The International Depression was an ailment that came with the end of the Great War in Europe. Over the duration of
the violent and lengthy conflict considerable industrial-military complexes had arisen to supply the war-effort which caused a considerable shift in both national economies and the socio-economic make-up of these countries. The violence of the war had accelerated weapons research and development while not leaving much funds or support for the development of social technology and infrastructure. The crippling of the populations of France, Belgium, the United Kingdom, and even Germany created an immense deficit in their working populations. And of most catastrophic being the sudden collapse in demand of war-time goods as supplied by the industries during the war.
With so little international demand for the weapons trade the demand for raw-materials plummeted internationally leaving nations that had developed considerable infrastructure to supply the war-time production with an over-abundance of supply that had to be sold off at a price that constituted a massive lost for all industries causing massive panic.
The resulting consequences of the shrinking international economy coupled with numerous social stresses and the political events to unfold in the following decades was accelerated with panic over stock prices and the withdrawal of money from the banks and from the stock market indebted both.
The world - and Europe - wouldn't recover for some several decades. Though the size and effect of the depression and its influence internationally would be a scar that never healed.
The Depression was declared officially over by the fifties by economists. Over the course of the forties the conditions of the economy were beginning to recover and natural market forces and planned government policies were able to foster an era of slow growth. By the fifties this growth had amounted to a period of stability. Although some would point that it truly lingered clear into the sixties with the establishment of communist power in China and the official secession of the Chinese economy from the world-market (sparking a minor recessions after).
Wartime draw-down Edit
During the war-time period of 1914-1925 a large amount of European attention was given to national industry so as to allow national armies to be maintained. As well as large sweeping drafts and conscription sweeps across Empires there was not much resources left behind to let traditional economic functions carry on, marking either social-shifts to keep these working (women entering the workforce) or for secondary nations not-involved in the conflict to supply the belligerent states with their crucial materials. Towards the end much of this was purchased on extended credit or loan deals.
The military-industrial economies of the German, French, British, and other similar nations rose violently over the course of the war, climbing as the conflict rose with investment into war-time manufacturing raising five to ten times. This caused large demand for foreign raw-material feeding the economies of neutral countries allowing them to expand their means of production and their workforce to grow on war-time demand. This also had an effect on them as their economies changed focus and they came to suffer indirect symptoms of the war.
With the sudden end of the Great War in 1925 the war-time economy bubble popped and popped violently. The echoes and ripples of this end of an economy washed across the world resulting in a downward collapse of nations across the globe. Although the effects of the depression were not felt universally, it did at the least become the cause for recessions.
In the end, the manufacturing, agricultural, wholesale, and foreign-trade sectors of Europe, England, and even the United States dropped from 23-80% with unemployment spiking 300-800%. Nations on the fringe would have experienced their own dips and rise in unemployment rates.
There isn't a clear consensus on exactly which factors inspired the depression. It was well known and predicted among analysts that the war would have to end at some point and the wild-fire growth and expansion of the military sector of the economy could not be sustained. Never-the-less national investment in these fields inspired private investment which introduced many thousands and millions to the total loss of stock-revenue when the conflict finally came an end. Though there are several theories the consensus best reached in explaining it is that of a marriage of them.
The end of the Great War met with the sudden and rapid shrinking of international economies leading to a drop in the aggregate expenditures/GDP of the leading Great Powers of the world. The shrinkage of the economy violently expelled the industrial workers of the countries who were spilled out into the streets to compete with returning veterans who had been relieved of their duty after the world. Further more complications in the ability to carry out basic economic functions in the fields of farming and even mining met with complications that resounded in the core, belligerent nations involved in the Great War.
The collapse of the military, manufacturing economy also resounded in the nations that supplied the raw materials to fuel the European and Japanese war machines. Over the course of the conflict mining, timber, and farming endeavors were expanded to meet demand, keeping prices relatively stable; although there was still notable rises in price in industrial materials as per the war-time consumption. When the conflict finally came to an end supplier nations were left with the means to produce considerably more goods. But with the war ended and the belligerent nations unable to properly pay for the materials the cost of the goods produced quickly dropped to far below the cost to produce them marking a shift to instability and the collapse of secondary and tertiary markets.
The collapse of the economies saw the plummet of stock values across regional stock markets, marking panic among investors and general civilians. With a mass withdrawal of funds from banks to protect individual savings and earnings over a third (somewhere between a third or half) of the world's banks were forced to close when members and investors began to withdraw more money than they had saved. The collapse of the banking community compounded the economic situation with a further constriction of the investor pool.
In some economies, the government pumped the economy with emergency money. As was the case in the United Kingdom where the Crown hoped to stabilize and revive the economy by introducing more money to the supply. These cases however invoked defunding of programs or drove the deflation of the national currency which added another layer to the evolving depression.
By the 1930's a drought in the US had cut international agricultural production, driving up the cost of agricultural produce for a time.
The position of accumulated war-time debt and credit owed across the world complicated the matter of war-time recovery. With no one nation made the blame and to pay reparations to the fact the capacity of the involved nations to fully repay their owed debts was made more difficult.
The effects of the Depression had far-reaching circumstances. From it, only the Russians and the Spanish really stood to profit from the collapse of main-stream European economies. There came a greater reliance on Russian food exports and the Empire put investment into its own manufacturing to cover the general consumer needs. And with Spain they competed against the developing energy field in later decades (60's, 70's).
The Spanish stood to benefit by marking themselves as a stable post-war economy attracting many foreign businesses to move their operations to Spain which offered a friendly economic environment. This shift helped to mark Spain as a great power on the world stage and even a super power among European nations.
Economic isolation also became a profound impact of the depression with many nations across the globe focusing their economies more towards internal consumption and production rather than outward growth, out of fear of creating potentially dangerous dependencies by relying too much of the expansion or shrinkage of foreign states. The US was a leading example of this move and still retains its isolationist policy.
Of the nations to also maintain an isolated economy and even a multi-national, isolated macro-economy is China. Many of its leaders having been educated abroad they returned home for the Chinese Revolution with the ideas that a dependent economy is dangerous. Inter-twining this concept with the Chinese narrative of oppression at the hand of foreign groups the nation created a successful insular economy using its own conflict-derived economic damages as a strength to drive its own internal economic growth. Economic isolation became a point and a policy in Houist communist theory.
The Chinese, communist-driven economic policy expanded in the seventies with the rise of the ASB and the Comintern to create a multi-national economic system isolated from the global economy at large.