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Economic Depression: Cause and Effects August 21, 2005 by Michael DiNatale Recommend (71) Font Size Read comments (11)Share More topics Great Depression | Economic Depression | Fighting Depression A Look at the Circumstances that Led to the Great Depression At 1100 hours on November 11, 1918, the armistice went into effect, ending the fighting of the First World War and with it the old world monarchies that had ruled Europe for hundreds of years. Russia had succumbed to a communist revolution in 1917, the great Ottoman and Austria-Hungry Empires were disbanded, and British Empire, once the most powerful country in the world, found itself in massive debt. Unrest and upheaval dominated Europe, and in these uncertain times depression began.The depression would spread to the United States almost ten years after it hit Europe. While the stock market crash of 1929 is often referred to as the starting point of the Great Depression, 20/20 hindsight provides us with the observation that perhaps hints of the coming depression could be seen. The agricultural industries began to show signs of trouble years before Black Tuesday. New equipment developed during the war years allowed for increased productivity and a larger more efficient harvest. However, with the war over, supply quickly out paced demand. Overproduction of goods caused a drop in prices which provoked farmers to increase production in an attempt to maintain the same level of profits they had grown accustom to. However, this created a vicious cycle which drove prices so low that many farmers were no longer able to make enough money to pay for supplies, food or the leases on their property. As a result many farmers defaulted and lost their farms.Right away the crash effected terrible effects on the economic situation in Europe. During the markets boom in the years previous to the crash large amounts of investments had

been made by European sources, eager to cash in on Americas good fortune while their own markets floundered. These assets disappeared virtually overnight. Similarly, American investments in Europeanbonds were called in as American banks desperately tried to raise money in order to stave off bankruptcy. Even more disheartening for the European continent, was the immediate decline in imports of European goods by the United States. The American economy had imploded leaving Europe in an even deeper pit of despair. The conservative notion that the system would right itself just never panned out. The old laissez-faire approach to managing a nations economy failed to stop a depression that could have potentially been avoided if the proper steps had been taken. If President Hoover had been willing to abandon laissez-faire, he might not have found himself in the same position as millions of his countrymen; out of a job. The German population was devastated by the outcome of the war. At the beginning of the war there was great enthusiasm for the war. The German nation was on the side of right, had they not? With their new ideas the Germans were going to bring a revolution to the world; a revolt against the bourgeois. The pride in German ideals was a result of the postindustrial era. Germany had modernized at a rapid pace, catching up to world leader Britain in a short time. Their science, engineering, and art left more of a mark on the modern urban environment than any other nation. The Germans were not afraid to experiment. The young nation would proudly embrace new ideals. A sense of nationalism was built up on these accomplishments. The Germans viewed themselves as leaders of a new era; they were the heart of Europe and the maintained that the continued dominance of bourgeois in world affairs was a clear and present danger to their way of life.After the war, not everyone was so sure. The Kaiser for which many young German men had fought and died for had been forced to abdicate his throne. The victors of the war were eager to gain something for all the loss of life and destruction caused by a war they blamed on the Germans. So the Treaty of Versailles was forced upon a country in the grip of starvation thanks to a British blockage that was still in effect after the armistice. Germans resented the treaty, which they deemed unfair, as well as the government that allowed it to be instituted upon them.The German economy soured quickly under the strain of the reparations it was forced to pay to the allied powers. The early 1920s saw the collapse of the German monetary system. Hyper-inflation, which resulted from the over printing of currency, had made the mark worthless to an unimaginable degree. People would have to literally take wheelbarrows full of money to the store to buy the most common of necessities. These

economic woes lead to an attempted coup by the Nazi party in 1923. The coup, while a complete failure, reflects the mood of a German population aggravated by a government that seems unable to solve their woes. The Dawes plan was able to bring stability back to the German economy for a few years, but the stock market crash in the United States derailed recovery efforts. The stability of the Germaneconomy had relied on loans from the United States, but the seemly sudden stock market crash forced creditors in the United States to call in their loans. This 2nd post war collapse of the economy was devastating. Nearly half the German work force became unemployed. Those who remained employed constantly feared that they might be next.The fear of the middle class, that they might become poor drove them into the arms of the Nazi Party. The Nazi were the most effective of the right leaning political parties to emerge in German after the World War I. They knew their audience, and worked tirelessly to assimilate them in to their fold.The publication of Remarques All Quiet on the Western Front in 1928 was a showcase of the confusion in ideals and emotions of a lost generation in the post war era. The reasons they had gone to war seemed false, they felt mislead; their innocence was gone. They had returned from the war without direction. Dissatisfaction with the current situation both with themselves and their fatherland would have made them yearn for the good old days where they were not lost and their country was strong. These attitudes would have allowed the Nazis to gain traction.The Nazi party acted strong, continuously demonstrating that it was willing to fight tooth and nail for its beliefs. This spoke volumes to the disenfranchised to which the Nazis must have appeared to as a guiding light. They were willing to show people the way. They attracted mainly middle class businessman with their strong opposition to Versailles Treaty and anti-communist stance, but sold themselves to some workers by promising economic and social reforms. Germans were tired of the post war environment and they wanted a return to their former glory. As the depression wore on, they stopped asking questions. The Nazis were loud, focused, and offering solutions; they could hardly be ignored. England was another story all together. The country had exited the war era in a better financial situation than most other European countries because it has used the sale of assets from its worldwide empire to fund the war effort without having to take massive loans. However, by selling these assets English industries were left largely unprotected from the effects of a worldwide economic crisis. When the Great Depression arrived, and international trade was essentially halted by high tariffs, England got its first real taste of depression. Without the export market, production

slowed to below pre-war levels and soon works began to lose their jobs. Unemployment in England reached a high of 20% but areas of northern England usually averaged well above that. These numbers were considerably lower than those in Germany, however unemployed has not the only cause of poverty. Millions in England had jobs that provided them with just enough to not die of malnutrition. Middle class families became terrified of losing what little they had that separated them from the working class, and were fearful that they might become destitute themselves at any moment. It didnt seem to bother them that their overall household income might be negligibly higher than a coal miner. As long as they continued to maintain their business they were on a completely different level than the working class.A Welfare system in England existed on a level beyond that of the other industrialized states. This system, which was fully funded by the government, paid out according to need. However, unemployment pay was governed by the means test, a strict set of rules that determined your rate. Anyone applying forunemployment pay had to face inspection by government officials to make sure that they had no hidden earnings or savings. The working class viewed this as a humiliating experience and it was much resented because of the sometimes unreasonable restrictions in levied upon impoverished people. So while Germany faced a turbulent political system during the depression years, England was comparatively blessed with relative stability. This is not to say that the specter of fascism did not haunt England, many including George Orwell thought England was doomed to fall to the fascists if socialism did not effectively rise up to fight it. In his book The Road to Wigan Pier Orwell, argues that there is no chance to save England without an effective Socialist party (p230). Orwells opponents, the same conservatives who were in control of English politics, would argue that government intervention was needed to save capitalism. In the end, it was the governments socialist welfare system that kept the poor from becoming a revolutionary threat; an odd sort of draw.The English welfare system prevented the middle class spirit from being broken the same way in had been in Germany. The middle class were key to the rise of fascism in Germany and without that same support in England fascism seemed doomed to fail. Those in the middle class were happy to have their position of class. It allowed them a certain level of comfort and as such they were not driven to resent their government. Had the Weimar Republic been able to institute an equally effective welfare system, they might have been able to prevent the support that extremist groups gained during the depression years. Workers may not have drawn

allegiances with the Communist party, and the Nazis might not have gain a significant heel to pit against middle class fears. Print SaveRead comments (11) Next piece

Written by Michael DiNatale Student at the University of Massachusetts: Amherst, graduating in December 2005 - Full profile Related Video

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All Quiet on the Western Front transpires in the trenches of the Nazi Western Front, which is protected by the young German soldiers of World War I. Paul Baumer, the narrator, enters the war under pressure to enlist. By Michael Dark | Published 5/7/2007 Essay: All Quiet on the Western Front Review of the movie All Quiet on the Western Front... The ideas on the home front were of a glorious war fought by heroic soldiers; however, the actual experience of the soldiers in World War I was more horrific than glorious. By jmopp | Published 5/15/2006 A Look at World War I Film All Quiet on the Western Front a review of All Quiet on the Western Front By jannette hypes | Published 7/17/2006 All Quiet on the Western Front: The Ordinary German Soldier Fighting in the Trenches a review of Remarque's novel and the impact at the time By Werner Haas | Published 1/29/2007 All Quiet on the Western Front (1930) - Review & Analysis of the Film

An in-depth review and anaylsis off the film. By Ryan Haydoo | Published 5/1/2007 All Quiet on the Western Front Movie Synopsis and Analysis The movie "All Quiet on the Western Front" is a World War I movie, meant to depict the German viewpoint of the war. This movie showed the great losses of war and several philosophical questions about war are addressed. By J. Lin | Published 7/6/2006 Related information All Quiet on the Western Front Essay: All Quiet on the Western Front A Look at World War I Film All Quiet o... All Quiet on the Western Front: T... All Quiet on the Western Front (1930) - Re... All Quiet on the Western Front Mo... Analysis of the Artillery Bombardments in... ResourcesTakeawaysDid You Know

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Is this depression going to end or what?anyway let kabelo Modukanele Add a Comment Posted on 04/14/2009 at 2:04:30 PM Your name how are we supposed to effectively prepare ourselves for a depression when we are already officially labled as being in a recession? if we're already cutting back on our spendings, how are we supposed to save more? Add a Comment Posted on 12/02/2008 at 11:12:50 PM John Petty Here is an article about the fed chairman during the time of the Great Depression and what he thought caused it. The same thing is happening again for the same reasons. Please read: In Review: America's Most Egalitarian Banker Marriner S. Eccles, Beckoning Frontiers: Public and Personal Recollections. New York: Alfred A. Knopf, 1951. At the start of the Great Depression, Marriner Eccles hardly seemed someone who might lead a charge against the economic orthodoxies that justified grand hoards of private fortune. By the early 1930s, after all, the Utah-born Eccles had become the top banker in the Mountain West, the organizer of the first multibank holding company in the United States. But Eccles had also come to understand, after watching the great speculative bubbles of the 1920s pop into massive misery, that prosperity - to endure - needs to be shared. Eccles began speaking out on that theme, shortly after the Great Depression began, and soon caught the attention of the early Add a Comment

Posted on 10/24/2008 at 5:10:42 PM abo the fear of another global depression is becoming more real than ever. Lets all do what ever we can to prepare for the worst while hoping for the best. Add a Comment Posted on 10/11/2008 at 1:10:33 PM IM A SMART DUDE Every start farming for food!!!!!!!!!! Im serious. Lets plan this out while we still have time. Add a Comment Posted on 05/26/2008 at 3:05:50 PM SeMore Butts OMG everyone get ur G's and go my some AK 47s and we will all rebel =]]] Add a Comment Posted on 12/11/2007 at 9:12:59 AM mzkole i read this all just for a supid essay =[ Add a Comment Posted on 11/13/2007 at 10:11:00 PM larry i get money Add a Comment Posted on 11/07/2007 at 8:11:00 AM lisanne what is this ?? Add a Comment Posted on 09/26/2007 at 11:09:00 PM smiley Hey wazz uop!!!!!!!!!!!!!!! Add a Comment Posted on 02/20/2007 at 12:02:00 PM Comments 1 - 10 of 11

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