Responses to the Great Depression
Leader: Franklin D. Roosevelt
Type of Government: Federal Republic
The Crash of 1929: The Crash of 1929 was one of the great contributors to the Great Depression, however it was not the sole cause. Many American citizens had begun investing a portion of their income or their savings into economic activities, such as buying stock. A small portion would actually be the buyer’s cash, while the rest of the stock would be paid through loans from brokers or banks or by mortgaging their homes. At first, stock was doing great, and its peak was reached in August 1929. However, stock experts had predicted that the stock prices were overvalued (due to production declining and rising unemployment), and many investors started pulling out of their stocks. On October 24, 1929, AKA Black Thursday, stock prices plummeted and countless people have lost all of their money, valuable property, savings, etc. Many could not pay back their loans, others had to sell their stocks at low prices in effort of attaining some money. Prices continued to drop during the Great Depression, however, after this crash, the stock market had nowhere to go but up, so there was a bit of recovery in the weeks following. Despite this, nothing healed completely until the Second World War.
American Economic Contraction: Defined as a whole, economic contraction is a phase in the business cycle in which the economy as a whole is in decline. America’s economy was certainly in decline after the Crash of 1929, with a decrease in wages, business activity, and employment, and consumer demand no longer correlated with producer supply. In turn, producers would need to cut back on staff and production in effort of reducing costs. This led to a vicious cycle of more unemployment, which contributed to the further plummeting of demand, which contributed to even more unemployment. Banks were out of businesses, businesses had failed, and industrial production had fallen significantly. Due to the dependence of many nations on US exports and imports, many other countries felt the US’ economic contraction.
Smoot-Hawley Tariff Act of 1930:In an effort of practicing economic nationalism (an effort to become economically self-sufficient by imposing high tariffs on foreign goods), the Smoot-Hawley Tariff Act raised tariffs on imported goods in the US. This was also an effort to help recover from the Great Depression, however all it did was lead other countries into implementing their own high tariffs on imported goods, resulting in a drop in international trade. Levels of production and income decreased significantly.
Social Conditions for Americans: As expected, social conditions were awful. Many lost everything - their homes, jobs, and savings. They had gone from stable lives to starving, unemployed, and homeless. There was a constant struggle for the basic necessities, such as clothing, food, and shelter, and marriage, childbearing, and divorce rates fell while suicide rates rose. The job market was close to nonexistent, leading to more hopelessness in the young adults of this era. The Great Depression also divided classes further - there were many who retained their wealth and could practice comfy lifestyles, while those in lower classes had to suffer immensely. This fueled their hatred further, creating firm class boundaries. A notable author of this time period would be John Steinbeck, whose book The Grapes of Wrath greatly captured the sufferings of families during the Great Depression.
Keynesian Economics: Keynesian economics was the product of economist John Maynard Keynes, who wrote his “answer” to the unemployment problem of the Great Depression in the book The General Theory of Employment, Interest, and Money. This answer was founded on his principle that the Great Depression was due to “inadequate demand”, rather than excessive supply. To combat this, his answer was that the gov’t must actively stimulate the economy by increasing the money supply, which would lead to a lowering in interest rates. Also advocated for public works projects for job openings, as well as implementing tax policy that would allow for the distribution of wealth. This would contribute to reduced unemployment and increased demand. Led to deficits in the government budget, however was necessary to maintain the economy during the Great Depression.
The New Deal: The New Deal was an effort to restore the American economy. President Franklin D. Roosevelt, influenced by Keynesian Economics, created the New Deal that included legislation that would sustain the banking system, provide jobs, subsidize farms, give worker rights, minimum wages, and social security. The New Deal undermined laissez-faire ideals, with government action making political, economic, and social reform. Despite the New Deal leading to massive changes, there was no major economic change until the US entrance into the second world war.
Leader: Adolf Hitler
Leader: Lenin
Type of Government: Weimar Democratic and parliamentary government coalition - later on, totalitarian dictatorship
Nazi Party: During the Great Depression, the Nazi Party gained supporters like never before. The Great Depression was the Nazi Party’s time to rise. Many Germans were angry with the way the government was, perceiving it as weak and unresponsive to the Great Depression. The Nazi Party, however, offered much more for the citizens; they promised a new government structure and to pull Germany out of the depression, as well as restoring German nationalism and tradition. They promised putting Germany back to work and restoring Germany’s power. The Nazis pinned the causes and effects of the Depression on Communists/Marxists, Jews, and others who had taken blame, allowing for an entire country to take out their anger and blame Germany’s downfall on these individuals. Hitler gave extremely convincing and charismatic speeches, changing up emphasis on certain values according to his audience type. Eventually, the Nazi Party won majority election and Adolf Hitler had become appointed Chancellor. Conservatives of Germany had hoped for the re-institution of conservative authoritative rule, or perhaps a monarchy, however Hitler juked them and implemented a dictatorship.
Nationalist Socialism was the basis of Hitler’s values, as it was the values of the party he led. Hitler had joined the Bavarian German Workers' Party after WWI, which later changed its name to the National Socialist German Workers' Party. He had assumed leadership of this party. National Socialism was a form of fascism that had elements of scientific racism and German nationalism. Aimed to create a pure, homogeneous German society. Many German citizens did not actually believe in all the values of this party, however they offered changes to German society in terms of work and alleviating the pressures of the Great Depression, which was greatly supported.
Hitler's Rise to Power: Hitler’s rise to power was greatly attributed to the Depression. He capitalized on the struggles of the German citizens, promising that the election of the Nazi Party will bring an end to the Depression - he also made sure to reinstitute German nationalism and the importance of being German. He had most certainly taken advantage of the mood against Germany’s current government, and with his promising speeches on restoring Germany, he had laid his foundation for success. Hitler had served in WWI, afterwards partaking in political activities by joining far-right political parties, such as the National Socialist German Workers’ Party. In this party, he ascended to leadership, alleviating the party to major representation within the German parliament. Eventually, they won elections and Hitler was essentially given chancellorship. He had eventually overridden everything and became a totalitarian dictator when the President had died. Before doing so, he demanded emergency powers after an altercation of fire at the government building. He used these powers to create the dictatorship he acquired after the President's death.
The Racial State: Race was a huge component of Hitler’s campaign - he was extremely anti-Semitic, and advocated for a pure, homogeneous German society of Aryans. The Nazi Party implemented laws, such as the Nuremberg Laws, which would discriminate extremely towards any who is not German - Jews, Blacks, Gypsies, etc. Hitler essentially wanted to establish an extremely Nationalistic German state, where they would all unite under the same ethnicity. He advocated for ethnic cleansing, however it would later lead to genocide. German authorities would resort to violence in an effort of purifying their nation, hence the Holocaust and concentration camps.
Women and Race: Race was already elaborated upon in the “the Racial State paragraph”. During the Great Depression in Germany, Women suffered under an extremely traditional perspective of the Nazi Party. Completely contrasting the emancipation of the Weimar Republic, the Nazi Party advocated for the suppression of women in terms of politically, academically, and responsibly - they belonged only within their familial duties. These views correlated with the common traditional/conservative views of Germany, representing the Nazi Party well.
Nazi Eugenics: A foundation of the Nazi Party ideals would be the concept of scientific racism/Social Darwinism. They had essentially believed that the Aryans are a pure and superior race, and they wanted to expel those who were not Aryan and unite the German Aryans with pride. Once the Nazi Party came into power, they had slowly amped up their ethnic cleansing. They started simply with expelling those of non-German ethnicities/nationalities and installing laws (such as Nuremberg Laws) that would discriminate against and segregate non-Germans. Eventually, it had led to genocide, with mass killings of groups of different ethnicities (especially Jews) in labor/concentration camps. It would start with sanctioning off areas into ghettos for these different ethnicities, however, it would later result in transporting the people of these areas to camps, initially for labor, and later for conveniently wiping them out.
Anti-Semitism: As noted earlier, a key concept of the Nazi Party was social darwinism and the superiority of the Aryan race. This would lead to the discrimination and genocide of Jews in Germany, with horror stories of ghettos, transportation cars, and concentration camps. Anti-Semitism was strong, and ever since the beginning, the Nazi Party had pinned a majority of the Great Depression on the Jewish. This group mentality contributed to the popularity of practicing anti-semitism, eventually leading to anti-semitism on a national level. The Anti-Semitism that was practiced had an immense historical impact on Germany that lasts to this day - Jews are looking for a place of their own as well.
The Nuremberg Laws: The Nuremberg Laws essentially “institutionalized” the racist Nazi ideologies - similar to segregation de jure in the United States, however much more grim. They broadly defined “Jews”, incriminating those who were not even practicing Jews. The Nuremberg Laws derived them of their basic rights, such as a political presence, a citizenship, or marriage with Germans or “related blood”. The Nuremberg Laws dehumanized the Jews and set the stage for discrimination and genocide. The Jews were thrown into poverty, secluded into designated areas, etc. Later on, marriage certificates and approvals are required, all in order to ensure the purity of the Germans. Later on, the Nuremberg Laws would be extended to other ethnic groups as well.
Kristallnacht: Kistallnacht means “Night of Crystal”, which is referring to the shattered glass from windows of Jews on the streets. This Night consisted of violence against Jews that were instigated by the Nazi Party. These took place on November 9 and 10, 1938. After a Jewish assassination of a diplomat, which led to anger within the Nazi Party and the decision to launch anti-semitic violence. Essentially, these were officially organized movements of violence against Jewish homeowners, businesses, etc. in an angry reaction to the assassination of an important diplomat, the assassination also having coincided with an important National Socialist event. Many of the German police and Hitler Youth participated in this event, and many dressed in regular clothing to mimic their actions as the “public reaction”, rather than the reaction of the Nazi Party. There was actually organization and orders behind this “spontaneous” violence, all sanctioned by the Nazi Party.
Leader: Stalin
The Bolshevik Revolution: The Bolshevik Revolution was a renewal of political power in Russia. Led by Vladimir Lenin, his Bolshevik party overcame the Russian imperial rule and seized power. Lenin and his leftist party launched a coup d’etat, where they strategically took over political buildings and implemented a soviet government (one with peasants, soldiers, and workers representing the people) to replace the elitist provisional government. This led to the major political change that would define Russia for the rest of the Depression - forming the Soviet Union with the Communist Party and Lenin leading the country.
Type of Government: A socialist state / federal republic
War Communism: War Communism consisted of active government practice of communist values. It was the Soviet Union’s extreme attempt at securing their economy, as they nationalized everything (farming, industry, etc.). They collectively farmed for the nation and themselves while the rest of the labor pool had to work in the manufacturing industry. Terror was commonly used to promote these ideals, and methods of torture (such as starvation) were used to combat the protest against these economy practices. They were essentially producing as much as possible, trying to hit the adequate quantity necessary for agricultural and economic profits rather than achieving quality.
New Economic Policy: This is a policy implemented after the War Communism policy’s failure, reintroducing money (that had been abolished during War Communism). This correlated with the realization that socialism was not ideal both in practice and in maintaining their party’s popularity, resulting in the return of most industry and agriculture to private ownership. The state kept its control over more industrial and foreign trade practices, as well as banking and transport. The farmer ownership of land and property was permitted, as long as they had paid taxes. This method of economic policy introduced profit and prosperity, the first to have been seen in Russia for quite a while. Businessmen especially profited by this new policy.
Five Year Plans: The fear of invasion led to the perceived necessity of rapid industrialization, thus, The Five Year Plans were implemented by Joseph Stalin. He had utilized a Socialist approach in effort of restoring the Russian economy. He started collective farming and emphasizing on heavy industry, setting quotas that would absolutely need to be met, or else the workers and farmers did not get food. This would lead to a poor quality in desperation of reaching the quotas. There was a major concentration on speedy industrialization. Famine broke out often due to the occasional inability to produce enough. Punishment would also be given to those who protested, often in the form of forced starvation.
The Great Purge: The Great Purge (also known as the Great Terror) began with the assassination of Sergei Kirov. This triggered the three Bolshevik trials of important government figures, leading to the Bolshevik’s “purging” of untrustworthy people and undesirables in the government. Paranoia and suspicion was at its peak, and surveillance was encouraged and tightened. Suspected peoples were imprisoned and executed in Gulag and other prison camps - millions of “enemies of people” were sent. Despite the terror, it definitely did secure the regime much more, eliminating actual enemies in the process, however many innocents as well. There were three trials, the first being of Grigory Yevseyevich Zinovyev, Lev Borisovich Kamenev, and Ivan Smirnov (accused of joining Trotsky to form a terrorist organization), second being G.L. Pyatakov, G.Y. Sokolnikov, L.P. Serebryakov, and Karl Radek (accused of forming an anti-Soviet center), and third being Nikolay Ivanovich Bukharin and Aleksey Ivanovich Rykov (leaders of an opposing right-wing team that was accused of being apart of the Trotsky conspiracy).
Collectivization: Collectivization was a Socialist concept that was commonly practiced during the Soviet Union regime. Under economy policies such as War Communism and the Five Year Plans, Collectivization was basically taking one industry and collecting it all together into one - such as agricultural farming. Farms were collectivized into one community in effort of producing large amounts, all achieving one goal - a quota to feed the nation and a bit of surplus for themselves and/or profit. The actual definition of collectivization is “organize (something) on the basis of ownership by the people or the state, abolishing private ownership or involvement.”
Leaders: Benito Mussolini
Type of Government: Fascist State,Totalitarian Dictatorship
The Fascist State: Similar to the other countries, the Great Depression had ravaged Italy. This led to the rise of extremist movements, allowing for the foundation of the Fascist State. Italian involvement in WWI led to a distrust in capitalism and democracy, also contributing to the rise of fascism. A significant Italian leader stirring the rise of Fascism would be Benito Mussolini. Similar to Hitler, he had unparalleled charisma and delivered his speeches ringing with nationalism, militarism, and promises to solve problems of the Depression. The desperation of the peoples contributed to their willingness to accept new political systems, especially those of which appeared the most promising (such as Mussolini’s regime). There were many angry laborers and strikes occurring at the time of Mussolini’s rise. “Fascio di Combattimento” was Mussolini’s political movement, rounding up those in favor of nationalism and futurism (fans of technical and industrial innovation). Mussolini concentrated on creating a new economic plan, which did not entirely work - he wanted to create infrastructure projects, increase the value of the lira, and grow grain instead of fruit. The last two options did not work as much, with both of them backfiring back onto the citizens. Italy’s agricultural economy did not serve them well in comparison to the European industries. Not only did Mussolini round up supporties by rallying them up, he also intimidated the opposing Socialists through violence and other methods of intimidation (arson, etc.). In order to successfully instill his government in the first plan, Mussolini marched upon Rome and threatened civil war - unless he was accepted as Prime Minister and allowed to practice his form of government. The King did not want civil war, so he allowed this. Mussolini’s slogan was “everything in the State, nothing outside the State, nothing against the State“ and he made economic efforts of eliminating class divisions, banning workers strikes, unions, etc. Mussolini mostly focused on censoring a lot of society, such as freedom of speech and press, in order to ensure the longevity of his leadership.