transformed economic activity and absorbed the
unemployed to feed the war machine. Such a long
and deep depression was a new experience and
governments were at a loss as to how best to
handle the economic problems of their day. In
Germany from 1931 to 1933, they made matters
worse.
The depression also provided a test for the dif-
ferent forms of government by which the peoples
of the world were ruled. They were inevitably
judged by ordinary people according to how
effective they perceived them to be in finding
remedies for the ills of depression, unemployment
foremost among them. In people’s minds, the
communist, the various fascist and Nazi ‘models’,
the conduct of the democratic governments, as
well as colonial rule, could in these circumstances
be compared.
Any government and political system that hap-
pened to exist during the early depression years
was bound to be blamed for the widespread
misery. But those authoritarian governments that
were already firmly established by 1929 were in a
better position to maintain themselves by brute
force and to manipulate the attitudes of the
masses through propaganda. Popular discontent
could no longer threaten the Soviet system of
communist rule. The Western colonial empires
were under firm military control. Mussolini stifled
protest: strikes were prohibited by law; the Italian
state set low rates of interest; and the Institute for
Industrial Reconstruction was created in January
1933 to assist Italian banks, which in turn led to
the state assuming direct responsibility for a range
of industry from shipping to steel. Nevertheless,
unemployment in Italy remained stubbornly high
in the early 1930s and the standard of living
persistently low. Yet there was no open criticism
as Mussolini advertised himself, photographed
stripped to the waist with spade in hand and
working on public works projects.
Hitler came to power during the most serious
period of depression and he quickly consolidated
dictatorial power. Nevertheless, it was his evident
success in reducing unemployment in Germany
from 6 million in October 1933 to just over 4
million a year later and 2.8 million in 1935 that
so increased national popular support for him.
Rearmament and army expansion after 1936 vir-
tually eliminated unemployment in Germany.
Whatever evils came to be associated with Hitler’s
rule in the eyes of the people, they gave Hitler
credit for ‘curing’ unemployment. Hitler recog-
nised that he could turn the prevailing despair to
his advantage if he could infuse a spirit of action,
convey concern for the plight of the unemployed
and actually put people to work. His success was
not instantaneous; it was achieved, moreover, by
forcibly destroying the independence of labour. It
was achieved, too, in the face of traditional
banking advice. Hitler listened to the Keynesian-
type economists in Germany who had met with
rejection by Brüning. Hjalmar Schacht, who
returned as president of the Reichsbank, created
large paper credits. Money was spent on new
superhighways – the Autobahnen, which had mil-
itary value – on expanding rearmament and on
support for agriculture. The Nazi economy was
tightly controlled by the state in order to achieve
self-sufficiency in agriculture – and as far as pos-
sible in industry – without replacing the actual
private ownership of industry or the land.
At the price of liberty, the Nazi economy from
1933 to 1939 was successful in maintaining stable
prices, full employment, eventually, and a modest
rise in the standard of living of the working man.
Rearmament was not allowed to cut standards of
living drastically. Hitler was anxious to win and
retain German support by providing economic
and social benefits, and used violence only against
open opponents from the beginning and against
the Jews from 1938. The authoritarian models’
apparent good points, which were proclaimed by
their own captive press, radio and film, impressed
the unemployed in the democracies more than
the bad. But the German economy by 1939 was
heading for the rocks, which only a successful war
could evade. Democratic governments requiring
the cooperation of parliament looked less effec-
tive and more cumbersome by comparison.Poincaré’s government of national union had
restored French finances to health in 1926. The
elections of 1928 had given the right a great
victory, but his retirement a year later, due to
illness and exhaustion, marked the end of an era