Great Depression of America
Wall Street Crash
24 October 1929 was a fateful day in the history of the world. This was the day of the Wall Street Crash. The value of shares on the American stock market collapsed. People tried frantically sell their shares before the prices fell even further. In one day no fewer than 13 million shares were sold. This was the start of an economic crisis that devastated the whole world.
What were the political consequences of the Depression?
The depression began with the Wall Street Crash. This was a collapse of confidence among American investors. After Wall Street there was a dramatic slump in the USA. This had catastrophic results for the world economy. The world economy depended on the USA.
After Wall Street there was a worldwide economic crisis. Governments turned to protectionism: they imposed high import taxes to protect their own industries. This resulted in a further decline in world trade and widespread unemployment.
The Depression and the USA
In the years before 1929 the American economy had grown at a dramatic rate. The USA was by far the most important manufacturing country in the world. On the eve of the Depression, the USA was producing 4.5 million cars a year, while Germany, Britain and France made less than half a million cars between them. Taken together, Britain, France, Germany, Italy, Japan and the USSR produced fewer manufacturing goods than the USA did by itself.
The national income of the USA fell by nearly a half between 1929 and 1932. American factories, which had become so successful, suddenly fell silent. Exports of cars fell from $541 million in 1929 to $76 million in 1932. Farmers were also badly hit: wheat exports fell from $200 million to a mere $5 million in 1932.
American foreign policy had been isolationist before the Depression. The US government became even more isolationist after 1929. Politicians were more interested in rebuilding the American economy.
In 1932 a new President was elected: F. D. Roosevelt. Under Roosevelt policy became even more isolationist. Roosevelt called for a New Deal for America. This New Deal policy was based on government spending on public projects and government help for businesses and farmers. Roosevelt needed the support of extreme isolationists in the US Congress to get support for his New Deal.
America and the dictators
Lacking support from Washington, the leaders of France and Britain were encouraged to be cautious towards the dictators. Many American politicians said that America should be neutral if there was ever another war in Europe. This encouraged Hitler to think that Germany could be aggressive without much risk of war with the wealthy USA.
American reluctance to get involved was seen during the crisis over Abyssinia in 1935. Mussolini was criticized by the US government for invading this African country but nothing practical was done to stop him. American companies greatly helped Mussolini by allowing a mass increase in the sale of American oil to Italy