Economic Impact of War: From Inflation to the Great Depression
Economic Consequences of War
Inflation and Debt
Inflation: A rapid increase in prices.
External Debt: The debt of both states. The problem of internal debt was added to this debt, primarily with the U.S.
Gold Standard: An international monetary system in force until the 1930s. It established that the currencies of all countries belonging to this system were exchangeable for a fixed amount of gold.
Economic Turmoil in the 1920s
The Severe Recession of 1920-1921: A typical manifestation of a crisis of conversion from a war economy to a peace economy.
Deflationary Policy: An economic policy that has as its main objective to curb rising prices. To do so, it reduces the number of bills that are in circulation, obstructs the granting of credits, and reduces public spending.
Hyperinflation: An inflation problem that hit Germany, Austria, Hungary, Czechoslovakia, and Poland. They lost control over prices and suffered the traumatic experience of this problem. Prices rose daily, and even several times a day.
International Conference of Genoa: Held in 1922 with the aim to stabilize currencies and return to the gold standard.
Dawes Plan: A plan created in 1924 with the goal of normalizing the German economy, proposed by the United States.
Industrial and Economic Theories
Fordism: This term comes from the name of Henry Ford, who was the first to organize the principles of Taylorism in assembly line work and the mass production of automobiles.
Taylorism: The first scientific method of work organization. It consisted of the division of the industrial production process.
Tariffs or Customs Duties: Taxes that must be paid on imported goods.
The Great Depression
Crash of ’29: The collapse of the New York Stock Exchange, which was the catalyst for the economic crisis.
Speculative Bubble: The stock market situation was very fragile due to the imbalance between the stagnation of the real economy and the relentless growth of stock shares.
Black Thursday: On October 24th, 13 million shares were offered for sale with almost no demand. The market was collapsing, resulting in a stock market crash.
The Great Depression: A long crisis caused by the stock market collapse that caused a chain reaction, collapsing the U.S. economy.
World Economic Conference in London: Held in 1933, it proposed a return to the gold standard and tariff reduction. The meeting ended without agreement, and each country individually tackled the crisis.
Economic Policies and Recovery
Keynes: A British economist who proposed more state intervention in the economy.
Roosevelt: Came to the U.S. Presidency in the most intense moment of the Depression and launched a program of state economic intervention, known as the New Deal.
Autarky Economy: An economic policy that aims for a country to produce, with its own resources, all that is necessary for the domestic market.
Smoot-Hawley Tariff Act: Passed in 1930, raising the tariff law of that country by 50%. This caused a fall in exports in many countries.
Deflationary Policies: One of the traditional solutions to the crisis. Governments tended to apply the classic recipe of economic liberalism, seeking a balanced budget by reducing government spending and reducing the volume of credit and currency in circulation. Moreover, they reduced wages, but this policy failed completely and accentuated the crisis.
Protectionism: One of the traditional solutions to the crisis. To protect their industries and agriculture, governments chose to put up barriers to imports. They did so even though they knew it was bad for international trade and would ultimately harm their own economies.
New Deal: A state economic intervention program launched by Roosevelt. Between 1933 and 1938, a set of measures was adopted to combat deflation, revive the economy, and create jobs.
Matignon Accords: Fostered in 1936 between employers and unions, who were working to end the conflict.
Social Changes
Universal Suffrage: The right to vote without discrimination, with the only limitation being age.
Mass Culture: The growth generated by new media, based on word and image, also changed ways of thinking.