Short History Of... - The Great Depression

Episode Date: July 23, 2023

The Great Depression was the worst and deepest peacetime economic shock of the twentieth century. It affected millions of lives, redefined global trade, and contributed to the drift towards the Second World War.But how were the seeds of this financial disaster sown in the First World War? What was the cost to ordinary people? And how did America and the wider world dig itself out of its financial hole? This is a Short History of the Great Depression. Written by Dan Smith. With thanks to John Moser, author and chair of the Department of History and Political Science at Ashland University. For ad-free listening, exclusive content and early access to new episodes, join Noiser+. Now available for Apple and Android users. Click the Noiser+ banner on Apple or go to noiser.com/subscriptions to get started with a 7-day free trial. Learn more about your ad choices. Visit podcastchoices.com/adchoices

You're a podcast listener, and this is a podcast ad heard only in Canada. Reach great Canadian listeners like yourself with podcast advertising from Libsyn Ads. Choose from hundreds of top podcasts offering host endorsements or run a pre-produced ad like this one across thousands of shows to reach your target audience with Libsyn Ads. Email bob at libsyn.com to learn more. That's b-o-b at l-i-b-s-y-n dot com. It's a few minutes before 9.30 in the morning on Thursday, the 24th of October, 1929, in Manhattan. With a derby hat perched on his head and his collar turned up against the autumnal chill, a smart-suited trader hurries along Wall Street and around the corner onto Broad Street.

The usual thrum of the traffic fills his ears, and newspaper sellers shout to be heard above the melee. A moment later, he's jogging up the steps of the New York Stock Exchange. With its columned portico, it's reminiscent of an ancient Greek temple. Walking in always gives the trader a crackle of excitement. Thanks to his work here at this modern temple to the gods of commerce, he has a smart apartment not far from Central Park,

and his eye on a place in the Hamptons. Today, though, he feels a little tense. There have been hints for weeks now that what has been a buoyant market is slowing up. Nervous clients have been asking him to shift their stock at the best price he can get. But he reminds himself to keep a cool head. If there's one thing that makes a potentially volatile market worse, it's jumpy traders. So he pushes open the tall door and strides confidently onto the trading floor. Already packed with his colleagues, it's a vast space with a gilded ceiling stretching four stories up,

huge windows and Georgian-panelled marble walls. Right on cue, the familiar brass bell rings and business begins. The floor erupts into action. The dense crowd of traders divides, each man taking one of the numerous horseshoe-shaped trading posts that dot the floor at regular intervals. At each of the wooden workstations are telephones and bulky machines that noisily spew out ticker tape with the latest stock prices. The phones ring incessantly as the traders, all of them standing, bark their buy and sell orders. Except today, there is a lot more selling going on.

With every commodity update coming through on the tickers, prices drop lower and lower. The recent skittishness has escalated into blind panic. As the prices tumble, no one wants to be left with stock that is worthless. Better to take whatever price you can before it plummets further. But the more sellers there are, the faster the price drops. It's a race to the bottom. With gathering alarm, the trader joins the rush to dump stock, selling to whoever will buy.

And though the exchange was the first air-conditioned building in North America, he's feeling the heat. No one's interested in making a fortune today, but everyone's terrified of losing one. The slide quickly becomes a collapse. Within moments of the bell chiming, the market has lost over 10% of its value. The tickers can no longer keep up. Prices are moving so quickly that no one knows what they are anymore. The trader needs some air. The pressure is too much to bear.

Emerging out onto the steps, he fumbles for a cigarette, but struggles to light it with his trembling hands. He hopes it will calm him, but what he sees now has the opposite effect. On the street below, there is a sea of fedoras and derbies, each worn by an agitated investor who's got wind of what's going down in the exchange. The crowd grows by the second, and the voices rise. A few police officers on horseback are there to keep order, but it's clear things are only getting more heated.

The trade has never seen anything like it. No one has. By the end of the day, a record 16 million shares have been traded. The day will go down in history as black thursday the starting point of the wall street crash and a staging post on the world's painful march into years of financial hardship the great depression was the worst and deepest peacetime economic shock of the 20th century. It changed how economists thought about financial systems, re-sculpted global trade, and brought about profound social change. It was also a pivotal factor in the drift towards the Second World War. But how were the seeds of this financial disaster

sown in the First World War? Why did events on Wall Street reverberate across the planet? And at what cost to ordinary people? And how did America and the rest of the world finally dig itself out of its financial hole? I'm John Hopkins, and this is a short history of the Great Depression. Though the Wall Street crash was the moment the Great Depression began in earnest,

it is not where the story really starts. John Moser, chair of the Department of History and Political Science at Ashland University, is the author of The Global Great Depression and The Coming of World War II, and editor of The Great Depression and The New Deal. It's probably natural that we look to the stock market crash because we like to focus on single events, right? October 24th, 1929, boom, everybody's talking about it. There's chaos on Wall Street. It's in all the newspapers. So it's a convenient way to mark the start of it. But a lot of these things exacerbated problems that were already there. immediately after the First World War. On the 28th of June 1919, at the Palace of Versailles near Paris, politicians are meeting to sign a document. It's five years to the day since the assassination of Archduke Franz Ferdinand in Sarajevo brought the world into unprecedented

conflict. The Great War came to a close six months ago, but it's taken time for peace to be brokered. ago, but it's taken time for peace to be brokered. Germany was denied a seat at the negotiating table, but here, in the spectacular Hall of Mirrors, the German Minister of Foreign Affairs, Hermann Müller, reluctantly puts his name to the document. The government in Berlin knows they face threat of invasion if he doesn't. The treaty forces Germany to accept responsibility for the losses and damages suffered by the Allied nations. Worse still, the defeated nation is now saddled with a huge bill for reparations as Europe tries to figure out how to start rebuilding its savaged economies. Some economists, like the British John Maynard Keynes, warn that the deal is counterproductive. Dismissing the argument that future peace relies on crippling Germany so that it cannot strike again, he believes the treaty harbors much bigger problems for the future.

For centuries, Europe has been the world's epicenter of power, its nations building empires that stretch across the planet. of power, its nations building empires that stretch across the planet. Up until 1914, it has been relatively easy for goods and people to cross international borders. The British Empire has long been the preeminent power, with trade and free movement key to its prosperity. A centuries-long expansion of global trade has promoted ever-increasing production and consumption. But the war has changed all this. Instead of capital being used for growth, for four years it has been used to fund destruction. Now the great European empires are either much diminished, like Britain's, or, like

the Austro-Hungarian and Ottoman empires, all but wiped out. As these empires disintegrate, the knock-on effect is the shrinking of international trade. The Versailles Treaty, rather than focusing on Europe's rehabilitation, primarily ensures the losers settle their debts. Even as once great powers emerge weakened, their desire to extract vengeance is stronger than their willingness to bury the hatchet. This all works out rather well for the financiers across the Atlantic Ocean. In short order, New York overtakes London as the global center of credit. Europe turns to American banks for loans to both rebuild their infrastructures and to repay their debts. Often the money that the US loans to one nation is used by the receiver to repay

a European neighbor, who in turn sends it back over the Atlantic to settle its own debts with America. But rather than helping rebuild the pre-war system of free trade, the political elite in the States begin imposing tariffs to protect US producers from cheap foreign imports. The net result is a global economy at the start of the 1920s that is smaller and less productive than it was a decade ago. But that's not what it feels like in the US, where the good times roll. It's the spring of 1923 in Detroit, Michigan. A middle-aged insurance broker called John is driving a couple of blocks from the home he shares with his wife and two children.

He's feeling on top of the world as he grips the steering wheel of his new Ford Model T. It was built just a few miles up the road of the famous Highland Park factory, where Henry Ford revolutionized the manufacturing world with his introduction of the assembly line. But now it is John's, and you can hardly believe it. He hasn't told his wife. It's meant to be a surprise. But it's best she doesn't know he's taken a loan to buy it. It's no problem to pay it off after all.

He managed the repayments fine on the radio set they bought last year and the refrigerator that was wheeled into their kitchen six months ago. Work's going well, so why not enjoy the benefits? He's living a dream that, even a few years ago, seemed to belong to a class of people far removed from himself. Despite a small blip in 1921, the US economy has been growing very healthily year on year. When John purchases his car, he contributes to this cycle of boom.

The money he spends goes to pay the wages of the Ford workers who built the car, but also the producers of the glass, steel and rubber who supply the factory. Then there's the money he'll spend on gas. And the more cars there are, the more roads get constructed, and roadside businesses pop up and new houses built out in the burbs. They say that money makes the world go round, and it's certainly spinning the US. There is a problem, though, that is silently creeping up on the country. Credit is not cheap.

John's deal on his Model T comes in at close to 30% interest per year. The economy may be healthy just now, but everyone knows that things can change in an instant. And though John tries not to think about what will happen if he loses his job or falls ill, he knows that without a social security net to catch him, those debts would go unpaid. The economy needs consumers, but there's only so much stuff people can buy. Once you have a car or a refrigerator or a radio set, you don't generally need to buy more of them. Demand starts to slow. By 1928, many banks are getting nervous, and it becomes harder to get credit.

Now consumers have less money to spend, especially on non-essential items, which has a knock-on effect for the many businesses that have expanded to meet demand over the last few years. Meanwhile, abroad, those countries reliant on American credit suddenly find the money tap turned off. At the center of the crisis is Germany, struggling to kickstart its own economy and whose reparation payments are so vital to its European neighbors. So lots of capital was circulating, but it was all based on this tenuous cycle. And if any single part of it broke down, then the rest of it would follow.

So when U.S. money stopped flowing to Germany in 1928, that set things up for a really nasty international situation. Back in the States, where the long-term outlook is suddenly much less certain, wealthy investors create a surge of short-term speculation on the markets. They focus on turning speedy profits by gambling on what will happen over the next few hours or days, rather than looking at the long-term prospects of a company or commodity. The situation is made worse because investors are legally permitted to pool resources and artificially drive up stock prices before cashing out and watching their value plummet. By the fall of 1929, the situation reaches breaking point.

The Wall Street crash sees $14 billion lost on the first day day but there are other factors at work to transform a financial calamity into a humanitarian disaster the fact is there were a whole series of terrible things that happened to the economy over the course of some months any one of these would have been unfortunate and would have had negative effects. But if you look at them all together, there's kind of a perfect storm that led to the greatest economic catastrophe that the industrialized world has ever seen. When the crash first happens, most people accept it as part of the industrialized world's natural cycle of boom and bust. Herbert Hoover, who has been Secretary of State for Commerce for most of the decade, has been president since March.

He seems like just the safe pair of hands that is needed. I always say Hoover is exactly the sort of person you would think you would want to have in the White House during a time of crisis. In fact, he had made his career of dealing with crises. The U.S. Food Administration fed Europe after World War I, and he was the administrator of it. He had a background as an engineer. He was never a politician.

He thought like an engineer in terms of solving technical problems. When, as Secretary of Commerce, there was a major recession that took place in 1921 that nobody really hears about. It didn't last all that long. But Hoover jumped into action. He organized these meetings. He had all these plans for how to cope with the economy. But then the economy bounced back before he could put any of them into effect.

1927, there's catastrophic flooding on the Mississippi River. And once again, Hoover is called upon. Then President Calvin Coolidge said, OK, Commerce Secretary Hoover, you're in charge of coordinating the relief efforts. Another brilliant job. Hoover is a national hero, but he's not a flashy guy at all.

He's a problem solver. The day after Black Thursday, Hoover addresses journalists. The fundamental business of the country, he tells them, the production and distribution of commodities is on a sound and prosperous basis. He is convinced that the way to weather the storm is to maintain confidence in the system. This chimes with the economic orthodoxy of the day, that a healthy economy aims for balanced budgets and the maintenance of a steady flow of solid, reliable money. That way, people will carry on consuming and keep the entire economic show on the road. What Hoover definitely doesn't want is inflation.

What Hoover definitely doesn't want is inflation. He and most of the world remembers the hyperinflation that overtook Germany in 1923 and 1924, bringing the country to its knees. Though the immediate impact of events on Wall Street doesn't cause that level of instant, extreme hardship, the dangers of much worse to come are evident to economists. Hoover is urged by some, most notably Keynes, to embrace radical new methods and spend his way back to prosperity. Keynes believes that government spending will keep people in work, which in turn will ensure most people have more to spend, kick-starting a new cycle of growth. But for now, he is a minority voice. Hoover prefers to pull the strings of the economy from a distance. One of the most pervasive myths about the Great Depression is that Hoover wanted

to sit back and just let the free market take care of things. Hoover had things he wanted to do. He started calling meetings. He got businesses together. He said, don't cut wages. And major businesses, for the most part, followed that. Average wages actually went up in the early part of the Depression. Hoover spends on public works, roads, schools, hospitals, as Keynes no doubt appreciates. In fact, he spends more money in peacetime than any president who has come before him, by a wide margin. But with much of it designed to speed up pre-existing projects rather than creating new ones, it's not enough to have a major impact. He's also insistent that federal money doesn't go towards direct relief for American citizens, which he believes would undermine the work ethic and turn citizens into dependents of the government. So now, with businesses already letting workers go,

there are a lot of Americans who suddenly find themselves with much reduced incomes and little help. Against the advice of many economists, Hoover also signs into law an act designed to shield American industry from cheap imports. Its true impact, though, is to freeze up international trade more than ever at just the wrong moment. You're a podcast listener, and this is a podcast ad heard only in Canada. Reach great Canadian listeners like yourself with podcast advertising from Libsyn ads. Choose from hundreds of top podcasts offering host endorsements or run a pre-produced ad like this one across thousands of shows to reach your target audience with Libsyn ads. Email bob at libsyn.com to learn more. That's b-o-b at l-i-b-s-y-n dot com. For a while, in 1930, it looks like things might be about to improve.

The stock market picks up, and unemployment briefly stabilizes. But hope of a quick recovery dies in 1931, as the vacillations in the American economy are felt far and wide. economy are felt far and wide. In May, one of Austria's most important financial institutions collapses, sending ripple effects quickly through Central Europe and onwards to the UK. With the banking systems of both Germany and Austria in existential danger, the Bank of England, the traditional focal point of international finance, spends massive amounts to try to bail them out. But it isn't enough. Britain is no longer the financial powerhouse that it was at the turn of the century.

In September, the British authorities take the momentous decision to come off the gold standard. It's a complex monetary system in which most of the world's leading industrial countries fix the value of their currencies to a specified amount of gold and it's underpinned global economies for over half a century in theory it gives money a stable value across Nations with no single country able to simply decide to print lots of new money or change the value of its currency in its own interests? So the idea was that the major currencies of the world would be tied to one another by the fact that they all had gold backing at a certain amount. The appeal of the gold standard was, A, it prevents inflation. B, it makes foreign trade easier. You always know what the value of the dollar versus the pound sterling will be,

the pound versus the franc, the franc versus the deutschmark, whatever. It was set value. So it made international exchange extremely simple. The issue is that now, in 1931, Britain is in dire straits. In order to maintain confidence in the pound, Britain is in dire straits. In order to maintain confidence in the pound and keep it in line with the gold standard, the government has felt compelled to balance the budget by raising taxes and cutting spending. But taxes aren't exactly flowing in, given the state of the economy and rampant unemployment, and cutting spending only increases the problems of the poor.

and rampant unemployment, and cutting spending only increases the problems of the poor. So the government decides it must leave the gold standard in order to battle the immediate crisis. More once-thriving economies follow the British path. And though the US doesn't leave just yet, by 1932 its unemployment has spiraled to over 25%. The stock market has lost nearly 90% of its pre-Wall Street crash value. Matters are made worse by major drought in the Southwest, a phenomenon that goes on for much of the 1930s, creating the vast wasteland that becomes known as the Dust Bowl. When worried customers look to cash in their investments and savings, the banks struggle to comply because they have invested it elsewhere. What follows is a stampede of panicked withdrawals. The banks themselves have to borrow money from other financial institutions, which themselves

demand repayment. Quite simply, the banks run out of money. Those in the poorer South crumble first, but the shockwaves travel all the way back to Wall Street. There was a long history of bank failures in the United States, but bank failure on that scale was something that really hadn't been seen before. It really involved the destruction of a lot of capital. When banks go under, the people who had their money there lost it. And banks start calling in loans to try to stay solvent.

And then the banks that had borrowed money from these banks see their capital pulled away as well. Individuals who had taken out loans are in trouble. They lose their homes. They lose their farms. They lose their businesses. The economy goes into a deflationary spiral. Bread lines and soup kitchens appear across the country,

and there is mass migration of workers and families looking for somewhere new to scratch a living. Shanty towns start springing up, and the quality of life for tens of millions of ordinary Americans plummets. A survey by the New York Health Department finds that one in every five school children is suffering malnutrition. It's summer 1932 in downtown Chicago. A local caseworker from the city authorities is visiting a family down on its luck. It's an unusually cool day. She shivers as she walks along the path of the railroad to the block where the family lives.

A train rattles past, and she notices a small, scruffy boy playing on the sidings before an emaciated woman about her own age appears from the shadows and scoops him up. Realizing that these broken-down wagons are their home, the caseworker pauses to tell the mother about a place they can get some hot food. Gratefully, the woman follows her, and soon they come to a long queue on the sidewalk. It snakes towards a soup kitchen. A big man in a chef's hat noisily ladles chicken broth from a giant vat into tin bowls to those waiting

there's occasional chatter but mostly there is an awkward air these are proud people ashamed of their desperation leaving the woman and continuing alone soon the caseworker arrives at the address written on the file under her arm a broad broad man in his thirties answers and invites her in. The home is clean and neat, but bare, with empty spaces on the shelves where things have already been sold. Only a few years ago, homes like these would all have had a wireless set. But not now. The man offers her some refreshment, but knowing his plight, she politely refuses. Formerly a railroad man, he lost his job almost a year ago, and there's not been any other work come his way since. With a wife and five children, the few dollars they'd put aside in savings didn't last long.

The older children appear not to be at home, but the woman can hear a young one wailing upstairs. The sound of hungry babies is far too familiar these days. The father asks if there is paperwork he needs to sign, maybe, but that's not why the woman is here. Uncomfortably, she tells him she needs to see their wardrobes. Her bosses require it. She can see him bristle. wardrobes. Her bosses require it. She can see him bristle. It's not enough that he has had to endure the humiliation of going frayed cap in hand to them. They want to check that he's as poor as he says he is. He sighs and leads her up the stairs. They go from room to room, inspecting.

She makes a note of the clothes too small for the children, of the trousers worn at the knee, the frayed shirts and the dresses patched up. What she doesn't write down, but cannot help notice, is the man's eight-year-old son waddling from his room when she enters. She recognizes the tell-tale gait of a child with rickets,

his joints painful and swollen from the lack of vitamin D. She goes about her work as quickly as possible, ticking boxes and jotting down odd bits of information. When she's done, she shakes his hand and tells him she'll do what she can to send him the help he's requested soon. Outside, the neighborhood is alive with the noise of the railroads and the tram cars, the soup canteen, and the shrieking of kids trying to distract themselves from their empty bellies with a game of ball. But she can't get the image of the struggling boy out of her mind.

Drawing on her faith, she tells herself that it won't carry on like this forever. Hopefully it won't be long before the bigwigs in power work out how to get them all out of this forever. Hopefully, it won't be long before the bigwigs in power work out how to get them all out of this mess. Meanwhile, over in Washington, the roads around the White House fill with over 40,000 marchers. Comprising mostly impoverished ex-soldiers and their loved ones, they demand early payouts on future service bonuses.

Fearing an uprising, General Douglas MacArthur calls out the tanks to keep things under control. Everywhere there is hardship and hunger. The hit song of the moment, Brother, Can You Spare a Dime?, encapsulates the destitution that defines a nation on its knees. the destitution that defines a nation on its knees. In July, Franklin D. Roosevelt accepts the Democratic nomination to fight for the presidency. He pledges himself to what he describes as a new deal for the American people. This is more than a political campaign, he says. It is a call to arms. When the polls open on Tuesday, the 8th of November, he defeats Hoover at a canter. But unfortunately for economic stability, there is a four-month lag between Roosevelt winning the presidency and taking office.

During that time, Hoover is a lame duck, and no one knows for sure what the new administration intends. Roosevelt himself goes off on a long fishing holiday, away from the crucible of Washington. The delay only adds to the uncertainty. People are taking their money out of banks because they don't know what's next. And this has a snowball effect. One bank goes down after another. So by the time of the inauguration, banking in the United States is on the verge of collapse. And his first major act is to address that. So he says, OK, there's a bank holiday. All the banks are going to be closed. We are sending investigators all across the country to look at each individual bank and look at the books

and then say, all right, this bank is okay to reopen. A week after his inauguration in March 1933, Roosevelt draws upon his brilliant powers of communication. From his desk in the Lincoln Study in the White House, smartly decked out in suit and tie, he takes a final sip from the glass of water in front of him. It's almost time to go live. He takes a final sip from the glass of water in front of him. It's almost time to go live. Roosevelt has decided to harness the power of radio to speak to the American people directly. It has been quite some week.

Not since Lincoln took power with the country on the brink of civil war has a new president faced such an array of problems. Banks have been collapsing. A quarter of the workforce is out of work, production is down by a third, and Europe stands on the precipice of extremism, with Adolf Hitler being appointed Chancellor of Germany just a few weeks ago. Now, Roosevelt wants to reassure his struggling nation. Sixty million listeners sit around their radio sets at home, 60 million listeners sit around their radio sets at home, waiting to hear what he has to say. This is the first of what come to be called his fireside chats as president. But he has delivered plenty of similar broadcasts during his time as governor of New York.

Ignoring the banks of technicians lining the study, he waits for the announcer to complete the introduction, and then he leans into his microphone. My friends, I want to talk for a few minutes with the people of the United States about banking. To talk with the comparatively few who understand the mechanics of banking, but more particularly with the overwhelming majority of you who use banks for the making of deposits and the drawing of cheques. I want to tell you what has been done in the last few days and why it was done and what the next steps are going to be. His words, delivered across the crackle of the airwaves, find their target. They soothe worried hearts, convincing the public that the government has a

plan. It is just a first step, but an important one in America's slow march out of depression. And he tells them, if your bank reopens, it has my seal of approval, essentially. It's sound. And lo and behold, those banks opened again. People went and put their money back in. This is right off the bat, a huge triumph. That speech is a masterpiece of political communication, and the crisis is averted. The economy, I don't want to say recovers,

it gets better, better than it was. With the wind in his sails, the president now starts to implement a few of the many programs, reforms and projects that comprise his new deal. Introduced over the course of the decade, they aim to spur economic recovery, reform the financial systems and provide a social security net for the unemployed and poor. net for the unemployed and poor. Acronyms for administrations dealing with securities, civil works, farming, industrial recovery and social security are absorbed into everyday American conversation. Meanwhile, billions of dollars are spent on public works to get people working again and businesses making money. The Securities Act of 1933 brings a new level of regulation to the securities market

to go alongside greater treasury supervision of the banks. A year later, a new commission is established to counter the sort of market gaming seen ahead of the Wall Street crash. In addition, the government guarantees bank deposits so that ordinary people will not lose their money even if their bank gets into trouble. Customers return, boosting the banks and helping to bring renewed confidence to the financial sector. Roosevelt also does what Hoover never felt able to and takes America off the gold standard. never felt able to and takes America off the gold standard. Just like the UK and other prominent nations, the White House has decided that it needs greater freedom to act than the gold standard allows. He said, well, the way we're going to bring about recovery is to get prices for stuff to go up. And if prices go up, that means people are going to make profits again. Employment is

going to go up. Wages are going to go up. And so there will be this virtuous cycle that pulls the economy out of the depression. But the first thing you got to do is get off the gold standard. It really didn't have that effect for some time. And in middle of 1934, Congress passes at FDR's recommendation, the Gold Reserve Act that reestablishes, that reconnects the dollar to gold, but at a rate that was about half of what it had been. And so you had the stability of the gold standard, but at the same time, you could have more currency in circulation while playing by the rules of the gold standard. And so in 1934, you started to see the beginnings of a sustained recovery.

The effectiveness of other New Deal measures are debated to this day. The Agricultural Adjustment Act, for example, seeks to drive up farming prices that have hit rock bottom and sent millions into penury. But to do so, cuts in farm production are encouraged to increase demand. In some areas of the country, it is possible to watch lakes of milk being poured away and healthy crops plowed up, even as people struggle to feed themselves. A centerpiece of Roosevelt's agenda is the National Recovery Administration, which compels private industry to work with the government on issues such as working conditions and setting

minimum prices and wages. The White House encourages workers to join unions to look out for their interests. But the reforms are soon mired in bureaucracy and are difficult to enforce. There are legal problems too, as the Supreme Court declares various aspects unconstitutional. What was meant to be Roosevelt's crowning achievement is dissolved in 1935. But over the next few years, other, more successful schemes offer economic security

to those who've fallen on hard times, and working standards improve. By 1936, key economic indicators are back to the levels of the late 20s. The exception is unemployment, which has fallen dramatically from its peak, but is stubbornly hovering over 10%. For the voting public, though, the successes of the New Deal outweigh its imperfections. Roosevelt is returned to the White House in November 1936, taking over 60% of the popular vote and 98% of the Electoral College to record one of the greatest electoral successes in U.S. history. But how much

of the glory for recovery should he and the New Deal take? I give the administration a lot of credit for effectively getting rid of bank failure. We've had some pretty prominent ones recently, but bank failures used to happen all the time. And then it became a very unusual thing after that. It has to be remembered that recovery, economic recovery, was only one part of the New Deal agenda. So you can point to all sorts of New Deal programs and say, well, if anything, this probably impeded recovery. But at the same time, we can still say they were worthwhile. Social security. Poverty among the elderly was a really chronic problem before social security.

I'm glad we have social security. Did social security help bring about recovery? No. I'm not totally anti-New Deal. There were certainly aspects of the New Deal that helped things along. But what really drove that recovery in the mid 1930s was the flow of capital from the rest of the world into the United States. Much of this capital comes to the us thanks to uncertainty about europe's future not only is the continent still suffering material hardship it's also a political tinderbox far more so than the us investors see america as a much safer place to operate than the nations of europe that frequently seem on the brink of civil discord and war. Over in Germany, for instance, there has been a wholesale loss of faith in the traditional

forces of power. Instead, people have turned to extremist ideology. Whenever the economy is going fairly well, the parties of the center did well. But during the hyperinflation, you saw the Nazis and the communists, their electoral support soared. And then during the depression, the same thing happened again. And the parties of the center just kind of declined almost into irrelevance. I think the situation in Germany is increasingly ordinary Germans looked at the situation in

their country and said, either we're heading toward communism or toward a government run by the Nazis. We don't necessarily like either of those options, but we know what communism looks like. We've heard the stories from Bolshevik Russia. At least the Nazis talk about nationalism and we like nationalism. They talk about making germany great again we are at least willing to go with the devil we don't know over the devil that we have heard so much about in russia though extremism doesn't find a similar foothold in britain there is serious social discontent as a series of coalition governments fail to get to grips with the economic challenges governments failed to get to grips with the economic challenges.

It's the 28th of October, 1936, a crisp autumnal day in Luton, about 35 miles northwest of central London, England. A shipbuilder is marching through the town, one of a crowd of 200. His limbs ache dully. He's been on the road for over three weeks, covering almost 250 miles from his hometown of Jarrow in the northeast. He holds one pole of a long banner, emblazoned in blue letters across white linen are the words, Jarrow Crusade.

The protesters move in unison, their worn-out shoes pounding the hard road like soldiers on the march. Accompanied by a band of harmonica players, the men sing periodically in an attempt to keep their spirits up. The shipbuilder's favorite has the refrain, Work, work, we want work. Because that is the whole reason for their being on the road. Jarrow is a town that is dying. Two years ago the local shipyard shut down, a symbol of British decline and the global depression. Ten thousand local men lost their jobs and there is no other work for them to do.

This march, this crusade, is their attempt to plead with the government to bring industry back to their community. They don't want to rely on handouts. They want to earn a living to support their families. Like his comrades, this man wears a suit and tie and a flat cap. Over his shoulder and across his chest is what appears to be a sash, but is in fact a ground sheet for sleeping on at night. When the weather turns bad he can put it over his head to fend off the rain. Beside him runs a small black dog yelping along with the harmonicas. He is a stray who joined the marchers at the beginning of their trek and never left, becoming their unofficial mascot. Up ahead a trellis table has been set up at the side of the road. Time for a break.

The kindly residents of Luton have laid on sandwiches. A cheer ripples through the marchers as they spot the spread. They relieve themselves of their kit bags and pull out their tin mugs for tea. The man shares a sandwich with a dog, who eats it quickly before he can change his mind. A few of the marchers have set up bonfire to keep themselves warm for a bit. Joining them, the man lets the warmth flood over him as the flames crackle. There is more singing, and someone bangs bin lids together for percussion. But then a hush falls. A woman is on her feet, indicating that she wants their attention. Short and red-headed,

wearing a black felt hat and a trench coat, she's well known to them, having marched with them for long stretches. A cigarette dangles from her mouth. Her name is Ellen Wilkinson, and she is the protesters' firebrand Labour Party Member of Parliament. As the men rest, she makes a rousing speech, reminding them of why they are putting themselves through this. Jarrow's plight, she tells them, is not a local problem. It is the symptom of a national evil. She pledges to help them deliver their petition, signed by thousands and carried in a specially made box. Along with their signatories, they will demand that the government of Conservative Prime Minister Stanley Baldwin reverses its decision to block loans to fund a new steelworks in the town.

It's serious business, but Ellen retains her sense of humour. The men guffaw at a joke she makes about Baldwin, and when she's finished, the crowd cheers its appreciation, the bin lids clattering in agreement. Reinvigorated, the marchers ready themselves to get on the move again. In the end, the government ignores the Jarrow Crusaders' pleas. The public has been touched by the dignity of their protest. But it doesn't put food on the table. Nonetheless, Britain is one of a number of afflicted countries that, along with the US,

slowly emerges from the Depression in the second half of the 30s. After years of downturn, the economic wheel is slowly turning back into a phase of expansion. These are by no means good times, but there is a quiet hope that they're past the worst. Even so, goodwill between the European nations is at a low ebb. I think one of the reasons why the great powers of the 1930s could not work together effectively to block aggression was there was a lot of hostility among these powers over the way they responded to the depression. Every country, every industrialized country responded to the Great Depression in a few general ways. One of them was to devalue currency. One of them was to raise tariffs.

And these were both things that pushed economic distress from their countries onto others. So this failure of cooperation on economic matters, I think, really led to failure to cooperate on political matters. As 1938 passes into 1939, fear is everywhere that a new world war is imminent. The attitude within the U. the us is that should this come to pass it will not get involved this time it's a view widely shared by the international

community for nervous investors wondering where to stockpile their assets new york seems even more like the best bet out there a haven a safe distance away from potential battlefields A haven, a safe distance away from potential battlefields. With its stores of gold and international currency bulging, American banks are keen to lend again to businesses investing for the future and to individuals who want to spend now. Moreover, foreign partners who have shied away from trade now have no choice but to spend in preparation for war. The global economy revs up once more, with the US at its forefront. An unprecedented global depression, with its origins

deep in the First World War, is brought to a close by the dreadful prospect of a second global conflict. global conflict. The Great Depression remains a defining event in the world's collective history. It is the yardstick by which all subsequent economic disasters have been measured. The Great Recession that began in 2007 for example is notable for being the biggest economic downturn since the Great Depression. For the rest of the 20th century and into the 21st, governments have aimed to shield

their economies from a similar shock. Economists have bickered and debated as to what caused the Great Depression, why it played out as it did, and what was the best course of action to take. Not least of these are the Keynesians, who put their faith in government spending as the way to control the economy, and the monetarists, who think it is done by regulating money supply. An abstract debate for most of us, it nonetheless profoundly influenced the behavior of governments across the planet over many decades. The depression and the war that followed convinced the US to embrace its role as the elite economic superpower, championing policies that other nations followed, at least in the non-communist

world. It was at the center, too, of establishing a network of international bodies like the United Nations and the World Bank, aimed at keeping the planet in some sort of political and economic check. Despite notable and painful downturns, the system has, for long periods, been remarkably stable. Economies will always go through highs and lows, boom and bust. The secret is to aim to steer a middling course where we do not get carried away in the good times nor suffer the very worst of the bad times. But if the Great Depression teaches us anything it is surely for

better or worse that money really does make the world go round. If you knew anyone who grew up during the Great Depression, they did not want to spend money. My grandfather, I never met anybody who was so stingy, but he would always say, I grew up during the Great Depression and I learned the value of a buck. At the same time, this notion is very much being encouraged that people need to consume stuff, that their money sitting in a bank is not as good as them going out and buying stuff to keep the economy moving. This actually became one of the big moral messages of the 1930s, was almost an imperative to spend money.

Interestingly, in the wake of 9-11, George W. Bush is talking about the global war on terror. And so what can ordinary Americans do? One of the things he said was consume, spend money. Hey, I can do that. I don't have to plant a victory garden or save fats and scrap iron and vet them for the war effort. I just need to go out and buy stuff. That's how I will make my contribution. So to maintain a consumer economy, as ours is, we've got to get out there and consume. Next time on Short History Of, we'll bring you a short history of the Battle of Britain. And they'd be on patrol there knowing the bombers are coming in.

And they'd sort of be chatting to one another. And then, you know, they'd make contact and they'd go straight into a dogfight. And they said, for about a few minutes, there's absolute chaos with guns going off and shooting. And then suddenly the sky would go quiet. The raid had gone through, and some people had shot down, the enemy had been shot down, and that was, it just went quiet.

You know, you had sort of five minutes of terror, and then suddenly it was all quiet again. And they landed back on, re-armed, refueled, and got ready to get airborne again. That's next time.