The Great Slump
An unprecedented crisis
The deepest slump capitalism had ever known followed by the most sustained boom, interspersed with the bloodiest war in human history. Such was the course of capitalism in the middle 50 years of the twentieth century.
The epicentre of the slump was the United States, which had emerged from the First World War as the greatest economic power, with 50 percent of global industrial production, overtaking both victorious Britain and defeated Germany. The onset is often identified with the Wall Street Crash of 29 October 1 929, when the New York stock exchange fell by almost a third. But " business was already in trouble before the crash", with auto output down by a third in September compared with March 1929.1 Over the next three years US industrial production fell by about half, and the slump spread across the Atlantic to Europe, where there were already incipient signs of crisis. German industrial production also fell about half and, with a slight delay, French fell by nearly 30 percent. Only Britain saw a smaller fallof about 20 percent-but that was because its heavy industries were already in a depressed condition.
By 1932 a third of the workforce in the US and Germany were unemployed and a fifth in Britain. Those hit were not only manual workers as in previous crises, but white collar employees who thought of themselves as belonging to the middle class. Hundreds of local banks went bust in the US and some giant banks in Europe collapsed spectacularly, destroying people's savings and aggravating the general sense of disaster. Hitting all industrial countries at once, the crisis destroyed the demand for the output of agricultural countries, driving down the prices farmers received and creating vast pools of misery. No region of the globe avoided at least some decline in output,2 and world trade fell to a third of its 1 929 level.3 By comparison, both world output and world trade had grown during the previous "Great Depression" of the 1870s and 1 880s.4
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