Most national economies hit bottom in 1933, but the slump lasted, despite some spotty improvement and a few national exceptions, until the outbreak of World War II in 1939. Despite the global spread of "hard times" and its momentous international impact, most histories of the Great Depression are resolutely national in focus. On "Black Tuesday," October 29, 1929, the New York stock market began a tumble that lowered stock prices by almost half within three weeks Whatever the Great Depression causes, there is no disputing its devastating impact. Between 1929 and 1933, over eleven thousand American banks failed; national production was cut in half; and thirteen million people (representing one-fourth of the labor force) were put out of work.
The pre-war years had been the greatest period of mass migration in recorded history, but now these streams died out, or rather, were dammed by the disruptions of wars and political restriction. In the last fifteen years before 1914 almost fifteen millions had landed in the U.S.A. In the next fifteen years the flow shrunk to five-and-a- half millions: in the 1930s and the war years it came to an almost complete stop; less than three quarters of a million entered the U.S.A. Iberian migration, over whelmingly to Latin America, fell from one-and-three-quarter millions in the decade 1911-20 to less than a quarter of a million in the 1930s.
the U.S.A., was getting virtually self-sufficient, except in the supply of a few raw materials; it had never been particularly dependent on foreign trade However, even countries which had been heavy traders, like Britain and the Scandinavian states, showed the same trend. When the great inflation was ended in 1922-23, essentially by the decision of governments to stop printing paper money in unlimited quantities and to change the currency, people in Germany who had relied 15 INTO THE ECONOMIC ABYSS 265 on fixed incomes and savings were wiped out, although at least a tiny fraction of the value of money had been saved in Poland, Hungary and Austria. . . . The Anglo-Saxon world, the wartime neutrals and Japan did what they could to deflate, i.e. to get their economies back to the old and firm principles of stable currencies guaranteed by sound finance and the gold standard, which had been unable to resist the strains of war. Indeed, they more or less succeeded in doing so between 1922 and 1926.
The roaring 1920s were not a golden age on the farms of the U.S.A. Moreover, unemployment in most of Western Europe remained astonishingly, and by pre-1914 standards, pathologically, high. It is hard to remember that even in the boom years of the 1920s (1924-29) it averaged between 10 and 12 percent in Britain, Germany and Sweden, and no less than 17-18 percent in Denmark and Norway. Only the U.S.A., with average unemployment of about 4 percent, was an economy really under full steam. Both facts pointed to serious weaknesses in the economy. The sagging of primary prices (which were prevented from filling further by building up increasingly large stockpiles) simply demonstrated that the demand for them could not keep pace with the capacity to produce.
Crashed 29 October 1929. It amounted to something very close to the collapse of the capitalist world economy, which now seemed gripped in a vicious circle where every downward movement of the economic indices (other than unemployment, which moved to ever more astronomic heights) reinforced the decline in all the others. U.S. industrial production fell by about a third from 1929 to 1931, German production by about the same, but these are smoothing averages. Thus in the U.S.A.. Westinghouse, the great electrical firm, lost two-thirds of its sales between 1929 and 1933, while its net income fell by 76 percent in two years. There was a crisis in primary production, both of food stuffs and raw materials, as their prices, no longer kept up by building stocks as before, went into free fall. The price of tea and wheat fell bv 266 two thirds, the price of raw silk by three quarters.
The war that began in Europe in 1939 and reached America at the end of 1941proved a decisive turning point for the United States and indeed for the whole world. Allied success on the battlefield, with its ghastly toll of casualties, saved the West (but not six million Jews) from Nazi dreams of racial purity and world conquest Winston Churchill dubbed it "the unnecessary war,"
President Franklin D. Roosevelt succeeded Herbert Hoover in 1933, Roosevelt still believed that the United States should use its influence in the cause of world peace That was not only a moral duty, he believed, but also a matter of self interest. In 1937 he compared war to an infectious disease whose spread could be prevented only by putting the aggressors in "quarantine" through diplomatic isolation or economic sanctions.
The Neutrality Act of 1935 was designed to prevent the economic entanglements of trade and loans that had helped drag America into the Great War. Roosevelt himself shared these anxieties. "I have seen war. . . I hate war." he insisted in 1936. He was also acutely sensitive to political realities, having watched the disintegration of Wilsons policies in the confrontation with the Senate in 1919. For Roosevelt, diplomacy had to be tailored to the public mood. In the 1930s it was understandable for Americans to display little interest in world affairs. Three thousand miles of Atlantic Ocean seemed ample protection against Hitlers Germany, and the expansion of Italy or Japan was of limited concern to a country with few overseas possessions and little dependence on foreign trade
The English Channel, her moat in the past, was no barrier to the growing German air force, and British power and wealth depended on the survival of the empire and the protection of vulnerable trade routes. The First Sea Lord Admiral Chatfield summed up British thinking in 1934: "We are in the remarkable position of not wanting to quarrel with anybody because we have got most of the world already, or the best parts of it, and we only want to keep what we have got and prevent others from taking it away from us." Britain therefore had to maintain a delicate balance. Her interests lay in preventing not just renewed war but also the further erosion of her power. She wanted peace, but not at any price. The problem was that she lacked the means for a firm policy that would deter worldwide aggression In particular Britains Navy, the main instrument for protecting her trade and empire, was inadequate for her responsibilities, after the reductions of the 1920s and successive arms control agreements. . . .
Appeasement was the policy of the Tory dominated National Government throughout the 1930s,but it was adopted with particular enthusiasm by Neville Chamberlain, who became prime minister in May1937 Chamberlain effectively seized control of foreign policy, trying to reach personal agreements with Hitler and Mussolini. He and most of his colleagues underestimated Hitlers long-term ambitions and exaggerated Germanys immediate military strength Chamberlain was also pessimistic about the chances of significant help. The British Dominions were isolationist, France was in turmoil, and Russia was engulfed in Stalins bloody purges. Like most of his colleagues, Chamberlain was particularly skeptical about the United States after the bitter experiences of the 1920s and early 1930s. "It is always best and safest," he once observed, "to count on nothing from the Americans except words."