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Category: History

Global economic crisis of 1929: historical experience and lessons


UDC 94:330



T.S. OKOROCHKOVA of VPO "Bryanskaya gosudarstvennaya selskokhozyaystvennaya akademiya" FSEI

The economic crisis which the modern world entered makes think on cyclic development of historical process again and to address experience of eighty-year prescription.

The general nature of an economic crisis of 1929-1933 was shown that it involved in the orbit all countries - big and small, developed and backward (except for the USSR which dropped out for the known reasons, from a coverage of world economy). Its universality was that it captured all industries of capitalist economy. The material damage caused by crisis for 2-3 years exceeded the economic damage caused to mankind by World War I and was estimated in hundreds of billions of dollars. The general reduction of industrial production was, according to some data, on average 38%, on others - 62%. The volume of agricultural products decreased by a third, trade - by two thirds.

Most crisis struck economy of the USA and Germany in which economic life the domination of powerful monopolies was undivided. The economic crisis in France and Italy on depth was slightly less, but is more long.

Rather small was a falling of production in England. However the wave of inflation forced both the USA, and England to cancel the gold standard of pound sterling and dollar. As a result currencies of 56 states depreciated.

Ruins and bankruptcies of the industrial, trade and financial enterprises and firms in the years of crisis became the mass phenomenon. Falling of industrial production, closing of tens of thousands of plants, factories, mines, chronic underloading of the production device - all this led to enormous rise in unemployment. In the USA in 1933 every third worker, and in general 16.9 million was the unemployed. In Germany - 7.5 million, in England-3 million, in France - more than 2 million. It is necessary to add those who worked part-time or working week with the corresponding reduction of salary to it. For example, in the USA only 10% of workers continued to work full time. Real salary in the USA dropped on average by 35%, in France - for 24%, in Germany - more, than for 25%.

The income of the American farmers during crisis was cut almost by half. For failure to pay debts and taxes 897 thousand farms were sold forcibly out that made more than 14% of their total number. In France the associations of large landowners bought up for nothing not only agricultural products, but also the whole farms.

Also the middle class suffered. So, for example, in France the amount of bankruptcies from 1930 to 1934 grew almost twice and reached 16317.

In a historiography there is no uniform point of view on the nature of the global economic crisis of 1929-1933. The Soviet historical science saw sources of crisis in the general crisis of capitalism which began in the years of World War I and supremacy of monopolies in economy of the capitalist countries.

Some modern experts consider that ease of receiving the credits became one of the causes of the Great depression. For example, it was possible to buy assets on borrowed funds and to watch how this lever will make the "magic" action, proceeding at the same time from absolute confidence that the prices are capable, only grow.

Not all scientists believe that the collapse at the exchanges of 1929 became the essential reason of crisis. Some researchers blame for it tough monetary policy of the president Hoover.

The lack of economic data in the late twenties of last century any time did not allow the people who are already living in crisis conditions to make true idea of accident scales.

If to draw a parallel with today, then experts note that the economy of the USA is only on a recession threshold. Unemployment is still four times less, than eighty years ago, there are no long queues behind a bowl of soup.

Nevertheless, the begun crisis shows unfitness of traditional approaches to the solution of social and economic problems. L. Zhoffrin, the editor of French "Liberatyun", notes: "It would be possible to watch an alarm in bank community with laughter and even with some content if millions of jobs, not to mention economic stability on our planet were not at stake". The president of France N. Sarkozy said: "Non-interference of the state to economy it is finished. The all-powerful market which is always right ended".

The intermediate periods between presidencies in the USA are especially dangerous, according to political scientists. Since the victory on the first elections of F. Roosevelt in November, 1932 prior to his inauguration in March, 1933 the economy of the USA continued the accelerated movement on the descending spiral.

The two-party system - democrat republicans, - issued as a result of civil war, appeared incapable to solve the social and economic problems which are put forward by crisis of 1929-1933. Negative experience of government of the republican president Hoover convincingly proved that any significant reform demands national approach to a problem, active use of the mechanism of the federal state. Assimilation of the principles of the state solution of social and economic problems became a core around which the party regrouping began under blows of an economic crisis-. The democratic party had to play the main role in this process. The economic crisis of 1929-1933 and the strip of the rough changes which were "a new course" of the president F. Roosevelt followed it became the critical period which defined for decades a new configuration of the two-party mechanism in the USA.

The idea of responsibility of the state for welfare of the fellow citizens which appeared in the 19th century in the period of the global economic crisis became prevailing.

Substantially the soil for reforming of the existing system was created by the wide social movements developed in the USA in the thirties. The main requirements of the movement of the unemployed were: introduction of the state social security system, including insurance on unemployment; rendering the immediate help to the unemployed from the federal government, the authorities of states and city municipalities; organization of public works with fair compensation.

By the beginning of 1932 the army completely jobless in the capitalist countries exceeded 26 million people. In 15 developed countries about 20 thousand strikes in which 10 million people participated took place.

The victory of the democrat Roosevelt who put forward the wide program of reforms at presidential elections of 1932 was manifestation of the socio-political shifts which happened in the American society. Views of the English economist D.M. Keynes, one of ideologists of the state-monopoly capitalism (SMC) became theoretical base of "a new course". The most important economic problem of "a new course" was in that by vigorous intervention in process of reproduction to bring economy out of crisis. A political task - methods of social maneuvering to achieve easing of socio-political tension in the country. The solution of these tasks was promoted the law on recovery of the industry (1933); the banking legislation (1933 - 1935) reforming the Federal Reserve System; law on the help to farmers (1933); Fair Labor Standards Act (1938).

For the solution of problems of unemployment the Administration of public works and Administration of emergency relief to the unemployed were created (actually, playing a role mini-

sterstvo). Often, for dollar a day and a free lunch (or for the preferential travel document in public transport) the unemployed planted trees, dug ditches, dug in ditches, removed city dumps, etc. - the main thing, did not run on barricades. Were created labor the camp for jobless youth which in the conditions of crisis always suffered more than others since the lack of professional experience did not leave it any chances in labor market.

Acceptance and implementation of the above-stated laws happened in bitter struggle to the right opposition presented first of all monopolistic associations. The political genius of such charismatic president as Franklin Roosevelt was necessary to bring the country out of the Great depression.

Nevertheless, "the new course" represented a peculiar compromise, and, so bore in itself certain contradictions. So, NIRA (law on recovery of the industry) allowed associations of businessmen to formulate "fair competition codes", and the president turned these codes into precept of law. It is natural that tops of corporations created codes, first of all, to please to the interests. Agrarian reform allowed to use the state grants much more to owners of large-scale enterprises, than small and average farmers. Laws on social insurance were not fallen by agricultural workers, government employees, servants. For those times, the level of insurance payments was low. The right to a grant was followed by many reservations.

In 1935 in social policy of "a new course" there is a bigger shift to the left: the Workplace Relations Act (Wagner's law) in which the principle of the collective bargaining regulated by the state was recognized as the best model of the labor relations is adopted. The trade-union rights were officially proclaimed and protected by the state.

Strengthening of functions of the state in the economic and socio-political relations in the period of "a new course" of the president Roosevelt was the irreversible phenomenon and provided not only a safe exit from the global economic crisis (unlike Germany), but also prosperity of the country the next decades the XX centuries. As a matter of fact, at the suggestion of Roosevelt the function of the intermediary between the large capital and the rest of society, function of redistribution of taxes from excess profits in favor of socially unprotected and, simply, less successful fellow citizens became the most important function of the state.

And, nevertheless, 80 years later America again on a threshold of a deep economic crisis. Experts speak only about mortgage crisis, about financial crisis so far. Perhaps, its consequences will be softened with tough regulation of hedzhfond and finan-

of the sovy markets, introduction of more strict rules of the bank reporting, reconsideration of architecture of a global financial system.

However it is necessary to consider that in the conditions of "the global village" the interdependence of all participants of the world market is much stronger, than during an industrial era. It can change only as a result of a global economic shock and formation of a new economic and political picture of the world.


1. N.V. Mikhaylova, V.V. Stepanenko. Attempts of resolution of conflicts of the 30th years on the ways of reformism and totalitarianism//XX century history Essays. Ch.P.M., 1991. - Page 37-56.
2. N.V. Sivachev. A regrouping in a two-party system in days of "a new course"//Political parties of the USA in the latest time. Prod. Moscow university. 1982. Page 67-93.
3. An echo of the Great depression//RBC - 2008. - No. 12. - Page 47-48.
4. Europe and USA: crisis lessons//In the same place. - Page 61-62.


T.S. OKOROCHKOVA The Bryansk state agricultural academy


Economic crysis that embraced all today&s world compel us to think about cyclic development of historical process and to return to experience of 1920s again.

Helen Mary
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