The despair of poverty is hard to imagine for
those who have never suffered it. A decade after
the conclusion of the Great War the era of the
Great Depression began, reducing millions of
people in the advanced Western world to the
levels of grinding poverty suffered throughout the
twentieth century by humanity in Asia, South
America and Africa. The peoples living in the
empires of the West now fell even below the
barest subsistence levels as the price they could
obtain for their raw materials dropped precipi-
tously. Their economies were dependent on the
demand of the West. Whatever befell the indus-
trialised West, the effects on the poor of what we
now call the Third World were even more cata-
strophic. At the time only one country appeared
immune – the Soviet Union, where industrial pro-
duction increased. It was a persuasive argument
to some that communism provided the only solu-
tion to the periodic booms and depressions that
bedevilled the trade cycle. But in the Soviet
Union, Stalin’s state planning actually imposed
hardships as great as, and greater than, anything
happening in the West.
The effect of the depression was aggravated by
its occurring before the trauma of the Great War
had been overcome. It is the shortness of time
that elapsed between one shock and the next that
gives the years from 1919 to 1939 their particu-
lar characteristic. These years came to be viewed
as a ‘continuing world crisis’. The industrial
depression that began in 1929 had been precededby an agricultural depression dating from 1921,
not really overcome in the mid-1920s, and then
rapidly deepening after 1926. The ‘boom years’
of industrial expansion of the 1920s, thus, were
not as uniformly prosperous as often supposed.
For all its startling psychological repercussions,
the Wall Street Crash on ‘black Tuesday’, 29
October 1929, did not cause the depression. The
Western world, despite its attempts to return to
the ‘normality’ of the pre-1914 years, was unable
to do so after the Great War. But each nation
sought to return to pre-war practices, some like
Britain to the gold standard, sound money and
balanced budgets, with disastrous results.
The new problem of Allied war debts and
German reparations did necessitate a fresh
approach and international discussion and coop-
eration. During the 1920s, before 1931 when all
these payments came practically to a halt, the
international settlements followed a circular route
of German reparations payments constantly scaled
down, making possible the payment of Allied
debts to the US also scaled down, while American
loans to Germany, exceeding German reparations
payments, completed the circle. This was not very
sensible financially, but the actual sums involved,
though not the principal cause of the breakdown
of world trade, contributed to the disruption of
international finance by the end of the decade.
Study of the economic development of each
Western nation reveals how far the depression of
the 1930s had causes going back even before the(^1) Chapter 15
THE DEPRESSION, 1929–39