The Great Depression and International Relations

The Great Depression

The Great Depression began with the Wall Street Crash of the US stock market in 1929.  This was so catastrophic that it caused a large number of US banks to go bankrupt.  This then passed on, firstly, to industry, which slumped into depression; then into unemployment; then into a slump in buying; and thus a further slump in industry in a vicious circle of depression.

Next, because US banks were calling in their foreign loans, bank failures and industrial depression spread into Europe and the rest of the world:

    •   World trade shrank by 60% (1929-1932) – especially as countries imposed tariffs to try to protect their home industries;

    •   Industry slumped worldwide (Germany: -40%, UK: -16%, Japan: -8%, France: -25%) – especially export-reliant economies (eg Canada, Australia, Argentina) as global demand fell;

    •   Raw materials (eg coffee, tin, rubber, and wheat) prices collapsed by more than 50%, hitting the poorest countries (eg Brazil, Chile, Malaya, West African, India) hardest;

    •   There was mass worldwide unemployment (Germany: 30%, UK: 20%, France: 15%, Argentina: 30%);

    •   Wages were slashed, and there was mass poverty – shantytowns of homeless people sprang up (‘Hoovervilles’ in the US, ‘bidonvilles’ in France, ‘favelas’ in Brazil);

    •   Governments went bankrupt (eg Brazil, Peru, Chile).

Did the 1930s Depression cause WWII?

There is no doubt that the Great Depression helped to bring war, by creating the environment in which extremism and aggression dominated domestic politics and international relations:

1.  Unemployment → Extremism

Mass unemployment (eg Germany) and poverty (eg Japan silk workers) caused discontent = people put in power/accepted dictatorial governments who told them their country was superior and it was OK for them to take what they wanted by force.  Communist movements gained strength in France, Spain, and China, while fascist parties rose in Italy, Japan, and Latin America. 25 countries became dictatorships 1929-39. 

2.  America

America called in her loans to Germany.  This caused a banking crisis and the collapse of Germany industry in 1931 = led directly to Hitler’s rise to power. 

3.  Politics

Many leaders know that, when things get bad at home, one way to stay in power is to turn people’s attention to foreign affairs/ direct people’s hatred against other countries/ to have a few successes in foreign policy = more aggressive, nationalistic foreign policy. 

4.  Empire-building

In the atmosphere of cut-throat economic trade, the answer of countries like Japan & Italy was to build an empire – this would secure their supplies of raw materials and natural resources.  Countries like Japan (Manchuria), Italy ( Abyssinia ) and Germany (eastern Europe), therefore, set about building an empire = international conflict and tension. 

5.  Self Interest

Countries who were prepared to be philanthropic during the 1920s, could not afford to give way during the 1930s → countries left the League instead (eg Japan over Manchuria).  Self-interest destroyed the international co-operation ideal of League of Nations. 

6.  Britain and France

were suffering too – that was one reason why they did not send an army to Manchuria or impose sanctions on Italy over Abyssinia (could not afford).  Again, that was a reason they did not begin to rearm against Hitler in the 1930s = appeasement/ failure of League of Nations.