European History

Posted: September 9th, 2013

European History

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European History

The great depression is one of the worst economic disasters to hit the industrialized world. It happened between 1929 and 1939, affecting many countries in the western world. In the US, the depression began when the stock market prices fell, a trend that continued for the next three years. By 1932, the stocks had lost 80% of their value. This destroyed investors’ financial status and strained financial institutions, leaving many people who had deposited money in the banks to suffer. People did not have money to spend, and those who did spent as little as they could. There was reduced demand, which led to reduced production. This, in turn, led to massive unemployment, and more suffering for the people. The US suffered a lot during the great depression. Although the depression began in the US, it spread to other countries, especially those that traded with it, and those that depended on it as a financier.

After the First World War, many European countries had suffered great losses, unlike the US, which was not fully engaged in the war. The US had assisted many of the European countries after the war, and it was their main financier. Therefore, although the great depression began in the US, its effects were felt across many European countries, as its effect spread gradually. Great Britain and Germany were the European countries which were most affected by the great depression. The two had been heavily involved in the war. In Germany, unemployment rose sharply at the end of 1929, and by 1932, it had risen to 25%. Britain suffered reduced exports, a condition that lasted until the Second World War. It had largely depended on America as an external market, but this changed once the depression began. Other countries were affected by the great depression, but they were not affected severely.

Countries found different ways to deal with the great depression. Many of them imposed tariffs, and others set and increased quotas on imports. These measures were aimed at protecting the domestic markets by reducing imports. These measures affected international trade, as almost all the countries began using such measures. The great depression not only affected the countries economies, but it also influenced the political spheres of different countries. In the US, it led to a change of the presidency, as the people elected Franklin D Roosevelt, whom they believed had a solution to solve the economic problems. Roosevelt’s government proposed and implemented a number of measurements, such as increased government regulations but this did not solve the economic problems in the country.

In Germany, the depression led to extremism, and it contributed to Hitler’s rise in power. Germany suffered tremendously because it had to pay reparations to other countries, under the treaty of Versailles. Hitler initiated a number of initiatives, including increased production of weaponry, and increased public work. This increased the employment levels in the country, and it contributed to ending the great depression in Germany. Britain had not recovered from the effects of the First World War by the time the great depression began. Britain experienced a reduction in demand for its product, contributing to massive unemployment in some industries. The Second World War increased the rate of employment in the country, as men left to fight in the war. In addition, Britain abandoned the gold standard, and this enabled it to improve the economy.

The beginning of the Second World War marked a gradual end of the great depression. It led to the rise of American industries, as other countries began demanding ammunitions. This increased demand led to increased employment, and a desire for people to spend on other things. Countries were willing to lift the restrictions they had placed on imports, and this increased international trade. By Britain abandoning the gold standard, it was able to depreciate its currency, and this increased its competitive advantage in the export market, as other countries could afford to buy its goods. The Second World War was the solution to ending the great depression for many countries.