A History of Modern Europe - From the Renaissance to the Present

Economies in Crisis 999

Reflecting the enormity of class divisions in Britain during the Depres­

sion, these working-class boys look in amazement at two Eton students

outside a cricket ground.

of unemployment benefits and the restoration of government salaries to
their pre-Depression levels helped. The subsidized construction of more
houses pumped money into the economy, helping to increase consumer
confidence. While some inefficient steel and textile manufacturers went

under, others consolidated and became more efficient, perhaps benefiting
from the imposition of higher tariffs on industrial imports. Real wages
slowly rose. The imposition of quotas on agricultural imports aided farm­
ers. As industry and agriculture gradually returned to prosperity, unem­
ployment began to fall.
The German economy also slowly improved, at least in part because, after
Hitler came to power in 1933, rearmament created many jobs. Business con­
fidence slowly returned. In 1930, the Young Flan, named after its Ameri­
can originator, had extended the date by which Germany was to have paid
all reparations to 1988. Then the Lausanne Conference of 1932 simply
declared the end of reparations payments. In France, the Depression lin­
gered longer than in any other European industrialized power. The govern­
ment, constrained by weak executive authority, failed to act decisively until
1935, when it lowered taxes to encourage consumption, after trying to
protect France with a wall of protectionism and productions quotas. When
other countries devalued their currencies, France’s comparative advan­
tage disappeared, and demand for exports trailed off. Moreover, France’s
low birthrate, combined with the horrific loss of life during the war, reduced
demand.