12.3.2 Worldwide Woe

When the Great Depression occurred, ordinary people bore the brunt of it. Workers lost their jobs and were unable to find new ones as businesses laid off employees. Without the means to pay rent or a mortgage, families were evicted and became homeless. Hunger was a significant problem, particularly in urban areas where there was little chance of having a garden or finding other available foodstuffs. Families coped however they could, sometimes traveling hundreds of miles in the hope that jobs would be available somewhere. Homeless camps and shantytowns sprang up, but life in such a place was precarious because city officials might force the residents to leave (Figure 12.12).

No part of the world was immune from the effects of the Great Depression. China was still relatively isolated in the 1930s, but it did experience economic problems when prices for two of its major exports, soybeans and silk, dropped. As an island nation, Japan had limited natural resources, and its militaristic new government needed to alleviate scarcities and secure needed resources such as oil and rubber. With a growing population, it also needed reliable food supplies.

All these factors coalesced into a Japanese plan to target certain areas throughout Asia for takeover, relying heavily on the Imperial Navy. Japan moved into Manchuria in 1931, setting up the state of Manchukuo there the following year. Seizing the region meant Japan would not have to pay for the items it wanted, such as rice, important during a depression that had limited its exports and thus its income from trade. The move also further established Japan as a preeminent power in the region.

Many regions of Africa produced agricultural crops—wheat, maize, and cotton, for example. As trade declined, these sectors bore significant losses, and here too the poor suffered most. The colonial areas of Africa often mirrored the economic troubles of their imperial countries. However, South Africa’s gold mines produced enough income to keep it more stable than other regions in Africa.

Many Latin American countries were unable to contend with the severe decrease in exports the Depression brought. Some had financial systems heavily dependent on the export market and little in the way of an industrial sector to make up for the loss. Despite this weakness, however, Latin America weathered the Great Depression quite well. Most countries went off the gold standard—a monetary system in which the value of a currency is tied directly to the value of gold—in the early 1930s, but there was no widespread banking collapse as there was in the United States.

European countries fought the Great Depression in different ways. Britain saw its exports drop considerably and in 1931 found it necessary to lower tariff rates within its empire to stimulate trade. Britain’s economy was stagnant in the 1920s, so the dip of the Great Depression was not as painful as in the United States, though economic sectors such as mining experienced a greater decline than others. Britain did not adopt widespread work-relief programs, relying instead on more targeted support of specific industries. France implemented austerity programs, hoping to keep taxation levels low. It was only in the late 1930s that the French economy turned around, due to an increase in military equipment production.

In the United States, new president Franklin D. Roosevelt unveiled a comprehensive reform plan in 1933. This New Deal was designed to restore faith in the banking system, create work-relief programs to put the unemployed to work, increase the bargaining and consumer power of industrial workers, and provide an overall enhanced quality of life. Overhauls to the banking system included more regulations on U.S. banks and regular audit controls. The creation of the Federal Deposit Insurance Corporation (FDIC) in 1933 meant that depositors could feel their money on deposit was safe. The United States also adopted programs that already existed elsewhere. For example, the Social Security Administration was created in 1935 to provide an old-age pension program for the country. Germany had such a program for several decades, and Britain had already enacted many programs as part of its welfare state that the United States was slow to adopt.