Stalin’s Dictatorship, WWI Aftermath, and the Great Depression
Stalin’s Dictatorship
Stalin exercised a true dictatorship in which the Communist Party controlled all organs of state. His leadership was reinforced by the cult of personality that was given to the person. Anyone suspected of opposing Stalin was charged as an enemy of socialism. In Moscow, the major processes of a violent police apparatus purged dissidents, and many of them were executed, imprisoned, or deported to labor camps.
The Consequences of World War I
The United States benefited greatly from the First World War. During the conflict, the sale of food, weapons, and allied industrial products facilitated the accumulation of half the world’s reserves of gold, and the dollar became a strong currency. After the war, the United States became the first world economic power. Many European countries were indebted to the United States following war loans. The World War impoverished European countries, with agricultural and industrial output declining due to war borrowings and the devaluation of their currencies.
Overproduction Crisis
Peasants were the first casualties since they had borrowed to acquire new land and machinery. After the conflict, exports decreased, and the American market could not absorb all production. With the increase in supply, accumulated stocks, prices dropped rapidly, and farmers failed to repay their loans. It was the ruin of thousands of people who lost their land, machines, and homes. Many migrated to the cities. In industry, a similar phenomenon occurred. Production grew faster than the market, and factories produced more than they could sell. The accumulation of stocks drove down prices, and many companies went bankrupt and closed their doors. Workers experienced extended unemployment, and consumption decreased. The Roaring Twenties was nearing its end.
Stock Market Crash and the Great Depression
Many shareholders were aware that the stock price was much higher than their actual value. The lack of confidence spread among investors, and on October 24, 1929, a great wave of selling hit the New York Stock Exchange. Everyone wanted to sell their shares, and no one wanted to buy them. The great offer of shares made their value fall sharply, triggering the stock market crash of 1929. Many investors were ruined, and panic spread among the citizens. Banks were forced to close for lack of funds, and they, in turn, could not collect loans made to individuals and ruined businesses. The stock market crash precipitated the bankruptcy of many banks. The stock market crisis spread to much of the industry, commerce, and agriculture, causing a widespread economic recession. Consumption decreased, and many factories closed, unable to sell their production, increasing the number of unemployed, and many families fell into poverty and had to resort to living on charity. From the U.S., the crisis spread to the rest of the world because U.S. banks withdrew the funds deposited in European banks, and American companies diminished their investment in these countries. American imports plummeted, and world trade suffered a major recession.