Germany
While virtually all of Europe had struggled through the 1920s, Germany’s economic recovery had been particularly constrained by financial mismanagement and the reparations placed on it by the Treaty of Versailles. The Weimar Republic had experienced financial collapse in 1923, and became dependent on American loans in order to recover. The period of 1924-1929 then came to be known as the Happy Twenties in Germany, as economic recovery allowed creative and liberal movements to blossom. However, just as things were getting back on track, the U.S. withdrew its loans to Germany, the Reichsbank was forced to send 14 billion Marks to the U.S. in gold and currency, and the economy collapsed once more. Unemployment skyrocketed, production fell, and much of the country was plunged into a similar economic situation as it had been in just a few years previously.After WWI, German nationalists promoted the stab-in-the-back myth, a conspiracy theory claiming the country was being betrayed by its own citizens, namely Jews, communists, and political opponents, and these groups were made scapegoats for Germany’s defeat in the war and the economic struggles of the early-1920s. When the Depression hit, Nazi leaders intensified their attacks on these groups, especially Jews, whose supposed wealth they associated with American capitalism. Through this propaganda, the Nazi Party saw its position grow from being a radical, right-wing party with fewer than three percent of the votes in the 1928 election, to become the largest party in the Reichstag by 1932. This boom in support did not come from the working class or unemployed, but rather the middle-class who had lost their fortune in the Great Depression. While many other factors were at play, the Great Depression was perhaps the largest catalyst in the Nazi Party’s rise to power - Germany’s economic woes and the perceived failure of the Weimar government allowed Adolf Hitler to capitalize on public dissatisfaction and take control of the country in 1933.
Elsewhere in the world
Notably, the fledgling Soviet Union was largely shielded from the Great Depression, due to its economic isolation and the implementation of its command economy during its transition to communism – its economy had suffered greatly in the 1910s and 1920s due to conflict and famine, and its industrialization process was allowed to proceed (with mixed results) in the decade before the Second World War. Of the major non-European powers, China was also relatively unaffected as its currency was backed up by silver, not gold. In contrast, Japan entered its largest economic downturn in history as the value of the Yen dropped due to the failure of the gold standard – this combination of currency devaluation and trade loss was similar to trends seen across Europe at the time. In Latin America, raw materials and agricultural products were the primary exports, especially to the U.S. and Europe, but these dried up during the Depression due to lower demand and increased trade tariffs. Overall, international trade would see some improvement by the end of the decade, but this was followed by the Second World War, which saw more drastic fluctuations in currency, trade, and commerce.
