Russian Revolution, USSR, Stalin, and the Great Depression
Civil War and the Creation of the USSR
The Soviet government faced a civil war. A fraction of the Tsarist army was organized momentarily as the White Army. The Bolsheviks created the Red Army under the leadership of Leon Trotsky. During the conflict, the Bolshevik party took the name of the Communist Party of the Soviet Union. In 1922, the USSR was created, a federal state uniting all nationalities of the old Empire of the Czars. The USSR was governed with a Parliament and a single party, the CPSU; it was a totalitarian system. The new system was justified by the dictatorship of the proletariat: power was exercised by the Communist Party.
Stalinism
The Stalinist economy imposed a collectivized society so that the Soviet Union became a powerful industrial beast.
- Private property was banned.
- Priority was given to heavy industry.
- A state-run economy was instituted.
The result was rapid industrialization. Stalin implemented a dictatorship in which the Communist Party controlled all organs of state. His leadership was reinforced by a “cult of personality.”
The Roaring Twenties: The Impact of the First World War
The U.S. benefited from the First World War. During the conflict, the sale of food, weapons, and industrial products to the Allies allowed the country to accumulate half of the global gold reserves, and the dollar became a strong currency. At the end of the war, the U.S. had become the world’s leading economic power. Its production was very high, and its agricultural industry accounted for 44.8% of world production. Many European countries were indebted to the U.S. as a result of war loans. The war impoverished European countries, which were faced with war loans and the devaluation of their currencies.
The Crash of 1929
Share prices far exceeded their actual value, and on October 24, 1929, a great wave of selling hit the New York Stock Exchange. Suddenly, everyone wanted to sell their shares, and nobody wanted to buy them. The value of the shares plummeted, triggering the stock market crash of 1929. Many investors were ruined, and panic spread among citizens, who rushed to the banks to withdraw their money. The banks were forced to close. The stock market crash precipitated the collapse of many banks. In a few years, the stock market crisis spread and caused a widespread economic recession. Consumption was curtailed, and many factories closed. The number of unemployed increased, and many families fell into poverty. From the U.S., the crisis spread to the rest of the world.
The New Deal
In 1932, a Democrat, Franklin D. Roosevelt, won the election. He proposed a new program to promote economic recovery and pull the country out of the crisis. He called it the New Deal, which advocated for state intervention to revive the economy. To halt the fall in prices and boost the activity of companies, the New Deal proposed a set of measures: support for companies in difficulty, public works projects, and the destruction of accumulated agricultural stocks. The state established control over banks, encouraging entrepreneurs to expand their businesses or create new ones. These economic reforms were accompanied by a set of social reforms: the government promoted the creation of powerful public works, favored a policy of supporting farm prices and rising wages, and reduced the workday. These measures led to a relaunch of the U.S. economy and a decrease in unemployment. Despite these measures, the crisis was not overcome until the outbreak of the Second World War.