Cheryl Plouffe (Skyline High School)

Historical Context
In June 1929 Bernard Baruch, the influential American financier and presidential advisor, observed: “The
economic condition of the world seems on the verge of a great forward movement.” He couldn’t have been
more wrong. Over the next few years, the global economy slid into a long, deep depression which
produced immense suffering and despair. As the leading industrial nation in the world, the United States
was hit particularly hard. The total annual output of the country’s economy, that is, the GDP (Gross
Domestic Product), plummeted by 29 percent. By 1933 one out of every four workers was unemployed. But
it was the widespread impact of the economic crisis that made it a truly “Great Depression.” The
economies of the world had become increasingly interdependent in the early twentieth century. Therefore,
the sharp decline in manufacturing output and rapid withdrawal of investment capital in the United States
had a ripple effect that devastated tenant farmers in Turkey, steel workers in Great Britain, fishermen in
Japan, coffee planters in Brazil, cocoa pickers in West Africa, and woolgrowers in Australia. Certainly those
individuals who managed to remain employed during the 1930s benefited from the depressed economy.
Food, clothing, and other consumer goods all became much cheaper. To differing degrees, however,
impoverishment and destitution were shared global experiences. In the words of one woman from rural
Canada: “I just don’t know what to do for money . . . I can’t hardly sleep for worrying about it.”

Scholars still debate the causes of the Great Depression. Despite President Herbert Hoover’s forceful
claim that “the depression was not started in the United States,” most historians and economists agree
today that the crisis began there and then spread to the rest of the world. But there is no consensus about
why or how. Given the complexities and ambiguities of history, it seems likely that a historically contingent
array of economic, political, and social forces pushed much of the world into the precipitous economic
decline. There was no single cause. As the historian John A. Garraty writes: “The Great Depression of the
1930s was a worldwide phenomenon composed of an infinite number of separate but related events.”
Reparations payments, war debts, protectionism, the gold standard, the stock market crash, agricultural
overproduction, mechanization, poor leadership, export dependency, financial instability, and skewed
income distributions all contributed. Untangling this web of causality to discover a single explanation for the
Great Depression is a futile task. But understanding the significance of each strand and how it intertwined
with the others is instructive.
It is easier to separate different responses to the Great Depression. In economic terms, many
countries turned to autarky, severing ties with the global economy to create more self-sufficient,
independent national economies. Economist Joan Robinson described what was going on as “beggar-thy-
neighbor” policies. Rather than work together to resolve the crisis, world leaders assumed that the
economic recoveries of their countries would only come at the expense of others. Governments in Sweden,
Columbia, Peru, Japan, Australia, and Egypt, among others, clamored to raise tariffs on imported goods so
that their domestic industries were protected. They also devalued currencies to make their exports cheaper
in foreign markets and implemented price support schemes to rescue their farmers at home. Imperial
powers like France and England also made sure that their products received preferential treatment in
colonial markets and dominions. Perhaps the best example of this economic nationalism was the United

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States. The Hawley-Smoot Tariff Act of 1930, for example, jacked up duties on over 20,000 imported
goods and greatly contributed to the breakup of the global economy. Although there were efforts to piece
together an international solution to the Great Depression at the World Economic Conference of 1933 in
London, nationalist agendas made it a near impossible feat. As Franklin D. Roosevelt made clear in what
became known as his “bombshell message” to the Conference, economic self-interest took priority over
multinational agreements.
In political terms, the Great Depression contributed to the rise of militarism in Japan, the creation of a
coalition government in Great Britain, and the staging of a coup d’état in Brazil. “When politicians from
moderate centrist parties failed to introduce policies to tackle the crisis,” historian Patricia Clavin has
observed, “they lost out to extremist parties to the Right and Left of the political spectrum” (“The Great
Depression in Europe, 1929–1939,” History Review, September 2000; 30). The most common political
response to the global crisis was populism, a notoriously slippery concept that defies placement on the left-
right political continuum. Populism typically involves a strong critique of the traditional ruling elite on behalf
of ordinary people, and it tends to favor greater government intervention in economy and society.
Sometimes, but not always, it results in a new political system. The human misery of the Great Depression
made a ripe breeding ground for populist rhetoric and sentiments. Targeting scapegoats and promising
greater justice and equality, populist leaders organized the less powerful into mass movements or
assumed political power with groundswells of popular support.
Populism took three widely divergent forms in the 1930s. First, more democratically inclined
governments created welfare states to protect and enhance the well-being of their citizens. Discarding the
traditional laissez-faire policies of the “privileged minority,” they set forth on bold new courses of action for
their nations. In New Zealand, for example, the Labor Government denounced “poverty in the land of
plenty” and greatly expanded public provisions for housing, education, health care, and social security.
Similarly, in Columbia, Alfonso López Pumarejo implemented a comprehensive plan to redistribute income
and land to the majority of the population. And in the United States Franklin D. Roosevelt extolled the
virtues of “the forgotten man,” launching the New Deal to provide relief and stimulate recovery. Perhaps
the most far-reaching populist effort was in Mexico, where Lázaro Cárdenas del Río redistributed land to
peasants, nationalized foreign oil companies, supported unions, and made sweeping changes to public
education.
Second, there was a strong undercurrent of populism in the fascist regimes of Europe. To be sure,
Benito Mussolini’s success in Italy predated the 1930s. The dishonor and hardships associated with military
defeat and reparations payments were also important factors in the rise of fascism. Still, it was the Great
Depression that pushed the Nazis to the forefront in Germany. With industrial production plummeting 71
percent in just two years, the number of unemployed reaching six million, and the government of Heinrich
Brüning committed to a policy of austerity, Germans of all classes proved receptive to Adolph Hitler’s calls
for national unity, international respect, and a sweeping economic recovery program. Appropriating the
nation’s anger and humiliation, preaching traditional values of work and order, condemning Jews for all
things wrong, and glorifying the myth of a German Volk, or people, Hitler was remarkably adept at

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mobilizing the country behind him. In particular, he effectively used modern mass communications like film
and radio to whip up public enthusiasm. According to one American journalist, Hitler’s power emanated
from his ability to connect with “the longing of the individual.”
Third, populism took the form of grass roots protest movements. In Africa and Asia, the Great
Depression meant increased poll taxes, land evictions, and forced labor for the indigenous people, as
colonial rulers reeled from the fall of export revenues. Freedom movements gained in popularity as
nationalist leaders called for social justice and self-determination. But their success was mixed. In Burma,
Vietnam, and the Belgian Congo, the colonial powers brutally suppressed populist organizations that
sought political autonomy and a better life for the poor. Indeed, the harsh reaction of the French to calls for
independence convinced many Vietnamese to embrace communism. In India, nationalism met with much
greater success under the auspices of the Indian National Congress and Mohandas (Mahatma) Gandhi. A
master at public relations, Gandhi used populist rhetoric like “Daridranarayan” (God is in the poor) to
transform the cause of Indian independence from an elite movement of the educated classes into a mass
movement of the poor and illiterate.
Along much different lines, industrial unionism constituted a populist response to the Great Depression
in the United States and Canada. Rebelling against exclusive craft organizations, the Committee for
Industrial Organization (CIO) rallied less skilled workers into more inclusive unions that assailed corporate
wealth and pushed politicians leftward. Against the backdrop of a stricken economy, public relations efforts
and sit-down strikes not only galvanized workers but also convinced much of the public that industrial
democracy or justice was a legitimate goal. Historian Michael Kazin notes that the CIO “employed simple,
repetitive phrases and images . . . to reach Americans, of all classes, whose complacency the Depression
had shattered” (The Populist Persuasion: An American History, New York: Basic Books, 1995; 138–139).
Assessing the full impact of the Great Depression is tricky. The secondary literature relies on national
economic figures like GDP growth, balance of trade, and unemployment to compare how countries fared
during the 1930s. From these measurements, we learn that Sweden and Denmark had a quick recovery
because they abandoned the gold standard and established closed economies at an early date. We also
realize that the Great Depression had little impact on the USSR. Rather, Josef Stalin’s Five Year Plans
actually resulted in considerable economic growth during the 1930s. The statistics suggest that Chile
experienced catastrophic conditions, with a 76 percent drop in exports and a 30 percent fall in GDP. The
Great Depression had a delayed impact on China because its agricultural sector remained isolated from
the world economy and its silver currency was devalued in the late 1920s.
It is important to recognize that these measurements have limitations. Aside from inherent problems of
data collection (how unemployment is defined or what constitutes a good or service), there is very little
information available for countries in Africa. As one international economic organization admits, “the long-
term economic development of Africa is difficult to quantify with any precision” (Angus Maddison, The
World Economy: Historical Statistics, Paris: OECD, 2003; 189). Another problem is that the numbers offer
only a cursory view of what actually happened. Take the case of Latin America. GDP figures suggest that
most of the countries in this region suffered extensively in the 1930s because international demand for
their raw materials and agricultural produce dried up. Deprived of export revenues, it became very difficult

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for them to buy critical manufactured goods from more industrialized countries. What GDP figures fail to
reveal, however, is that there was also a positive development called “import substitution.” New industries
began to emerge at home that made the same manufactured goods as those imported from foreign
countries. National economies revived and foreign dependencies decreased. Although at first glance Latin
American countries like Chile experienced dire economic conditions, import substitution not only softened
the blow, but also contributed to relatively quick recoveries.
National economic figures also provide few insights into daily life and hardship during the Great
Depression. Some scholars have made important connections between trade imbalances and peasant life
in India. Others have collected alternative data on birth rates, marriage rates, or even participation in the
Muslim pilgrimage (hajj), as well as more qualitative material like diaries and correspondence, to measure
the social impact of the crisis. The results have been several excellent histories of working-class life in the
United States, Canada, Great Britain, and France. One example is Lizabeth Cohen’s Making the New Deal.
But we still have much to learn about the historical realities of women and men in other parts of the world.
As Dieter Rothermund writes, “The peripheral peasantry which bore the brunt of the depression has
remained in the dark” (The Global Impact of the Great Depression, London: Routledge, 1996; 10). In sum,
national economic figures are extremely useful in measuring the impact of the Great Depression, but they
are far from conclusive.
In late 1936 and early 1937, most observers believed that the Great Depression was nearing an end.
The economies of many Latin American countries had revived thanks to import substitution. Effective
policy-making had helped Scandinavian countries experience the Great Depression as little more than an
ordinary recession. Full-throttle rearmament programs had resulted in quick recoveries for the economies
of Germany and Japan. And in the United States, movers and shakers were talking about the Great
Depression in the past tense. In the fall of 1937, however, a sudden downturn dashed global optimism.
Often called the “Roosevelt Recession” because it was triggered in part by Franklin Roosevelt’s efforts to
tighten government spending, the slump resulted in nearly 20 percent unemployment in the United States.
Although European countries (with the exception of France) experienced a sharp but short-lived recession
and the United States began to recover when the federal government expanded government spending
again, less developed countries in Latin America, Africa, and Asia once again suffered from depressed
prices and decreased demand. It was readily apparent that the world economy remained in a frail state.
It actually took World War II to end the Great Depression. As Premier Léon Blum of France predicted
at an early date: “Around the manufacture of armaments, there will be coordinated an economy which will
be the basis for a more abundant production in all domains.” During the late 1930s, huge government
expenditures on war armaments and supplies fueled the economies of the industrial nations. Italy, Great
Britain, France, and, of course, Germany and Japan at least doubled the amount they spent on arms. With
the onset of war, these expenditures escalated to astronomical levels, and the economic results were very
positive. Following Pearl Harbor, for example, enhanced government expenditures in the United States
increased industrial output by 100 percent and created full employment conditions. World War II also
resulted in greater demand and higher prices for agricultural produce and raw materials from export-

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dependent countries. In 1939, the GDP in Egypt was nearly 20 percent higher than pre-depression levels.
In Mexico, it was 25 percent higher; in Indonesia, 16 percent. After a decade of economic distress and
uncertainty, the Great Depression gave way to an even more cataclysmic global development.

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A Global Experience

Photographs
Examine the photographs below. Consider:

What is happening in the photo?

Where was the photo taken?

When was the photo taken?

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GDP Per Capita in International Dollars

Directions: Download the graph sheet handout
(https://www.activeclassroom.com/active_reader/download/Z307A03/Z307A03_Graph_Handout.pdf). Plot
the GDP per capita figures for each country on the same graph. Use a different color to connect the points
for each country. Then answer the questions that follow.

France India Malaysia Chile Mexico USSR Germany U.S.

1929 4,710 728 1,682 3,396 1,757 1,386 4,051 6,899

1930 4,532 726 1,636 3,143 1,618 1,448 3,973 6,213

1931 4,235 711 1,548 2,333 1,643 1,462 3,652 5,691

1932 3,959 709 1,397 2,274 1,373 1,439 3,362 4,908

1933 4,239 700 1,440 2,652 1,501 1,493 3,556 4,777

1934 4,192 697 1,540 2,987 1,574 1,630 3,858 5,114

1935 4,086 680 1,364 3,056 1,660 1,864 4,120 5,467

1936 4,244 697 1,478 3,056 1,768 1,991 4,451 6,204

1937 4,487 676 1,308 3,241 1,796 2,156 4,685 6,430

1938 4,466 668 1,361 3,139 1,794 2,150 4,994 6,126

1939 4,793 674 1,609 3,178 1,858 2,237 5,406 6,561

Source: OECD, 2003.

1. On the whole, when did most countries hit bottom during the Great Depression?

2. Which country experienced the steepest decline in living standards?

3. Unlike all the others, one country actually experienced a steady increase in GDP per capita during
the Great Depression. Which country was it? Do some research to explain why.

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4. Describe the impact of the Great Depression on India.

5. Find out why Germany made such a strong recovery after 1932.

6. The Malaysian economy declined because it was heavily dependent on two exports. Do some
research on the history of Malaysia to identify one of them.

7. How high were living standards in the late 1930s compared to the early decade? Had most
countries recovered to 1929 levels?

8. What surprises you the most about the GDP per capita figures in this exercise? Explain why.

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