The Great Depression in Germany and throughout Central Europe–further destroyed the artisan class, those in small-scale agriculture, and local producers. In France, the global depression did not begin until 1932; after two strong years from 1929-1931. The strong French agricultural sector limited the worst effects of the crisis. Nevertheless, the crisis caused 500,000 people, against a population of 40 million, to become unemployed. Furthermore, it precipitated a decline in the overall industrial production. The French government refused deficit spending thus limiting the recovery. Despite the limited effects, the chaos furthered a sense of decline in nationalism and a division of the French society between the extreme right and the extreme left. Generally, in the United Kingdom, the Great Depression was not as bad as in the United States. Hence, it needs to be considered along with the economic chaos dating back to 1918; when economic output fell by 25% between 1918 and 1921. The long term effect-that would plague the next fifty years- was that the traditional industries that began with the Industrial Revolution and provided employment to millions were increasingly uncompetitive in the world market. The coal mining, shipbuilding, iron, and textile manufacture industries began to falter due to the Great Depression. The economic situation became worse with the market becoming even more restricted, after the 1929 Wall Street crash, with other countries implementing heavy import duties. In some industrial and mining areas in Northern England, Scotland, Wales, and Northern Ireland, unemployment reached 70% at the local level. Approximately 3 million people were out of work; many depended on assistance from local governments for their own survival. In many 1929, a new Labour government came to power with its members not having any deep knowledge of economics or experience of running the economy. The Labour government was also not radical in its economic planning. The government support scheme paid out according to the level of contributions made rather than according to need, and was only payable for 15 weeks. During this time, a majority of the people were too poor to make any meaningful contributions; thus, this approach did not provide a long-term solution to unemployed. The government seemed incapable of any solution and reluctant to invest in public works to provide jobs. Instead, it introduced the Means Test in 1931 that divided families and led to widespread hardship and bitterness.
Figure 11: Unemployed people in front of a workhouse in London, 1930
The lack of an effective approach encouraged the rise of extremist parties throughout Europe. The British Union of Fascists, under Oswald Mosley, and the Communist Party of Great Britain were appealing to the next generation of young students and the industrial workers. The response was a series of hunger marches through which the unemployed sought to draw attention to their plight and to the effects of the Great Depression on the poor which the government had ignored. However, throughout Europe, the popularity of the extremists was limited by the simple demand for jobs and not a violent overhaul of the existing economic system.
New middle class characteristics began to develop. A house boom took place during the middle of the decade, with between 200,000 and 350,000 new homes constructed every year, and became a standard by which the middle class defined itself. Continuing a trend from the previous century, the middle class also began to move out of the city centers to suburban housing.
Overall, the generally accepted trend was that the state would play a greater role in people’s lives. The economic theory developed by John Meynard Keynes advocated for increased government expenditures and lower taxes as temporary measures to help pull the global economy out of the Great Depression through increased demand for goods. Any government spending would have a huge ripple effect by increasing business activity and then even greater spending. Thus, he argued that future economic depressions could be avoided through direct intervention in the economy by the government and that even deficit spending could be justified during times of economic turmoil. The age of laissez-faire was over.
