In 1929, a sudden and dramatic crash in the New York Stock Exchange marked the beginning of the economic crisis of capitalism.
The Great Depression led to economic collapse, social polarization and political instability. All in a short time. It also marked a departure from the old economic liberalism associated in particular with Britain's free trade policy. Politicians shifted to protectionism around the world, which led to the collapse of global trade, but also intensified competition for control of markets and commodities, a competition that quickly took a military form.
Rise of the USA
The First World War ended with a redivision of the world, during which Great Britain and France received large enough territories. At the same time, the British ruling class was painfully aware that the United States had ousted it as the world's financial tycoons.
At the height of its heyday in the mid-nineteenth century, Britain adopted a free trade policy because it benefited its exports when it was a prominent industrial power. Its competitors, the United States and Germany, did not follow suit. Rather, they used measures to protect their domestic markets and developing industries. Other states will follow suit.
After 1918, Britain tried to keep the pound sterling as the main international trading currency by valuing it in relation to gold. But it could not support either the gold standard or free trade as a general rule throughout the capitalist system. After an immediate post-war recession in the early 1920s, there was relative stabilization in the second half of the decade before Europe plunged into depression in 1929.
The mid-1920s recovery was based on countries importing American goods and borrowing American money. The US had tariffs to prevent the countries it was selling goods to from balancing by exporting goods to America. Instead, they were forced to borrow from the United States to cover the deficit. The winners in World War I took out American loans to pay off their debts, while the losers took them to help pay off the reparations imposed on them by the post-war treaties negotiated at Versailles.
The Wall Street crash in 1929 put an end to this financial carousel.
Between 1929 and 1932, world trade fell by a quarter. Most of the decline was due to falling incomes, the rest was due to the desire to protect trade. When the British government defaulted on America's loans, Washington retaliated by imposing trade restrictions on British imports.
Meanwhile, the expansion of US agriculture has led to overproduction and high levels of indebtedness for farmers who borrowed to expand. US agriculture has been putting pressure on import restrictions even before the Wall Street crash. Herbert Hoover, the Republican nominee, won the 1928 presidential election promising to protect agriculture. Subsequently, in June 1930, the United States imposed tariffs on more than 20 imported goods. Over the next three years, average U.S. tariffs rose to 000 percent, up from 54 percent in 39. Soon the UK, France and then Germany introduced similar tariffs over the next two years.
Having set up a tricky import control barrier to protect its home market, Washington now demanded that the UK and other European countries pay off their dollar-denominated debt (which could only be earned through exports to the United States).
In October 1932, Britain and its dominions established a system whereby British tariffs were reduced for all who trade in pounds sterling. The new block of sterling accounted for a third of world trade. In trying to stop foreign imports into the new bloc, London was challenging its competitors. If they wanted to gain more market share, they would have to rebuild the world.
The US and France followed the UK's lead in trying to create their own protected trade zones, as well as some degree of government control of the economy.
Germany, Japan and Italy did not control overseas territories and sought military expansion to provide markets for sales and raw materials. For the German economy, this global transition to protectionism was a disaster. Great Britain, France, the USA and the USSR had sufficient reserves of raw materials within their economic zones. Germany didn't have that.
Almost half of Britain's trade went with its dominions and colonies, and a third of French exports went to their colonies.
Germany's economic well-being was based on exports, but now they were excluded from the main markets, and strategic raw materials had to be bought with dollars, pounds sterling or francs. In terms of foreign trade, Germany ranked third after the United States and Great Britain in 1928, when its foreign trade amounted to 58 billion dollars. By 1935, it was $ 20,8 billion. It was financially weak, with only 1 percent of the world's gold and financial reserves in 1938, compared with 54 percent in the United States and 11 percent in Britain and France.
Before Hitler came to power, German governments already resorted to export subsidies and trade through barter or German marks, which could only be exchanged in Germany. Before Hitler came to power, some of Germany's ruling circles began to argue that its export problems and the lack of raw materials could only be solved by dominating Eastern and Southeastern Europe. Such statements have resonated with the military command.
Hjalmar Schacht resigned from his post as President of the Reichsbank in protest against the fact that Germany continues to pay war reparations in accordance with the Treaty of Versailles.
He argued that the German trade zone could cover not only Central and Eastern Europe, but also the Middle East, Latin America and the Far East. Although he never joined the Nazi Party, Schacht became acquainted with Hitler and promoted his contacts among bankers in 1932.
On November 28, 1932, Time magazine reported on a dinner at the home of steel tycoon Fritz Thyssen:
At the residence of Herr Thyssen ... Leader Hitler and Colonel Goering dined ... The Germans soon noticed the amazing fact that several news big business agencies such as Deutsche Allgemeine Zeitung and Reinisch-Westfalische moved abruptly from hostility to supporting Adolf Hitler.
Noting that these newspapers were closely associated with large business circles, Time magazine added:
For the first time in his fast-paced career, Adolf Hitler “warmed up”. Stocks on the Berlin Stock Exchange, which fell after the resignation of the von Papen cabinet, strengthened again and began to rise.
By January 1933, when Hitler came to power, there were 6 million unemployed in Germany. Hitler's original economic program was similar to the New Deal of US President Franklin D. Roosevelt, which was being implemented around the same time. Government spending on highways and railroads increased, subsidies were allocated for housing, firms were forced to participate in cartels, and industry was offered cheap loans and tax exemptions. Industrial production rose from 53,8 percent of 1929 to 79,8 percent in 1934. Nonetheless, unemployment remained three times higher than in 1929, and inflation began to rise.
The large capitalist corporations remained largely intact, but they increasingly submitted to the militarization movement that they themselves supported. Hitler first, in 1933-1934, introduced relatively lenient measures, some inherited from his predecessors, aimed at creating jobs. Since 1935, they have given way to an arms economy - the "readiness economy". By 1936, the economic volume of Germany was equal to that of 1929. Three years later, it has grown another 30 percent. This expansion was based on the reduction in labor costs, implemented even before Hitler came to power.
In 1938-1939, the German economy fell into a serious economic crisis. There was a huge budget deficit - government expenditures in 1938-1939 amounted to 55 million Reichsmarks, and tax and customs revenues - only 18 million.
Much of the economic policy of the Third Reich was based on "autarky" - economic self-sufficiency. The Nazis restricted exports to curb an earlier trade deficit. But there was a limit to how far they could go along the way. Rearmament fueled the need to import raw materials, but the only way Germany could find the necessary materials in a world dominated by protectionism was by physically expanding the borders of the Third Reich. The only "solution" open to this regime of structural tensions and crises caused by dictatorship and rearmament was the strengthening of dictatorship and rearmament, then expansion, war and terror, plunder and enslavement.
Peace outside Germany
The same can be seen during this period in the United Kingdom, the United States and Japan. All of them were "locked" in a trade defense system in which the only solution to their economic problems was to redistribute the world.
Only the USSR was a kind of exception in this respect. True, the USSR, as a new type of state that survived a successful revolution of the working class, had its own problems. The old ruling class was destroyed, the new class - the proletariat - rose to the head of its state. But, in the conditions of economic blockade and destruction, foreign invasion and civil war, as well as because of the defeat of socialist revolutions in other countries, his leadership had to focus not on the international revolution, but on industrialization.
In Japan, one faction of the ruling class associated with the military command viewed China as its natural marketplace for marketing and supplying materials. After the Wall Street collapse, they attempted to "colonize" Manchuria. But it brought them into conflict with Washington, which was determined to create an "open door" to China for American goods. A minority faction in the Japanese elite, including the naval command, wanted to expand south to gain control of oil (the United States controlled Japanese supplies), rubber and other materials from the colonies of European powers (Great Britain, France and Holland), and to invade the Philippines, which were actually under US control.
The United States, without ceasing to monitor the situation in the Pacific region, also looked at the European continent. The American bourgeoisie had major investments in Europe and was already eyeing control over Middle Eastern oil. In the late 1930s, Germany and Japan, in connection with the expansionist plans of the United States, were perceived by Washington as direct competitors, as well as the British Empire, whose economic "finishing off" was part of the key strategic goals of American capital.
The Great Depression ended only with the war, as the great powers accepted the need to arm and prepare for a new war, in order to increase profits. Political and corporate leaders alike increasingly realized that there was a struggle for survival that centered on the ability of each state to control part of the global economy, to guarantee the supply of raw materials, and to weaken the ability of rival powers to do the same.
In this light, we can view World War II as a conflict between rival imperialists.