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The Great Depression hit Germany hard. The impact of the Wall Street Crash forced American banks to end the new loans that had been funding the repayments under the Dawes Plan and the Young Plan. In 1932, 90% of German reparation payments were cancelled. Unemployment reached 25% as every sector was hurt. The government did not increase government spending to deal with Germany's growing crisis, as they were afraid that a high-spending policy could lead to a return of the hyperinflation that had affected Germany in 1923. The unemployment rate reached nearly 30% in 1932, bolstering support for the Nazi and Communist parties, causing the collapse of the politically centrist Social Democratic Party. Hitler ran for the Presidency in 1932, and while he lost …. it marked a point during which both the Nazi and Communist parties [together] possess[ed] a Reichstag majority following the general election in July 1932. Hitler instituted an economic policy built on self-sufficiency, creating a network of client states and economic allies in central Europe and Latin America… [and avoiding widespread international trade]. By cutting wages and taking control of labor unions, plus public works spending, unemployment fell significantly by 1935. Large scale military spending played a major role in the recovery throughout the 1930s and is associated with Hitler’s rise to power.


The global economic crisis affected France a bit later than other countries, hitting around 1931. The depression was relatively mild: unemployment peaked under 5%, the fall in production was at most 20% below the 1929 output; [and] there was no banking crisis. However, the depression had drastic effects on the local economy, and partly explains the 1934 riots and even more the formation of the Popular Front [Socialist Political Party] …which won the elections in 1936. Ultra-nationalist [Fascist Leaning] groups also saw increased popularity, although democracy prevailed into World War II.


Spain had a relatively isolated economy; with high protective tariffs it was not one of the main countries affected by the Depression. The banking system held up well, as did agriculture. By far the most serious negative impact came after 1936 from the heavy destruction of infrastructure and manpower by the Civil War. Many talented workers were forced into permanent exile. By staying neutral in the Second World War, and selling to both sides, the economy avoided further disaster.


The Great Depression hit Italy very hard. As industries came close to failure they were bought out by the banks in a largely illusionary bail-out—the assets used to fund the purchases were largely worthless. This led to a financial crisis peaking in 1932 and major government intervention. The Industrial Reconstruction Institute (IRI) was formed in January 1933 and took control of the bank-owned companies, suddenly giving Italy the largest state-owned industrial sector in Europe (excluding the USSR). IRI did rather well with its new responsibilities—restructuring and modernizing as much as it could. But it took the Italian economy until 1935 to recover the manufacturing levels of 1930—a position that was only 60% better than it was in 1913.


Already under the rule of a dictatorial junta…. Portugal suffered no turbulent political effects of the Depression, although [Junta Leaders] greatly expanded …...powers…[w]ith the budget balanced in 1929, the effects of the depression were relaxed through harsh measures towards budget balance and [self-sufficiency], causing social discontent but stability and, eventually, an impressive economic growth.


Because of high levels of United States investment in Latin American economies, they were severely damaged by the Depression. Within the region, Chile, Bolivia and Peru were particularly affected. The League of Nations labeled Chile the country hardest hit by the Great Depression because 80% of government revenue came from exports of copper and nitrates, which were in low demand; GDP dropped 14%, mining income declined 27%, and export earnings fell 28%. By 1932, GDP had shrunk to less than half of what it had been in 1929, exacting a terrible toll in unemployment and business failures.

Latin America

Before the 1929 crisis, links between the world economy and Latin American economies had been established through American and British investment in Latin American exports to the world. As a result, Latin Americans export industries felt the depression quickly. World prices for commodities such as wheat, coffee and copper plunged…. [on] the other hand, the depression led the area governments to develop new local industries and expand consumption and production. Following the example of the New Deal, governments in the area approved regulations and created or improved welfare institutions that helped millions of new industrial workers to achieve a better standard of living.

Latin America part 2

Morocco, a colonial protectorate of France, relied heavily on the French market for sale of its wheat. Over the years, wheat production in Morocco had grown in yields as well as acreage under cultivation. The increase was a result of the 1923 French Law, which provided that a portion of Moroccan wheat could be sold in France without paying a tariff. Exports grew from 493,000 quintals to 1,400,000 quintals until 1929, when the World experienced the impact of overproduction. French farmers began to complain about Moroccan wheat imports and the bottom fell out on prices. Eventually, landless debt-ridden farmers migrated to urban centers which created pressure on resources and increased competition for employment; the urban centers became overcrowded and contributed to the establishment of shanty-towns on the outskirts of the cities. Morocco’s mining industries also experienced economic hardships due to falling prices of minerals, such as phosphate, on the world market; Moroccan phosphate production fell from 1,779, 000 tons in 1930 to 900,731 in 1931.


In Nigeria, urban employees were seriously affected by the fall in living standards from 1930 to 1945. Some wage earners were thrown out of work as British companies reduced their labor force……surviving firms adopted cost-cutting by closing down offices in order to save on production costs. The 1929 “Aba Women’s Riots” in Southern Nigeria saw women market traders protesting against taxing practices and economic hardships faced by women.


In Southern Africa, Northern and Southern Rhodesian transport systems suffered a serious blow during the Great Depression. Reduction in demand by the colonial mother country, England, of Southern Rhodesian corn and tobacco led to difficulties for the colonial government in accumulating foreign capital needed for economic stability, but it also led to the operational slowdown of the Rhodesia Railways. In Northern Rhodesia, the demand for copper was no longer above the pre-Depression period and forced reductions in production at the Katanga fields.

Rhodesia (now Zambia and Zimbabwe)

As world trade slumped, demand for South African agricultural and mineral exports fell drastically. The Carnegie Commission on Poor Whites concluded in 1931 that nearly one third of Afrikaners lived as paupers. The social discomfort caused by the depression was a leading factor in the strengthening of the system of Apartheid because Blacks were seen as economic competition for scarce jobs. South Africa’s close colonial ties to the United Kingdom caused a deeper economic slide as profits were reduced from the South African economy.

South Africa