Economic crisis and recovery in 1930s America and Europe

Industrial development in Europe and USA in the middle of 30-ties of 20th century was not that successful as it used to be several years before and sure it cannot be compared with the year 1939. 1934-1939 period can be characterized as a period of instability, economical crises and great changes in some countries, such as Germany (Nazi industrial program,), USSR (Stalin's -- industrialization -- ) and USA (Great Depression and Roosevelt's New Line politics).

I'll start with countries of Capitalist world (including Nazi Germany and USA) suffered from economical crisis and I'll try to find out their main attempts to improve and stabilize their national economics.

United States of America

Beginning of 20th century was a very intensive period of American economics development. American businessmen received amazing profits from selling military machines and some other goods while Europe and Russia were fighting. American budget grew and very soon a -- Wild West country -- as Europeans treated it became world leader in industrial production. But in the end of 20 ies American economics collapsed and that was the result of world economical crisis which included all national economics of all capitalistic states. Those times were very tragic: poor workers lost their small incomes, small businessmen lost all savings. Very soon former businessmen started earning money by selling fruits and vegetables in the streets of their cities. Homeless people were happy if they managed been arrested because they were fed for free in jails. Number of jobless people increased in several times: "100 thousand American workers pretended on 6 thousand building vacancies in USSR....some of them were going to leave USA as they got some job there..."(the Great World War 1914-1945 -- Volume 1: Lightning Strikes Twice

John Bourne, Peter Liddle, & Ian Whitehead page 134).

Even rich Americans had to economize. For example, Conrad Hilton closed several floors in all hotels and turned off phones in the hotel rooms to economize 15 cents per month. Bethleem Steel Company fired 6 thousand workers and crashed their houses which were built by this company' the aim was - stop paying taxes for those houses.

President Hoover was afraid of the possibility of revolution in 1932. People could no longer live in such conditions. They wished great changes and hoped that president elections would change the situation. Sure, they didn't support Hoover as they didn't want to listed to his promises no more; they trusted another man - Democrat Franklin Delano Roosevelt.

He proclaimed New Line politics, which had to stop crisis and improve American economics.

First of all he reconstructed bank system and promised citizens that he would open only reliable banks (but there were no such banks). People believed him. June 1933 his administration created special insurance company, which had to unite all banks (they had to participate in it). This measure helped both banks and people. As a result in 1935 bankrupted sums were 34 million dollars (1931-146 millions).

Second aim was reconstructing industry and agriculture. To fulfill this program 2 laws were adopted in 1933. One of them settled prices for goods, number of produced goods etc. This was one step back from capitalism and it can be characterized as necessary measure which had to improve the situation with Soviet methods of state's regulating of national economics. This program succeeded and Roosevelt managed helping industrial monopolies. Another law increased prices of agricultural goods and it helped farmers' effective work.

Another point of New Line was creating new vacancies, as there were too many jobless people who used to experienced businessmen, workers, teachers and doctors. Roosevelt created special centers in every state to support jobless citizens by small payments. -- in 1933 every jobless family received 15,5$. At the end of this year they received 30,45$ -- (World Economics J.Simon, M. Miller. WestPrint 1988-page 219). Number of unemployed people lessened lot and in 1935 it amounted 10 million people (not that much as before).

Adequate measures provided by F.D. Roosevelt helped United States to stop economical crisis but there still was a great aim - raising national economics. Unfortunately in 1935 Supreme Court found these measures unconstitutional because it created not equal conditions for competition. But nevertheless, Roosevelt's program did a lot and already in 1935 industry was saved from bankruptcy and United States was ready to go ahead improving the situation.

Not everything was that successful. After laws which regulated developing of agriculture and industry were found unconstitutional a new problem appeared. Historians call it -- depression inside depression -- which lasted till 1938. Industrial development was not that fast as government wanted it to be, because President was no longer able to influence private enterprises which took into consideration only their own but not national interests of the whole American nation. I'll set a frightening example which can explain this tragic period: -- Only in 1940 American economics and industry amounted American economical figures of 1929, but even in 40 ies there were 14% of jobless people (7,5 million) -- (World Economics J.Simon, M. Miller. WestPrint 1988-page 290).

But still New Line was successful. Federal government increased expenses from 4266 millions up to 10-061 million dollars. (1932-1940).

Results of Great Depression were terrible and United States as a result, was not able to help Britain and Soviet Union in time when they suffered from shortage of ammunition and military machines. Great Depression caused millions of casualties during WWII because Second Front was opened only in 1944. Roosevelt faced resistance of leading businessmen who supported (!) NSDAP! It is not a secret that some monopolists gave huge sums of money to Hitler and his party, invested them in Nazi industry but they knew that Hitler was evil man and USA could expect nothing good from his regime. We have to thank Roosevelt's activities because he managed preparing USA to a big war and his order to build new war ships and airfields was really necessary.

Situation in Europe was a little bit different:

France:

Economical crisis in France started later than in other countries. It was stopped for some time by receiving German reparations, reconstructing destructed regions, building defensive line. Industrial collapse began only in 1930 and it was less serious than in USA and Germany, but lasted longer.

We have to remember that French society united to resist fascists inside their own country. Communists could not do it on they own and they united with some radical capitalist parties to resist fascists and create a program of economical development. Their union was named National Front. January 1936 it published his program, which included also economical points which contained mostly social measures of improving the situation in the country. Government increased incomes of former soldiers, workers and liberated labor laws.

Important changes also took place in economical sphere. In 1937 -- several military plants were nationalized because French nation realized the threatening German politics and knew that France is one of the main objects of future German aggression... -- (the Great World War 1914-1945 -- Volume 1: Lightning Strikes Twice

John Bourne, Peter Liddle, & Ian Whitehead p. 159).

During 2 years (1935-1937) the results of French economical development was the following: -- industrial index was increased in 7 points and amounted 101 (94 points in 1935)... It amounted 72% of 1929 index (67% in 1935)... Coal mining was increased in 1%; Steel-20%... Export figures didn't change but import was 18% more. -- (World Economics J.Simon, M. Miller. WestPrint 1988 p.223).

French economical politics was not very radical if we compare it with German but France didn't face such terrible crisis as United States or Germany and that's why French nation managed easily overcoming crisis and strengthening national economics, especially military industry.

In 1937 French economical program was stopped and I think that was a great mistake. As a result French industry was not able to produce enough production as next government didn't find German threat real and hoped that Britain would help them in case of war. But they were mistaken and society's disrespect to own army turned out to be fatal mistake of French nation.

Soviet Union

As we know Soviet Union was a very undeveloped country in 1920 ies but when Stalin became Soviet dictator (1929) the situation had changed. Stalin was a very wise man who was sure that First Socialist State as Soviets called their motherland could not be a weak state because its neighbors are ve4ry aggressive and he also remembered history (Foreign intervention in Russia during the Civil War). He proclaimed great program of industrialization and collectivization.

Collectivization had to create such conditions when farmers should be united in common agricultural unions. Peasants were forced to join them and work there as usual workers who receive money for their work. Farmers in these unions received a small part of what they grew. "In 1935 agricultural production amounted 125% of pre-war period (1913).. that was a real success..."(From Moscow to Berlin: Marshall Zhukov's Greatest Battles Georgi Zhukov Noontide Pr 1991 page 95). We can read some books, which blame Stalin for this politics because many people were left without their private property and died from hunger. Sure, we have remembered negative results, but also we must remember that many cities and villages were left without any food during Russian Civil War. Soviet leaders remembered that tragic experience. That's why collectivization supplied citizens who lived in cities and also soldiers of Red Army, which was very popular, and nation was ready to work hard to help own army. Later collectivization showed how effective it was during WWII.

Industrialization was proclaimed to fulfill the same plans Hitler wanted to do. Soviet government wished having own industry and be independent from foreign import because it was a threat to Soviet sovereignty. Also industrialization was necessary to make a highly developed country with major part of industry in national economics out of outdated part of Tsarist Russia where agriculture was leading sphere of economics. Here are some figures: -- in the beginning of 1937 plants constructed during industrialization amounted 88,6% of the whole industry; pre-revolutionary enterprises - only 11,4% -- (World Economics J.Simon, M. Miller. WestPrint 1988-page 239). Metal producing reached figures of the same American sphere of industry. Coal mines developed rapidly and many regions of Soviet Union which used to be famous for their undeveloped infrastructure turned into industrial centers of this country. In 1934-1937 electricity supply increased 2,7 times. These figures are amazing and their result was Soviet victory in WWII.

Soviet leaders succeeded creating a country of new formation which became first in Europe and second state in the world (after USA) which produced great number of goods and the main result of Stalin's politics was creating strong highly developed military industry which was the leading sphere of national economics (the same as in Nazi Germany).

So, to sum up the written I'd like to say that democratic states, such as USA, France, Britain suffered from economical crisis a lot and tried to overcome it anyway. Some of them succeeded, some - not. What about such states as Germany or USSR they didn't face serious crisis because their economics were regulated by the state and to tell the truth, I'm sure that such way of regulation is really necessary when situation in the country is not stable and to overcome some tragic events economical regulation is really necessary to gain success (Remember Roosevelt, Stalin, Hitler). But here I have to notice one more thing: regulation is dangerous in peaceful times when country has to develop according to natural economical laws. Soviet Union's economics was successful during WWII and the Cold War but when the situation had changed its economics collapsed and this event had very tragic results.

Literature sources:

1. John Bourne, Peter Liddle, & Ian Whitehead

The Great World War 1914-1945 -- Volume 1: Lightning Strikes Twice

2. Messenger, Charles Hitler's Gladiator., Conway Martim Press, 1988

3. Steve Humphries & Pamela Gordon Forbidden Britain -- Our Secret Past 1900-1960. BritPubl 1999.

4. Heiden, Konrad. The Way of NSDAP: Fuhrer and His Party Civic Education Center 1996

5. Tippelskirch, Kurt von the History of World War II MSA 2000.

6. Georgi Zhukov From Moscow to Berlin: Marshall Zhukov's Greatest Battles Noontide Pr 1991.

7. Montefiore, Simon Sebag Stalin: The Court of the Red Tsar Dixie 1993

8. J.Simon, M. Miller. World Economics WestPrint 1988