and Spain, the latter.

The New Deal. In the United States, the government offered direct aid to Americans in economic trouble in the form of the New Deal. The Social Security system, government economic intervention and agricultural planning, and banking regulations were all attempts to recover from the depression. Most importantly for Americans, the New Deal restored confidence in the economy and in the government.