THE ORIGINS OF THE GREAT DEPRESSION OF 1929 – 1933
The crisis of 1929 – 1932 was the most profound crisis of capitalist production. It took European economies for four years. The crisis struck deeper in the United States of America.
Various causes account for the occurrence of the Great Depression.
(a) Wall street crushes
Wall Street is a street in New York City where buying and selling of shares takes place. The Wall Street crush marked the beginning of the Great Depression. The prices of shares were increasing rapidly forcing people to buy more and more shares, but suddenly the prices of shares started to fall drastically and the people had bought so many shares started to sell them at give away prices. Large number of individuals and enterprises who had lent out money to the capitalists to make an interest ran bankrupt because the capitalists failed to pay back the loans.
(b) Over production in the United States of America.
After world war one the USA became the leading economic power. In the 1920’s American factories and farmlands produced more and more products expecting world trade to continue to expand. Due to increased production that lacked enough demands, prices of commodities declined reducing profits, capitalists responding by cutting down production which led to reduction of the work force leading to widespread unemployment.
(c) Nature of capitalists’ production
The capitalists believed in the Laissez faire policy whereby the government does not intervene in economic activities, due to the tendency of capitalists to compete with one another; they tend to produce more than the existing demands which leads to fall in prices and therefore the fall in profits forces the capitalists to reduce production and close their factories which leads to unemployment.
(d) Concentration of wealth in the hands of the minority and poverty in the hands of the majority
This lead to disproportion between investment and consumption. Due to poverty there will be inadequate demand which forces prices to fall leading to reduction in profits thus the capitalists are forced to reduce production and reducing the workforce which leads to widespread unemployment.
(e) Interdependence of countries.
Due to the interdependence of countries, a crisis in one country was bound to have serious consequences in another country. This explains why the Wall Street crush in the USA forced her to withdraw the loans that she had lent out to European countries hence having disastrous consequences in the European countries for example Germany failed to pay the war reparations.
(f) Protectionist policies.
Poor economic policies like protectionism were also for causing the Great depression. The USA during the inter war period pursued protectionism whereby it carried out discriminative policies against world economies. The USA introduced the “MC cumber tariff” in 1922 to shelter her economies against imports from other nations.
(g) Effects of World War 1.
The effects of world war one also contributed to the outbreak of the Great Depression.World war one lead to high production, low prices and profits hence was contributing to the Great Depression.
IMPACT OF THE GREAT DEPRESSION ON EUROPE AND AMERICA
(Factors for rise of dictatorship)
The Great Depression had a tremendous impact on the metropolitan economies for a period of four years. The effects are the following:-
(a) Massive unemployment.
The Great Depression was characterized with low prices that let to reduction in profit; the decline in profits compelled the capitalists to retrench workers thus leading to Massive unemployment rose from 3.2% in 1929 to 24.9% in 1939.
(b) Decline in production.
There was a massive fall in the level of production activities; the Great Depression was characterized with falling prices and profits which forces the capitalists to reduce production and in some cases to close their industries and factors.
(c) Widespread poverty.
The Great Depression led to widespread poverty both in the United States of America and Europe. Poverty was due to low purchasing power which was caused by massive unemployment.
(d) Collapse of the agricultural sector.
The Great Depression contributed to the collapse of the agricultural sector, the fall in production was caused by the rising prices of farm implements such as tractors and fertilizers. Due to the rise of prices, farmers could not purchase the farm implements thus contributing to the collapse of the agricultural sector.
(e) Inflation
The Great Depression contributed to widespread inflation in both the United States of America and Europe. The Great Depression was characterized by low levels of production which later on pushed up prices due to rising demand for goods. In 1929 countries such as Germany and Britain were characterized by hyper inflation that reduced the value of their currencies.
(f) Collapse of international trade
The Great depression contributed to the decline of international trade because it was associated with hyper inflation which contributed to loss of the value of money thus discouraging trade among countries. The Great depression also contributed to the collapse of many commercial banks, this too contributed to the collapse of international trade.
(g) Rise of dictatorship in Europe for example Italy and Germany
(h) Decline in working conditions.
NAZISM IN GERMANY
The world Nazism comes from the world “Nazi” which was a popular abbreviation for a member of Adolf Hitler’s political party called the National socialist party. Nazism was a dominant political system that arose during the inter war period. It was dominant in Germany.
Characteristics of Nazism
(a) The destruction of democracy.
The National socialist party removed all free elections and banned all trade unions. All communications and the press were restricted by the government. All radio programs and news papers were closely controlled by the state.
(b) Adoption of a one party state.
All political parties except the National socialist party were banned, so that the Germany became a one party state like the Soviet Union. All political meetings and associations were forbidden.
(c) Glorification of the military.
There was creation of a large and strong military and police machinery. Hitler created a huge police force and a tough secret police called the “Gestapo”. After 1933 Hitler withdrew Germany from the League of Nations and embarked on a policy of rearmament.
(d) Racism
The Nazi philosophy always emphasized Germany hatred for all foreign races especially the Jews. German text books were rewritten to fit in with the Nazi philosophy; the most obvious were History and Biology. History was distorted to reflect Hitler’s views that great thing can only be achieved by using force while Biology was dominated by the Nazi race theory which reflected the greatness of Germans as opposed to other nationalities.
(e) Expansionism
Hitler’s political party had two political aims,:-
– Re–uniting Germany that had been split by the allied powers in 1919.
– Obtaining for Germany a leading role in Europe in the form of oversees colonies.
In March 1938 Germany troops entered Austria without resistance and controlled it for seven years. They again over ran Czechoslovakia with little resistance and in 1939 they invaded Poland with the aim of liberating one million Germans.
(f) Dominated by totalitarianism.
Nazism was dominated by totalitarianism, Nazism believed that, “nothing should be above the state, nothing outside the state and nothing against the state” Hitler used to make remarks like, believe! Obey! Fight”
(g) Against capitalism.
Nazism was strongly against capitalism which was associated with exploitation and oppression. The Nazis hated Western capitalist countries such as Britain and France.
REASONS FOR THE RISE OF NAZISM IN GERMANY
(a) The effects of the Versailles treaty.
The treaty was too harsh for Germany, for example it involved the partitioning of Germany and forcing her to pay reparations that were fixed at 6.5 million pounds. Hitler promised to overthrow the Versailles treaty and rebuild Germany into a great power again, hence the majority of Germans turned to Hitler and the Nazi party.
(b) The effects of the Great Depression.
The economic hardships brought about by the great depression shook the basis of the Weimar republic’s existence. Between 1929 and 1933, the unemployment problem worsened for example 6 million Germans were unemployed. The USA withdrew her loans scheme from the Germans which led to the decline in wages and fall in industrial production. The majority of the Germans turned to Nazism.
(c) The weakness of the Weimar republic.
The Weimar republic was declared after Kaiser William 11 fled in 1918. It was the first democratic republic with a democratic constitution.However the republic had a democratic constitution. However the republic had so many problems for example it lacked support from the Germans because they argued that it accepted the humiliating and unpopular Versailles treaty with its harsh terms consequently most of the Germans supported the Nazi party.
(d) Effects of world one.
The defeat of Germany in the Great War frustrated many Germans. Germans nationalists like Hitler often remarked that Germany was not defeated, but simply nglish-swahili/betray” target=”_blank”>betrayed by the Kaiser’s government. There was widespread discontent in Germany, there was low production that led to scarcity of goods therefore contributing to hyper inflation for example in 1923 one British pound was equivalent to 20,000,000,000,000 marks where as in 1918 it was only 20 marks with all these hardships, the Germans turned to Hitler.
(e) The fear of a socialist’s revolution.
The bourgeoisie supported the Nazi party with the hope that it will keep out the communist policies and communism itself. Communism advocates for nationalization of private enterprises and renglish-swahili/distribution” target=”_blank”>distribution of wealth hence the bourgeoisie decided to support Hitler who will protect their enterprises.
(f) The role of Hitler.
As soon as Hitler was appointed chancellor, he banned all political parties and declared the Nazi party as the only legal party thus playing a leading role to the rise of Nazism in Germany.