USM Open Source History Text: The World at War: World History 1914-1945

Conclusion to the United States from the First World War to the Great Depression

That the Great Depression was caused by an over-production and under-consumption is hard to fully comprehend. As technology sped rapidly ahead, as more was available and possible, it seems hard to fathom that this was fertile soil for economic depression to grew. And yet it did. It did because speculation replaced consumption, because wealth became too concentrated and thus failed to spark buying, because while more goods were coming to market, few customers globally could afford to buy, and, above all, because losses of speculative wealth could cause the entire global economic flow to abruptly shut down.

The consequences of economic collapse define the next phase of the twentieth century. Governments throughout Latin America were overthrown. Stalin came to power in Russia with the promise of rapid collectivization of agriculture and industrialization of industry. In Japan, a right-wing government took power and launched the country’s imperialistic period, which began with attacks on China and ended with defeat in WWII. In India, the Middle East, and Africa peoples began to rise up and demand independence. In Germany, the hardest hit nation, the years of economic slump paved the way for Adolf Hilter and his Nazi party to greatly increase their power in Germany parliament, a position from which they could transform democracy into dictatorship. In the months after the Reichstag Fire on February 27, 1933, Hitler seized absolute power, threw out the German constitution and established military-style rule. Nazi Germany, like Japan, would begin a national program of rapid military industrialization, which would lift it quickly out of depression and pave the way to WWII. In 1945, the United States and its allies would face the smoldering ashes of Europe - the product, in part, of the economic collapse of 1929.

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