Contemporary History of the World

Dictatorship, Democracy, and Depression

 The Rise of Authoritarianism

• Traditional Interpretation (Eurocentric):

• The traditional interpretation of “interwar Europe”
was that democracies triumphed in the aftermath of
World War I, the Fourteen Points of Wilson, and the
Treaty of Versailles. The question, then, was why did
democracies breakdown during the interwar period?
• Newer Interpretation (World Historical):
• Most everywhere, the triumphant regimes were
authoritarian – usually highly militarized –
dictatorships with strong industrial and
modernization programs. This indeed was the
preferred model that France and Britain implanted in
the “Middle East” and which gained ground
elsewhere in Europe, Asia, and the Americas.
• Nuanced Interpretation: The two approaches are
indeed compatible as democracies broke down and
authoritarian and later fascist regimes triumphed.
However, perhaps it is best to begin with the Turkish women working in a factory during the government of Atatürk, the
authoritarian regimes rather than treating them as a exemplar for authoritarian modernization in the world. He not only promoted
result of a process gone wrong. women’s rights (women could vote by 1934) and industrialization but also changed
the Turkish script so it used a Western alphabet.
• Authoritarian Rule in The Middle East
• In many respects, the rise of centralist, nationalist, and
authoritarian modernizing regimes in the Middle East
were the preferred form of government by colonial
powers Britain and France in those places in which they
could not rule directly. In addition to being supported by
colonial powers, these regimes had broad based support
among landowners, small middle and merchant
communities, and modernizing industrialists.
• Turkey and Iran: Independent countries with strong
modernizing authoritarian leaders, Reza Shah and
Atatürk.
• Egypt: Governed by the secularizing Wafd Party after
independence in 1936. This was similar to the
modernizing and secularizing regimes of Iran and Turkey,
although the party got along better with dominant
religious institutions.
• Iraq
• In theory, the most problematic of the Middle Eastern
countries, since it was divided between Shia and Sunni,
housed an important Kurdish minority, and was crafted
out of three former Ottoman provinces. The British
formally granted Iraq independence in 1932, but King
Faisal died in 1933, leading the country to be torn apart
by war until 1936. On the eve of World War II, it was
governed by a predominantly Sunni officer corps that In 1941, the general Rashi Ali Al-Galiana led the four-general “Golden
governed a large military that had grown three-fold in the Square” government in Iraq that overthrew a British-backed regency
1930s. and formed an alliance with Nazi Germany. Britain invaded in 1941 in
the the Anglo-Iraqi War and occupied the country. Still, a Sunni officer
• Syria and Lebanon: Under the French Mandate until after corps remained dominant in Iraq.
World War II, which was also secular and somewhat
modernizing.
• Authoritarian Regimes in Eastern Europe
• The exemplary authoritarian regimes were those of
Hungary and Poland, which came into power in the
wake of the economic chaos of the postwar and the
threat of socialist revolution emanating from local
communist parties tied to Soviet Russia and backed by
widespread strike activities.
• Admiral Horthy’s Hungary (1920-44): A traditional
military dictatorship that came to power after crushing
the communist revolution of Belá Khun. During world
WWII, Miklós Horthy allied with Germany in 1941,
though he kept the country free of German troops
until the late invasion of 1944.
• Pilsudski’s Poland (1926-35): Marshall Josef Pilsudski,
the leader of Polish forces in the Soviet-Polish War
(1931-32) and a veteran of six border wars toward the
end of WWI, served as a fierce anti-communist dictator
of Poland. His successors suffered the joint Nazi-Soviet
invasion of 1939.
• A similar script played out in Italy, Portugal, Hungary,
Poland, Romania, Bulgaria, Germany, Austria,
Yugoslavia, and the Baltic states (Estonia, Latvia, and
Lithuania). All these formed “authoritarian,”
In this avant-garde portrait, Josef Pilsudski is still portrayed in a
anticommunist, modern, militarized regimes. Some traditional light. His hands are far removed from a fascist salute.
(such as Romania and Hungary) had powerful fascist
parties as well.
• Authoritarian Rule in Africa
• Ethiopia:
• After World War I, the only independent state in Africa
was Ethiopia, where Haile Selassie inherited the throne
in 1930 (on the right, his coronation).
• He too instituted a modernizing autocratic regime,
abolished slavery, and even promulgated a constitution.
However, he was overthrown during the Italian invasion
of Ethiopia in 1936, although he returned to Ethiopia
after the Italians had been removed in 1941. He
governed until his assassination in 1971, a symbol of
African independence.
• South Africa:
• On paper, South Africa was not an authoritarian regime,
having approved a constitution in 1910 that extended
voting and other rights to women. However, the extent
of its minority rule was outstanding. Under the
constitution, only “coloureds” and “Indians” who had
received the vote before 1910 retained it, while only
“whites” were allowed to sit in parliament. Even before
the formal introduction of “Apartheid,” South Africa had
an exclusionary regime.
• It was in this context that Gandhi first appeared as a
champion of Indian rights in South Africa and honed his
skills of civil disobedience.
• Authoritarian Rule in South America
• In much of Latin America, oligarchical regimes
were replaced by newer regimes that
attempted to solve national problems by a mix
of executive action, economic development,
repression of trade unions, and often a veneer
of populism. Some of the most notable
included:
• Arturo Alessandri in Chile (1920-1924, 1930-
1938): Framer of the Constitution of 1925 that
replaced “parliamentarianism” with
“presidentialism.” He was known as a
modernizer with an extremely repressive
regime of socialists and labor unions.
• Fulgencio Batista in Cuba (1933-1944, 1952-
1959): Batista was a modernizing military
general who initially came to power with a
program of social reforms that were to replace
the dictatorship of Machado, but ended up
governing an increasingly authoritarian regime
in the 1930s.
• Juan Perón in Argentina (1946-1955): Another
military leader who came to power on a social
reform agenda that was meant to replace the
old oligarchical regime. Still, his regime
featured a tightly controlled labor movement Cuba in the 1930s: In the 1930s, social protests, a military coup, and a power
and a typical blend of military nationalism struggle brought to an end the “dictatorship” of Machado and brought
common throughout the Middle East, Asia, Fulgencio Batista into power on an agenda of social reform during the Great
Europe, and the Americas. Its populist nature Depression. The Batista regime grew increasingly authoritarian in the 1930s.
took a page from Mussolini in Italy.
• Authoritarian Rule in East Asia
• Thai Monarchy: Continued modernizing society
and economy with strong support from the
military and tolerance by foreign powers.
• Chiang Kai-check’s regime in China: A
modernizing military anti-communist regime
that increasingly grew corrupt in the 1930s with
clear parallels to the Middle Eastern and South
American authoritarian regimes. Like Atatürk,
he created a party system that owed loyalty to
him as president, reinventing neo-Confucianism
that portrayed him as the “father of a national
family.”
• Japan: The Hirohito regime grew increasingly
authoritarian in the 1930s, responding to
feelings of exclusion among the world powers
during Versailles. The regime featured a strong
alliance between the military and industrial
enterprises. Shinto was transformed into a state
religion and Buddhist organizations were forced
to abandon their personal commitment to non-
violence.
• In 1931, Japan invaded Manchuria and
made plans to annex it as a client The Japanese invasion of Manchuria occurred in 1931 after China had signed a
state of Manchuko. This was the first “most favored nation” treaty with the United States in 1928, allowing US
invasion and annexation of the imports into China with few import duties while raising tariffs on Japanese
interwar period. exports. Japanese exports were simultaneously excluded from other colonial
markets in Asia by European powers. Between 1929 and 1931, Japanese
exports to China fell by one-half, wounding the Japanese economy and
provoking the invasion of Manchuria, a region of traditional Japanese “sphere of
influence.”
 Communism in the Soviet Union

• Lenin and the Bolsheviks

• Lenin had come to power in what was effectively a coup on a Marxist-Leninist
program that had promised a socialist revolution and the elimination of
private property led by a revolutionary vanguard. This replaced the old
Marxist paradigm of a socialist revolution led by the working class that would
bring capitalism to its knees.
• However, Lenin never had an ideal moment in order to implement his plans.
The new USSR was gripped by “War Communism” during the first five years of
its existence as Russia fought a long civil war (1917-1921) between “Reds” and
“Whites.” This led Lenin to institute a “dictatorship of the proletariat” while
also drawing back from some of his more radical promises of wealth and land
distribution before his death in 1923.
• Stalin
• Stalin, in contrast, came to power after a long factional struggle – between
himself, Leon Trotsky, and Nicolae Bukharin – in 1928. He implemented what
he called, “Socialism in one country” in a series of three “five year plans”
The Stakhanovite movement -- inaugurated during the Second Five-
(1928-1932; 1933-37; 1937-) that sought to produce economic growth by a Year Plan -- celebrated the achievement of workers who exceeded
strong state control of industry, the regimentation of the workforce, and their production goals. It was a propaganda weapon deployed by
collectivization of agriculture. He purged party rivals, the military, and Alexei Stakhanov, the miner who burst records for tons of coal
eliminating the “kulak” (rich peasant) class through show trials, mined in a single hour. Like production and efficiency, Stakhanovism
imprisonments, the Gulag system, and executions. became the new ideology of the Soviet Union. Above, a propaganda
poster in which productive ”red workers” punish lazy factory
• Like other autocrats, this was a highly centralized, regimented and militarized workers.
regime. His focus was on economic modernization and productivity. In this
way, Stakhanovism was the new symbol of communist ideology.
• Soviet “Empire”
• The Soviet Union never developed a theory of empire.
Like the United States, it was founded on a principal of
“imperial denial,” despite occupying lands that form
today independent countries, such as Turkmenistan,
Kyrgyzstan, Kazakhstan, Uzbekistan, Tajikistan, and the
Ukraine.
• In 1923, the Red Army crossed the Caucasian
Mountains and reoccupied the briefly independent
states of Armenia, Georgia, and Azerbaijan.
• After World War II, the Soviet Union reattached the
Baltic States of Estonia, Latvia, Lithuania (but not
Finland), and all of the Ukraine, hence recreating the
old borders of the Tsarist empire.
• The “official” title of the Soviet Union was the “Union
of Soviet Socialist Republic” and was nominally a
federal union or a federation rather than an empire. All
the same, the centralization of political decision making
and economic “central planning” undermined the
notion of a federation. The Communist Party was highly
centralized, the economy was “centrally planned,” and
all local administrators -- the nomenklatura (or
pejoratively apparatchik) – were directly responsible to
Moscow.
• Beginning in 1938, the Soviet Union undertook large
measures of “Russification” within the republics. Still,
the Soviet Union was sensitive to the rights of
nationalities, allowing children to be educated in their
own languages, and recruiting communist elite from the Soviet propaganda poster from the 1950s, “eternally together,”
local populations. celebrating the union of Russian and Ukraine ethnicities.
The Molotov-Ribbentrop Pact: An Agreement between Empires? In the secret Molotov-Ribbentrop Pact (1939), the Soviet Union and Nazi
Germany agreed to divide up Poland and the Baltic States into “spheres of influence,” which provoked the joint Soviet and German invasion
of Poland in September of 1939, the subsequent Soviet annexation of the Baltic States, and ultimately the outbreak of World War II. In
1941, Germany officially broke the pact by invading the Soviet Union. To the allies, the pact broke the accords of Versailles and the Munich
agreement, but to the signatories it was similar to the also-secret Sykes-Picot agreement in World War I in which Britain and France had
previously divided the Ottoman Empire into “protectorates.”
 Fascism in Italy and Germany

• In Italy
• Fascism is born in Italy, the ideology of Benito
Mussolini who founded formed a Fascist Party, which
won 22 states in the Chamber of Deputies in 1922,
marched on Rome in 1922, and then won a massive
electoral victory in 1924. By 1926, Il-Duce was a
dictator that ruled by decree.
• The fasci were highly politicized syndicalist groups,
scattered about Italy, and faithful to Mussolini and his
ultra-nationalist agenda. In this respect, the fasci
were not unlike the soviets, who had supported the
Bolshevik revolution.
• His regime was characterized by the cult of the leader
as the embodiment of the nation, the scapegoating of
enemies of the nation (Jews, Bolsheviks, the “political
class”), a single trade union, and a single political
party.
• It embraced a “cult of violence” and used its Futurism: Like the Russian and Mexican Revolutions of the left, Mussolini’s
paramilitary police – the “Brown Shirts” – to carry out “fascist revolution” also embraced art as propaganda of the right. The
purges of rivals. “Futurists” of Filippo Marinetti proclaimed the hygienic effects of violence,
• As Mussolini stated, fascism was “totalitarian” as it speed, industry, and modernity. Marinetti’s Futurist Manifesto (1909) was
embraced and permeated all levels of state and followed by his Fascist Manifesto (1919), expressing his and a number of
society. other intellectuals’ and artists’ enthusiasm for Mussolini and his movement
• Fascism and Empire
• In much the same way as Japan pursued imperial
expansion in order to redress the way that they
had been treated at Versailles (1919) and by the
alliance between the United States and China
(1928), Mussolini also pursued an imperial policy
in order to redress the inequities of Versailles.
Like Japan, Italy had allied themselves with the
victors of the war but they had been treated as
the vanquished. In the treaty, Italy lost historic
claims over Nice and the Dalmatian coast
(particularly Fiume), which had been ceded to
France and Yugoslavia.
• Recreating the image of Imperial Rome,
Mussolini aimed at re-establishing a
Mediterranean Empire:

• Ethiopian War (1935-36);

• Spanish Civil War (1937-1939)
• Occupation of Albania (1939)
• Greek Campaign in the World War II (1940)
• Italian Invasion of Egypt from Libya (1940)
• Yugoslav Campaign in World War II (1941)
The Italian invasion of Ethiopia (1935-36). Italy attacked from its
colonies in Eritrea and Somalia. This represented the second
annexation of territory during the interwar years following the
Japanese invasion and annexation of Manchuria. Above, the
Ethiopian troops with rifles were no match for the Italian Army with
its tanks and machine guns.
• In Spain:
• The dictatorship of Miguel de Primo de Rivera (1923-1929)
was partially modeled on Mussolini’s fascist corporatist
state, seeking to overcome the oligarchcy and corruption
inherent in parliamentary liberalism and proclaim the
government by an “iron surgeon” who would purge the
state of its ills and govern with a single political party and a
single trade union.
• In Germany:
• Fascism in Germany began in the state of Munich where
Adolf Hitler, a veteran of WWI (like Mussolini) founded the
Nationalist Socialist German Worker’s Party and first
made new in 1923, one year after Mussolini’s “March on
Rome,” when he unsuccessfully led the the Munich Beer
Hall Putsch and was throne in jail.
• By 1930, the Nazi Party was the second largest party in the
Reichstag (next to the communists), and, during the next
election, grew to be the largest. In January 1933, Hitler
was appointed Chancellor of a coalition government by the
President Hindenburg, and by July 1933 all parties had Jules Streicher, a rabid anti-Semitic intellectual, addressing the crowd
been made illegal. In June 1934, new election gave Nazis during the Beerhall putsch, an attempt to overthrow the government of
90 percent of the seats. In August, Hindenburg died and Bavaria. At first, Hitler’s movement was seen – like that of Mussolini and
Germans voted Hitler president as well, uniting the Primo – as an authoritarian movement, typical of “Catholic Europe,”
presidency and the Chancellorship. Hitler took the official which like the Middle East or Latin America sought a militarized,
title the Führer (“leader”). dictatorial path toward modernization. In the 1930s, though, the Nazi
Party proved to be different than its Southern European antecedents.
• Similarities to Italian Fascism: In many
respects, German fascism was similar to Italian
fascism in so far as it borrowed the model of a
single party, single trade union, a totalizing
ideology, and the prominence given to a group
of paramilitary “black shirts” (later the SS) to
enforce fascism on the streets. It even adopted
the name and the salute.
• Differences from Italian Fascism
• Anti-Semitism: While Italian fascism was anti-
Semitic, Nazism was rabidly so . The Jews were
behind everything – Bolshevism, capitalism,
parliamentarianism, the reparations of
Versailles – organizing vast conspiracy meant to
belittle and enslave Germans.
• Oratory and Ceremony: While Mussolini’s
populist and nationalist oratory successfully
mobilized masses as many populist orators on
the left had done (Clemenceau in France; Lenin
in Russia), Hitler’s Nazism was messianic,
frenzied, repetitive and crudely appealing.
Ritual and ceremony came to be carefully
choreographed and offered an awe-inspiring
spectacle able to convert the indifferent.
• Science: While Italian fascism based its
symbolic power on emotion, poetry and The Nuremberg Party Rallies of the 1930s brought Mussolini’s
aesthetics, the Nazis, raised these to a new and Lenin’s techniques of mass mobilization to a new level –
level. What is more, they incorporated science Wagnerian music, neo-classical architecture, frenzied anti-Semitic
– basing theories of racial superiority on the
false sciences of the twentieth century. oratory, cult of youth, ballet-like movements of uniformed men;
the parading of flags and swastikas. The spectacle was magical,
evoking the “collective unconscious,” to borrow the expression of
the psychoanalyst Karl Jung.
• Nazism and Empire (The “New Order”)
• When Hitler was in jail in Munich, he penned Mein
Kampf, which laid out his plans for the colonization
of Slavic Europe, which would form a Nazi “New
Order” in which Germans would gain Lebenstraum
(living space) in Eastern Europe.

• Ukraine (free of Jews): colonized by Germans

would be turned into gardens and become a
“California of Europe.”

• Crimea (in the Ukraine on the Caspian sea):

would be turned into a German Riviera
connected to Germany by Autoban.

• Poland (free of Jews): would be a connecting

link to the East and would be a source of
labor.

• When the Germans attacked Russia in 1941, some

Nazis explained that they were turning all of Slavic
Europe into a the “India” of Germany, and that
Germans should be trained in the “imperial
European ideal.”
Hitler’s “New Order” – an imperial regime along racial lines – was
almost realized at the height of Nazi power in World War II. This
involved complex plans of expulsion of minorities (Jews, Gypsies,
and other minorities), resettlement of Germans living outside
Germany, and colonization of Slavic lands, reorganizing Europe
based on racial hierarchies
 Fascism and Stalinism Compared

• The Origins of Totalitarianism (1951): Published by

Hannah Arendt, it argues that Nazism and Stalinism were
totalitarian ideologies, which, despite being from different
ends of the political spectrum (the extreme right and the
extreme left), shared various characteristics in common.

• Autocratic regimes with no tolerance for opposition.

• Charismatic leaders able to mobilize masses.
• The use of terror in order to implement radical
policies and eradicate opposition.
• The use of propaganda in order to disseminate
ideological charged messages of regime successes,
while portraying the opposition as anti-patriotic or
counter-revolutionary enemies of the state

• In his famous article, “Authoritarian and Totalitarian

Regimes,” the Spanish-German sociologist Juan Linz
further distinguishes between totalitarian regimes and
authoritarian dictatorships, which, though highly
repressive are less radical more pluralistic. Hence, if Nazi • The German-Jewish philosopher Hannah Arendt (1906-75). During
Germany and Stalinist Russia were totalitarian regimes, the Eichmann Trial, she also coined the phrase “banality of evil”
Horthy’s Hungary, Pilsudski’s Poland Ataturk’s Turkey, Reza (1961).
Shah’s Iran, Batista’s Cuba, and Perón’s Argentina would be
considered authoritarian regimes.
• The “Terrors” Compared
• In 1934, Stalin reorganized the police into the NKVD
(People’s commissariat of Internal Affairs), which
took the name KGB in the 1950s. Like Hitler’s
Gestapo (a branch of the SS), the NKVD ran the penal
system, including the forced labor and concentration
camps, the Gulags. It also controlled other matters –
highways, the militia and all state records.

• Gulags: Forced labor camps were located near

cities and in remote places such as Siberia.
Forced labor built canals, highways, dug the
Moscow subway system.
• The NKVD carried out the economic plans of the
1930s by sending persons who resisted
collectivization, protested against the centrally
planned economy or were just considered subversive
or undesirable into prison camps.
• Soviet Terror was much greater than Nazi Terror
during peacetime, and in many respects Stalinism a With respect to the purging of party rivals, Soviet terror was also more
more totalizing ideology than fascism, which had to totalizing than Nazi terror. In the famous “Night of the Long Knives,” (July
get along with big (and small) business. Nazi 1934) about 100 died as Hitler’s newer “SS” purged the “SA” from the
concentration camps in the 1930s housed some leadership. Stalin, in contrast, carried out a greater purge of rivals involving
25,000 to 30,000 prisoners while the Soviet Gulags three great “show trials” in the 1930s, and a “great purge” in 1937 and
housed millions!! 1938. From 1934 the 1939, 1.25 million members of the Communist Party
out of an original 2.8 million were killed. Above, a photo from one of the
show trials.
 What about “Democracies”?

• The “Retreat of Democracy”: As a general rule, the Eastern

and Southern European democracies established in the
aftermath of Versailles all crumbled in the 1920s
• What are the reasons?
• Lack of leadership: At Versailles, Woodrow Wilson
promised that World War I was a war to “make the world
safe for democracy.” However, the main institution created
to safeguard democracies – the League of Nations – was
not ratified by the US Senate, the US did not participate,
and subsequent presidents moved back to isolationism.
• Poorly Constructed Constitutions: Most of the
constitutions were so “democratic” that they lacked the
institutional safeguards needed to promote stability. Their
proportional representation systems fostered the creation
of multiple parties, which made for weak majorities and
ephemeral governments. Many lacked a strong executive Spain and Czechoslovakia: Spain and Czechoslovakia were the
power in theory or in practice. exceptions that proved the rule. Czechoslovakia remained democratic,
but it was sold out by the Allies during the Munich Agreements (1938),
• Economic Crisis: Most democracies were done in by the which allowed Germany to annex the country. In a like manner, the
economic chaos and inflation in the wake of World War I. Spanish Second Republic (1931-36) descended into civil war when Italy
For those that survived it, like Weimar Germany, the Great and Germany came to the aid of nationalist generals who had led a
Depression proved difficult to overcome. coup. The Allied Powers stood by under the guise of “non-intervention.”
• The Discontents of Democracies
• One major reasons that authoritarian militarized regimes
proved appealing to much of Europe was that democracies
were hardly exemplars:
• Britain: The Amritsar Massacre (1919), Bloody Sunday (1918),
and the Irish Civil War (1917-1921), in addition to its the
support for authoritarian regimes in the Middle East and Asia
made its support for democracy tenuous. The “Black and Tans”
– the British Police Force in Ireland – behaved in similar ways
to the “Brown Shirts” of Mussolini’s Italy, and Oswald Mosley
led an influential fascist party in Britain.
• United States: The United States had a perennial problem with
race, leading to the growth of the Klu Klux Klan in southern
states, and race riots in northern cities as increasingly number
of Blacks moved North where there were fewer legal barriers
to the exercise of their civil rights and more industrial jobs.
• France: The settler population in Algeria doubled from 500,000
to 1 million from 1900 to 1936, and was particularly intense in
the 1920s and 1930s. What is more, France’s promise to
extend citizenship rights to an increasing number of West Gandhi leading the “Salt March” in 1931. This kicked of and intensive
Africans was largely shambolic. In the postwar, it dissolved the campaign of civil disobedience from 1931 to 1934 that caught the
attention of the world. Under pressure, the British government passed
Syrian National Assembly in Damascus. the second Government of India Act in 1935 (the first was in 1919): In
• It was difficult to criticize Japanese plans to colonize these acts – and similar policies in the Gold Coast, Nigeria, and Malaya –
Manchuria or Hitler’s plans to colonize the Ukraine, the British instituted limited representative government and local
when France was accelerating its colonization of assemblies. The India Acts intended to slowly devolve self government to
Algeria, and ignoring promises of citizenship and India, and eventually turning it into a federation. Still, the Act had no
representative government in West Africa and the preamble, there was no mention of future dominion status nor was there
French Mandates in the Middle East. any bill or rights. Nehru called the 1935 act “a machine with strong
brakes and sans any engine” and labeled it a “charter for slavery.” The
• Netherlands and Belgium: Had abominable records in the British crackdown on civil disobedience – with all its racial overtones --
Congo and Indonesia in the 1920s and 1930s, and could hardly discredited its ability to portray itself as a champion of democracy in
serve as an example. Europe.
 The Great Depression

• Structural Causes:
• Few subjects have been studied in such depth as the causes of
the Great Depression, which was triggered by the Wall Street
crash of 1929. Although many debates remain, there is a
general consensus.
• War Debt and Reparations: Even though the United States
entered the WWI late (April 1917) with few troops (170,000),
its greatest contribution to the war was as a lender to the
Entente. This, though, had a perverse effect after the war, as
European powers were forced to pay down the debt,
weakening their domestic economies considerably. The same
occurred with Germany, which was forced to pay reparations
to the Entente powers as a result of Versailles.
• The Roaring “Twenties”: The 1920s – particularly in the
United States was a period of economic boom given that the
US was flush with money coming from Europe, and had taken
over the role of Britain as the largest investor overseas. The
“boom” lead to speculative bubbles in the stock market,
causing the crash of 1929.
Image of a Bank Run: The Wall Street Crash of 1929 was caused by rampant
• Changes in the World Economy and Geography: The redrawing speculation, fuelled by the practice of “buying on margin,” (the buyer would
of borders, the raising of tariffs, and the shift in world
only put down 10 to 20 percent for the purchase of stocks, and borrow the rest
economic power in the Atlantic and Pacific dislocated
traditional economic routes. from brokers) and plain overpriced stocks. The extent to which commercial
banks had invested depositors’ income in the stock market led to the Glass-
Steigall Act of 1933, prohibiting commercial or deposit banks from engaging in
activities reserved to investment banks. In 1999, President Clinton abolished
the Glass-Steigall Act, an action that many contributed to the financial crisis (the
most massive era of bank failures since the Great Depression) that exploded in
2008.
• Causes due to Human Error
• Most economists have agree that “human errors” made in
response to the crash contributed to the severity of the
Depression.
• Austerity: The general response to the crash was “austerity.”
Faced with piling government debt and massive
unemployment, governments tightened their fiscal policy
with the hope of avoiding the worst.

• Weimer Germany (1918-1933): Having experienced

the massive inflation of the postwar (1921 and
1922), the German government was loathe to take
expansionary measures that could stimulate
inflation. The result, in Germany, and elsewhere
was deflation.
• US, Great Britain and the Gold Standard: The
immediate response of the United States and Great
Britain was to return to the gold standard to
stabilize their currencies. This was also equivalent
to austerity. Britain and the Dominions wisely
abandoned the Gold Standard in 1931, but the
United States, France, and many other countries
remained with it. The “Roaring Twenties” (also called the “Flapper Era” or the “Jazz Age”)
was an age of economic boom in the United States, which in fact spilled
• High Tariff Walls: The response of the United States to the over to some of the countries less devastated by war in Europe, Latin
Depression was the erection of high tariff walls in the form of America, and Asia. Still, the boom of Wall Street absorbed much
the Hawley-Smoot Act of 1930. This number of immigrants European capital servicing war debt. In the meanwhile, the United States
coming through the borders had already been limited by the began to dominate trade in the western hemisphere, changing the
Johnson-Reed Act of 1922. The raising of tariff walls around structure of the world economy.
the world led to a depression in world trade, exacerbating the
crisis.
• The “Success” of Authoritarian and Totalitarian governments during the
Depression.
• In general, authoritarian and totalitarian governments had greater success at
solving economic problems, and social protection measures
• The “Success” of Hitler’s Economic Policy: The Nazi economic system was
based on the following reforms – compulsory labour service, rigid wage and
price controls, work creations schemes, discouraging women from the
workplace, and massive state control over the economy. Such strong state
intervention worked as unemployment fell from 5.6 million (30 percent of
the population) to 0.9 million in five years. By 1939, with the exile of the
Jews, there was full employment. Even many of Hitler’s critics and detractors
were willing to tolerate him because of his economic record (“look at what
he has done” was a common quip). In 1936, the Nazi Four-Year Plan was
synonymous with rearmament, which also stimulated the economy.

• The “Success” of Stalin’s Five-Year Plans: During the 1930s, communism was
a success especially when compared to capitalist breakdown. A war-torn
Tsarist empire had been transformed into a world industrial power, albeit
with much human suffering (famine, purges, gulags, etc.) leaving 7 million
dead in the Great Purge and another 20 million outcast. Another 3 to 5
million died in the Ukraine from famine from 1932 and 1933 as a result of
the collectivizations and the Five-Year Plan. By the mid 1930s, Stalin had
eliminated unemployment. By 1940, the Soviet Union was the second A propagandistic image of a Soviet Creche in the 1930 with an
leading producer of oil, the 3d in steel, and the 4th in coal, and state services image of a factory in the background. Following the crash of 1929,
extended to the population – maternity subsidies, disability payments, paid there was a real debate in economic circles over which economic
vacations, improved medical services, rest homes, rehabilitation centres for system was preferable and which brought more social welfare – a
delinquents. Many westerners travelled to the Soviet Union and praised the free-market liberal economy or a centrally planned economy. At the
height of the Depression, many believed that the Soviet system was
Soviet system, unaware or turning a blind eye to the human costs of the
communist system: superior.
• Political Consequences of the Depression
• In Western Europe and the United States: In the long-term, western
democratic governments would learn the lessons of the Depression,
abandon austerity, and develop “Keynesian” fiscal and budgetary
strategies, such as the “New Deal” in the United States. In so doing,
they borrowed government interventionist and social welfare strategies
that had been introduced and proved effective in authoritarian
countries. In the short term, however, their economies were devastated.
In the United States, GDP tumbled from 104 to 56 Billion USD, and
unemployment rose to an all-time high of 22 percent.
• In the Southern Hemisphere:
• The Great Depression was most devastating toward rural economies
driving agricultural prices down and initiating a long-term in which rural
populations migrated to the towns.
• Africa, India and parts of South America faced dire situations with falling
agricultural prices, falls in demand, falls in exports, and widespread
poverty. Tea and Coffee exports from East Africa declined sharply, as did
metal exports (copper, iron) from the Congo, as did palm oil and rubber
from West Africa. As did India cotton, jute, and tea. As did Argentine
beefs, wheat and hides - etc, etc. Even in South Africa, where gold
exports gave a boost to the economy, rural poverty was rampant.
• In North Asia:
One of the worst decisions of the Depression was to prejudice Japan – any ally
• The failure to redress the situation in which Japan had been locked of
Chinese and other colonial markets in 1928 was particularly damaging. of the Entente in World War I – by keeping them locked them out of Chinese
This caused much economic hardship and increase Japanese grievances, and colonial Asian markets. The Japanese invasion of Manchuria, in many
which had been building since Versailles. Japanese leaders initially respects, responded to the economic hardships faced by Japan during the
invaded and annexed Manchuria as a response to this crisis. Depression, which were compounded by the foreign policy of the United
States.