How were the European powers able to recover from the 1929 – 1935 Great Economic Depression?

How were the European powers able to recover from the 1929 – 1935 Great Economic Depression?

By 1936, almost all the countries of the world had recovered from the World Economic Depression. The following were the ways through which the depression was brought to an end.

A World Economic Conference was organized to overcome the economic depression.  This conference was held in 1933 in Geneva and it was attended by representatives from 66 nations.  The delegates worked out measures to solve the Great Economic Depression. For example, there was stabilization of the world currency, removal of free trade restrictions and implementation of uniform tariffs on imports and exports.

There was cancellation of the reparation payments that had been imposed on the defeated nations by the Versailles treaty of 1919 and had crippled their economies. This was done during the Lausanne conference of June – July 1932 that was held in Switzerland to liquidate the payments of reparations by Germany to the former Allied and Associated powers of World War I. It was attended by the creditor powers (Great Britain, France, Belgium and Italy) and Germany and it resulted in an agreement on 9th July 1932 between the above powers. By this agreement, it was concluded by the allied powers that the difficult economic conditions of that time made the continued reparation repayments by Germany impossible and therefore they were virtually abolished. This therefore helped Germany to overcome the depression.

There was charging of high tariffs the on imports by some countries so as to overcome the depression. This helped to protect the domestic markets from foreign competition. With time, this increased the sale of both industrial and agricultural products which offset surpluses, thus leading to the end of the depression.

There was also the expansion of public works by some countries as a measure to end the depression. Giant projects like construction of bridges, dams and highways were undertaken which provided employment opportunities to many people, thus reducing the problem of widespread unemployment that had characterized the Great Economic Depression. This was the case in USA where the President Franklin Roosevelt introduced a series of public work projects and rural rehabilitation schemes between 1933 and 1936 under the famous New Deal Policy.

There was also the creation of trading blocs through regional economic integration or co-operation. This revived free international trade which had been shattered by the protectionist policies that were practiced by the different countries. For example, there was the formation of the British Common Wealth in 1932, USA came up with the integration of the South American states, and the Scandinavian countries formed the OSLO Bloc while the agricultural nations of Eastern Europe also teamed up under the one regional trading bloc.

There was also the change of governments in some countries as a measure to overcome the depression. The governments that had failed to address the economic problems caused by the depression were overthrown and replaced with new and strong ones that the masses expected to end their suffering. For example, in Germany the Weimar republic was overthrown by Nazists under Adolf Hitler in 1934 while in Britain the Labour Party government was also forced to resign in the same year and the Conservative Party took over power.

The abandonment of the Gold Standard system was another measure undertaken to overcome the depression. The European nations stopped the system of Gold standard because it had caused economic rigidities that had caused the depression.  Therefore, regardless of the amount of gold in the reserves or banks, money was printed by the central banks of the various nations which increased the purchasing power of the masses, thus offsetting the surplus products which led to the end of the depression.

It was also solved through the provision of unemployment benefits. For example, in Britain and USA whoever was above 18 years of age was to be paid some money even if he or she was unemployed.  There was also provision of aid to the women and children. All these increased the purchasing power of the masses, hence solving economic depression.

Some countries carried out currency depreciation or devaluation as a measure to overcome the economic depression. By this policy, countries like USA deliberately reduced the value of their currencies in relation to the currencies of other countries. This consequently made their exports cheaper, thus increasing their volume of sales to other countries. This increased production and subsequently more employment opportunities that helped countries to overcome the depression.

Economic imperialism was also adopted to overcome the depression. Some powerful countries became aggressive on others so as to solve the problems caused by the depression. Such countries embarked on territorial conquests to acquire raw materials, markets and areas for further investment so as to address the domestic problems created by the depression. For example, Japan invaded the Chinese province of Manchuria in 1931 which was rich in silk and cotton. Italy occupied Ethiopia in 1935 in search for raw materials and German invaded the Saar Coal fields, Austria and Czechoslovakia.

There was adoption of agro-based industries by several countries as a measure to overcome the depression. These industries provided ready markets to both the agricultural and industrial goods which subsequently boosted production. With increased production, more employment opportunities were created, thus reducing poverty and subsequently resulting in high a purchasing power among the masses. All these helped to overcome the economic depression by 1935.

Economic reforms were put in place to address the depression. These policies were designed to improve on the industrial and agricultural sectors. Trade unions in various countries were given power to organize and bargain for the rights of the workers like increased pay.  Also, progressive taxes were levied on the rich to subsidize the poor.  These measures increased peoples’ earnings, created more jobs and improved the general welfare of the masses.

There was also the adoption of outright force by the existing governments against the rioters and other forms of social unrest.  In France for example, the police shot and killed fifteen demonstrators during the February 1934 ant-government street demonstration in Paris. Those who survived were forced to abandon street protests and riots against the government.

There was also military conscription as a measure to overcome the economic depression. Some countries like Germany, France and Britain recruited many of their citizens into the army so as to reduce the unemployment problem which was rampant during the 1930s.  This enabled such people to earn income which increased their purchasing power, thus helping such countries to overcome the Great Economic Depression.

Government control of banks was also adopted to end the depression. Through this measure, countries were able to restrict lending and borrowing. They argued that money which was borrowed for investment was simply consumed. The USA was also forced to stop granting loans to the European countries and she instead started demanding for the repayment to her loans especially those she had advanced to different European powers before 1929 in order to boost her economy.

Some European countries like Britain declared free trade. This helped them to increase on the volume of sales of the exports


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