The majority of countries set up relief programs, and most underwent some sort of political upheaval, pushing them to the
right. Many of the countries in Europe and Latin America that were democracies saw their democratic governments overthrown by some form of dictatorship or authoritarian rule, most famously
in Germany in 1933. The
Dominion of Newfoundland abandoned its
autonomy within the British Empire, becoming the only region ever to voluntarily relinquish democracy. There, too, were severe impacts across the Middle East and North Africa, including economic decline, which led to social unrest.
Argentina The decline in foreign trade hit Argentina hard. The British decision to stop importing Argentine beef led to the signing of the
Roca–Runciman Treaty, which preserved a quota in exchange for significant concessions to British exports. By 1935, the economy had recovered to 1929 levels, and the same year, the
Central Bank of Argentina was formed. However, the Great Depression was the last time when Argentina was one of the richer countries of the world, as it stopped growing in the decades thereafter and became underdeveloped.
Australia , 1934|214x214px Australia's dependence on agricultural and industrial exports meant it was one of the hardest-hit developed countries. Falling export demand and commodity prices placed massive downward pressures on wages. Unemployment reached a record high of 29% in 1932, with incidents of
civil unrest becoming common. After 1932, an increase in wool and meat prices led to a gradual recovery.
Canada , Ontario, Canada. Harshly affected by both the global economic downturn and the
Dust Bowl, Canadian industrial production had by 1932 fallen to only 58% of its 1929 figure, the second-lowest level in the world after the United States, and well behind countries such as Britain, which fell to only 83% of the 1929 level. Total
national income fell to 56% of the 1929 level, again worse than any country apart from the United States. Unemployment reached 27% at the depth of the Depression in 1933.
Chile The
League of Nations labeled
Chile the country hardest hit by the Great Depression because 80% of government revenue came from exports of copper and nitrates, which were in low demand. Chile initially felt the impact of the Great Depression in 1930, when GDP dropped 14%, mining income declined 27%, and export earnings fell 28%. By 1932, GDP had shrunk to less than half of what it had been in 1929, exacting a terrible toll in unemployment and business failures. Influenced profoundly by the Great Depression, many government leaders promoted the development of local industry in an effort to insulate the economy from future external shocks. After six years of government
austerity measures, which succeeded in reestablishing Chile's creditworthiness, Chileans elected to office during the 1938–58 period a succession of center and left-of-center governments interested in promoting economic growth through government intervention. Prompted in part by the devastating
1939 Chillán earthquake, the
Popular Front government of
Pedro Aguirre Cerda created the Production Development Corporation (Corporación de Fomento de la Producción,
CORFO) to encourage—with subsidies and direct investments—an ambitious program of
import substitution industrialization. Consequently, as in other Latin American countries,
protectionism became an entrenched aspect of the Chilean economy.
China China was largely unaffected by the Depression, mainly by having stuck to the
silver standard. However, the U.S. Silver Purchase Act of 1934 created an intolerable demand on China's silver coins, and so, eventually, the silver standard was officially abandoned in 1935 in favor of the four Chinese national banks' "legal note" issues. China and the
British colony of Hong Kong, which followed suit in this regard in September 1935, would be the last to abandon the silver standard. In addition, the
Nationalist Government also acted energetically to modernize the legal and penal systems, stabilize prices, amortize debts, reform the banking and currency systems, build railroads and highways, improve public health facilities, legislate against traffic in narcotics, and augment industrial and agricultural production. On 3 November 1935, the government instituted the fiat currency (fapi) reform, immediately stabilizing prices and also raising revenues for the government.
European African colonies The sharp fall in commodity prices and the steep decline in exports hurt the economies of the European colonies in Africa and Asia. The agricultural sector was especially hard-hit. For example,
sisal had recently become a major export crop in Kenya and Tanganyika. During the depression, it suffered severely from low prices and marketing problems that affected all colonial commodities in Africa. Sisal producers established centralized controls for the export of their fibre. There was widespread unemployment and hardship among peasants, labourers, colonial auxiliaries, and artisans. The budgets of colonial governments were cut, which forced the reduction in ongoing infrastructure projects, such as the building and upgrading of roads, ports, and communications. The budget cuts delayed the schedule for creating systems of higher education. The depression severely hurt the export-based
Belgian Congo economy because of the drop in international demand for raw materials and for agricultural products. For example, the price of peanuts fell from 125 to 25 centimes. In some areas, as in the
Katanga mining region, employment declined by 70%. In the country as a whole, the wage labour force decreased by 72,000 people, and many men returned to their villages. In Leopoldville, the population decreased by 33% because of this labour migration. Political protests were not common. However, there was a growing demand that the paternalistic claims be honored by colonial governments to respond vigorously. The theme was that economic reforms were more urgently needed than political reforms. French West Africa launched an extensive program of educational reform, in which "rural schools", designed to modernize agriculture, would stem the flow of underemployed farm workers to cities where unemployment was high. Students were trained in traditional arts, crafts, and farming techniques and were then expected to return to their own villages and towns.
France The crisis affected France a bit later than other countries, hitting hard around 1931. While the 1920s saw growth at a strong rate of 4.43% per year, during the 1930s, the rate fell to only 0.63%. The depression was relatively mild: unemployment levels peaked at less than 5%, and the fall in production was at most 20% below the 1929 output. France also had no major banking crisis. However, the depression had drastic effects on the local economy and partly explains the
February 6, 1934, riots and even more the formation of the
Popular Front, led by
SFIO socialist leader Léon Blum, which won the elections in 1936. Ultra-nationalist groups also saw increased popularity, though democracy prevailed into
World War II. France's relatively high degree of self-sufficiency meant the damage was considerably less than in neighbouring states like Germany.
Germany operating a screw press against a workman, Nazi propaganda
medal The Great Depression hit Germany hard. The impact of the
Wall Street crash forced American banks to end the new loans that had been funding the repayments under the
Dawes Plan and the
Young Plan. The financial crisis escalated out of control in mid-1931, starting with the collapse of the
Credit Anstalt in Vienna in May. The unemployment rate reached nearly 30% in 1932. Hitler ran for the Presidency in 1932, and while he lost to the incumbent Hindenburg in the election, it marked a point during which both Nazi Party and the Communist parties rose in the years following the crash to altogether possess a Reichstag majority following the
general election in July 1932. Although the Nazis lost seats in
November 1932 election, they remained the largest party, and Hitler was appointed as Chancellor the following January. The government formation deal was designed to give Hitler's conservative coalition partners many checks on his power, but over the next few months, the Nazis manoeuvred to consolidate a single-party dictatorship. Hitler followed an economic policy of
autarky, creating a network of client states and economic allies in central Europe and Latin America. By cutting wages and taking control of labor unions, plus public works spending, unemployment fell significantly by 1935. Large-scale military spending played a major role in the recovery. The policies had the effect of driving up the cost of food imports and depleting foreign currency reserves, leading to economic impasse by 1936. Nazi Germany faced a choice of either reversing course or pressing ahead with rearmament and autarky. Hitler chose the latter route, which, according to
Ian Kershaw, "could only be partially accomplished without territorial expansion" and therefore war.
Greece The reverberations of the Great Depression hit Greece in 1932. The
Bank of Greece tried to adopt deflationary policies to stave off the crises that were going on in other countries, but these largely failed. For a brief period, the drachma was pegged to the U.S. dollar, but this move was unsustainable given the country's large trade deficit, and the only long-term effect of this was Greece's foreign exchange reserves being almost totally wiped out in 1932. Remittances from abroad declined sharply, and the value of the drachma began to plummet from 77 drachmas to the dollar in March 1931 to 111 drachmas to the dollar in April 1931. This transition was especially harmful to Greece, as the country relied on imports from the UK, France, and the Middle East for many necessities. Greece went off the gold standard in April 1932 and declared a moratorium on all interest payments. The country also adopted protectionist policies, such as import quotas, which several European countries also did during the period. Protectionist policies coupled with a weak drachma and the stifling of imports allowed the Greek industry to expand during the Great Depression. In 1939, the Greek industrial output was 179% that of 1928. These industries were for the most part "built on sand", as one report of the Bank of Greece put it, as without massive protection, they would not have been able to survive. Despite the global depression, Greece managed to suffer comparatively little, averaging a growth rate of 3.5% from 1932 to 1939. The dictatorial regime of
Ioannis Metaxas took over the Greek government in 1936, and economic growth was strong in the years leading up to the Second World War.
Iceland Iceland's post-World War I prosperity came to an end with the outbreak of the Great Depression. The Depression hit Iceland hard, as the value of exports plummeted. The total value of Icelandic exports fell from 74 million
kronur in 1929 to 48 million in 1932 and was not to rise again to the pre-1930 level until after 1939. Government interference in the economy increased: "Imports were regulated, trade with foreign currency was monopolized by state-owned banks, and loan capital was largely distributed by state-regulated funds". Apart from two sectors—
jute and coal—the economy was little affected. However, there were major negative impacts on the jute industry, as world demand fell and prices plunged. Otherwise, conditions were fairly stable. Local markets in agriculture and small-scale industry showed modest gains.
Ireland Frank Barry and
Mary E. Daly have argued that: :Ireland was a largely agrarian economy, trading almost exclusively with the UK at the time of the Great Depression. Beef and dairy products comprised the bulk of exports, and Ireland fared well relative to many other commodity producers, particularly in the early years of the depression.
Italy giving a speech at the
Fiat Lingotto factory in Turin, 1932 The Great Depression hit
Italy very hard. As industries came close to failure, they were bought out by the banks in a largely illusionary bailout—the assets used to fund the purchases were largely worthless. This led to a financial crisis peaking in 1932 and major government intervention. The
Industrial Reconstruction Institute (IRI) was formed in January 1933 and took control of the bank-owned companies, suddenly giving Italy the largest state-owned industrial sector in Europe (excluding the USSR). IRI did rather well with its new responsibilities—restructuring, modernising and rationalising as much as it could. It was a significant factor in post-1945 development. But it took the Italian economy until 1935 to recover the manufacturing levels of 1930—a position that was only 60% better than that of 1913.
Japan The Great Depression did not strongly affect Japan. The Japanese economy shrank by 8% during 1929–31. Japan's Finance Minister
Takahashi Korekiyo was the first to implement what have come to be identified as
Keynesian economic policies: first, by large fiscal stimulus involving
deficit spending; and second, by devaluing
the currency. Takahashi used the Bank of Japan to sterilize the deficit spending and minimize resulting inflationary pressures. Econometric studies have identified the fiscal stimulus as especially effective. The devaluation of the currency had an immediate effect. Japanese textiles began to displace British textiles in export markets. The deficit spending proved to be most profound and went into the purchase of munitions for the armed forces. By 1933, Japan was already out of the depression. By 1934, Takahashi realized that the economy was in danger of overheating, and to avoid inflation, he moved to reduce the deficit spending that went towards armaments and munitions. This resulted in a strong and swift negative reaction from nationalists, especially those in the army, culminating in his assassination in the course of the
February 26 Incident. This had a
chilling effect on all civilian bureaucrats in the Japanese government. From 1934, the military's dominance of the government continued to grow. Instead of reducing deficit spending, the government introduced price controls and rationing schemes that reduced but did not eliminate inflation, which remained a problem until the end of World War II. The deficit spending had a transformative effect on Japan. Japan's industrial production doubled during the 1930s. Further, in 1929 the list of the largest firms in Japan was dominated by light industries, especially textile companies (many of Japan's automakers, such as
Toyota, have their roots in the textile industry). By 1940
light industry had been displaced by heavy industry as the largest firms inside the Japanese economy.
Latin America Because of high levels of U.S. investment in Latin American economies, they were severely damaged by the Depression. Within the region,
Chile,
Bolivia, and
Peru were particularly badly affected. Before the 1929 crisis, links between the world economy and
Latin American economies had been established through American and British investment in Latin American exports to the world. As a result, Latin American export industries felt the depression quickly. World prices for commodities such as wheat, coffee, and copper plunged. Exports from all of Latin America to the U.S. fell in value from $1.2 billion in 1929 to $335 million in 1933, rising to $660 million in 1940. But on the other hand, the Depression led the area governments to develop new local industries and expand consumption and production. Following the example of the New Deal, governments in the area approved regulations and created or improved welfare institutions that helped millions of new industrial workers to achieve a better standard of living.
Netherlands From roughly 1931 to 1937, the
Netherlands suffered a deep and exceptionally long depression. This depression was partly caused by the after-effects of the American stock market crash of 1929 and partly by internal factors in the Netherlands. Government policy, especially the very late dropping of the gold standard, played a role in prolonging the depression. The Great Depression in the Netherlands led to some political instability and riots and can be linked to the rise of the Dutch fascist political party
NSB. The depression in the Netherlands eased off somewhat at the end of 1936, when the government finally dropped the Gold Standard, but real economic stability did not return until after World War II.
New Zealand New Zealand was especially vulnerable to worldwide depression, as it relied almost entirely on agricultural exports to the United Kingdom for its economy. The drop in exports led to a lack of disposable income from the farmers, who were the mainstay of the local economy. Jobs disappeared and wages plummeted, leaving people desperate and charities unable to cope. Work relief schemes were the only government support available to the unemployed, the rate of which by the early 1930s was officially around 15%, but unofficially nearly twice that level (official figures excluded Māori and women). In 1932, riots occurred among the unemployed in three of the country's main cities (
Auckland,
Dunedin, and
Wellington). Many were arrested or injured through the tough official handling of these riots by police and volunteer "special constables".
Persia In Iran, then known as the
Imperial State of Persia, the Great Depression had negative impacts on its exports. In 1933 a new concession was signed with the
Anglo-Persian Oil Company.
Poland Poland was affected by the Great Depression longer and stronger than other countries due to the inadequate economic response of the government and the pre-existing economic circumstances of the country. At that time, Poland was under the authoritarian rule of
Sanacja, whose leader,
Józef Piłsudski, was opposed to leaving the
gold standard until his death in 1935. As a result, Poland was unable to pursue a more active monetary and fiscal policy. Additionally, Poland was a relatively young country that emerged merely 10 years earlier after being partitioned between
German,
Russian, and
Austro-Hungarian Empires for over a century. Prior to independence, the Russian part exported 91% of its exports to Russia proper, while the German part exported 68% to Germany proper. After independence, these markets were largely lost, as Russia transformed into the
USSR, which was mostly a closed economy, and Germany was in a tariff war with Poland throughout the 1920s.
Industrial production fell significantly: in 1932
hard coal production was down 27% compared to 1928,
steel production was down 61%, and
iron ore production noted an 89% decrease. On the other hand, electrotechnical, leather, and paper industries noted marginal increases in production output. Overall, industrial production decreased by 41%. A distinct feature of the Great Depression in Poland was the de-concentration of industry, as larger conglomerates were less flexible and paid their workers more than smaller ones. The
unemployment rate rose significantly (up to 43%), while nominal
wages fell by 51% in 1933 and 56% in 1934, relative to 1928. However, real wages fell less due to the government's policy of decreasing cost of living, particularly food expenditures (food prices were down by 65% in 1935 compared to 1928 price levels). Material conditions deprivation led to strikes, some of them violent or violently
pacified—like in
Sanok ( 6 March 1930),
Lesko county (
Lesko uprising 21 June–9 July 1932), and
Zawiercie ( 18 April 1930). To adapt to the crisis, the Polish government employed deflation methods such as high
interest rates, credit limits, and budget
austerity to keep a
fixed exchange rate with currencies tied to the gold standard. Only in late 1932 did the government effect a plan to fight the economic crisis. Part of the plan was a mass
public works scheme, employing up to 100,000 people in 1935.
Puerto Rico In the years immediately preceding the depression, negative developments in the island and world economies perpetuated an unsustainable cycle of subsistence for many Puerto Rican workers. The 1920s brought a dramatic drop in Puerto Rico's two primary exports, raw sugar and coffee, due to a devastating hurricane in 1928 and the plummeting demand from global markets in the latter half of the decade. 1930 unemployment on the island was roughly 36%, and by 1933 Puerto Rico's per capita income dropped 30% (by comparison, unemployment in the United States in 1930 was approximately 8%, reaching a height of 25% in 1933). To provide relief and economic reform, the United States government and Puerto Rican politicians such as
Carlos Chardon and
Luis Muñoz Marín created and administered first the Puerto Rico Emergency Relief Administration (PRERA) 1933 and then, in 1935, the
Puerto Rico Reconstruction Administration (PRRA).
Romania Romania was also affected by the Great Depression.
South Africa As world trade slumped, demand for South African agricultural and mineral exports fell drastically. The
Carnegie Commission on Poor Whites had concluded in 1931 that nearly one-third of
Afrikaners lived as paupers. The social discomfort caused by the depression was a contributing factor in the 1933 split between the "gesuiwerde" (purified) and "smelter" (fusionist) factions within the
National Party and the National Party's subsequent fusion with the
South African Party. Unemployment programs were begun that focused primarily on the white population.
Soviet Union The Soviet Union was the only major
socialist state in the world and had very little international trade. Its economy was not tied to the rest of the world and was mostly unaffected by the Great Depression. At the time of the Depression, the Soviet economy was growing steadily, fuelled by intensive investment in heavy industry. The apparent economic success of the Soviet Union at a time when the capitalist world was in crisis led many Western intellectuals to view the Soviet system favorably.
Jennifer Burns wrote: The early years of the Great Depression caused mass immigration to the Soviet Union, including 10,000 to 15,000 from Finland and thousands more from Poland, Sweden, Germany, and other nearby countries. The Kremlin was at first happy to help these immigrants settle, believing that they were victims of capitalism who had come to help the Soviet cause. However, by 1933, the worst of the Depression had come to an end in many countries, and word had been received that illegal migrants to the Soviet Union were being sent to Siberia. These factors caused immigration to the Soviet Union to slow significantly, and roughly a tenth of Finnish migrants returned to Finland, either legally or illegally. By far the most serious negative impact came after 1936 from the heavy destruction of infrastructure and manpower by the
civil war, 1936–39. Many talented workers were forced into permanent exile. By staying neutral in the Second World War and selling to both sides, the economy avoided further disasters.
Sweden By the 1930s, Sweden had what America's
Life magazine called in 1938 the "world's highest standard of living". Sweden was also the first country worldwide to recover completely from the Great Depression. Taking place amid a short-lived government and a less-than-a-decade-old Swedish democracy, events such as those surrounding
Ivar Kreuger (who eventually committed suicide) remain infamous in Swedish history. The
Social Democrats under
Per Albin Hansson formed their first long-lived government in 1932 based on strong
interventionist and
welfare state policies, monopolizing the office of
Prime Minister until 1976 with the sole and short-lived exception of
Axel Pehrsson-Bramstorp's "summer cabinet" in 1936. During forty years of hegemony, it was the most successful political party in the history of Western liberal democracy.
Thailand In Thailand, then known as the
Kingdom of Siam, the Great Depression contributed to the end of the
absolute monarchy of King Rama VII in the
Siamese revolution of 1932.
Turkey The Great Depression came at a time when the relatively newly established Turkish state was still reforming its economic policy following the end of the
Ottoman era. As the depression began, the country's trade deficits saw an increase, and the Turkish lira significantly lost value. Turkey's economy was predominantly agrarian, thus the fall in demand, which caused a fall in export prices of many goods, affected the country's economy badly. As a result of the depression, the government, which had been following increasingly more liberal economic policies up until then, started opting for more statist policies.
United Kingdom The world depression broke at a time when the United Kingdom had still not fully recovered from the effects of the
First World War more than a decade earlier. The country was driven off the
gold standard in 1931. The world financial crisis began to overwhelm Britain in 1931; investors around the world started withdrawing their gold from London at the rate of £2.5 million per day. The
National Hunger March of September–October 1932 was the largest of a series of
hunger marches in Britain in the 1920s and 1930s. About 200,000 unemployed men were sent to the work camps, which continued in operation until 1939. In the less industrial
Midlands and
Southern England, the effects were short-lived, and the later 1930s were a prosperous time. Growth in modern manufacture of electrical goods and a boom in the motor car industry was helped by a growing southern population and an expanding
middle class. Agriculture also saw a boom during this period.
United States Hoover's first measures to combat the depression were based on encouraging businesses not to reduce their workforce or cut wages but businesses had little choice: wages were reduced, workers were laid off, and investments postponed. In June 1930, Congress approved the
Smoot–Hawley Tariff Act, which raised tariffs on thousands of imported items. The intent of the Act was to encourage the purchase of American-made products by increasing the cost of imported goods while raising revenue for the federal government and protecting farmers. Most countries that traded with the U.S. increased tariffs on American-made goods in retaliation, reducing international trade and worsening the Depression. In 1931, Hoover urged bankers to set up the
National Credit Corporation so that big banks could help failing banks survive. But bankers were reluctant to invest in failing banks, and the National Credit Corporation did almost nothing to address the problem. (World War I veterans) after the marchers with their wives and children were driven out by the regular Army by order of
President Hoover, 1932 By 1932, unemployment had reached 23.6%, peaking in early 1933 at 25%. Those released from prison during this period had an especially difficult time finding employment given the stigma of their criminal records, which often led to recidivism out of economic desperation. Hundreds of thousands of Americans found themselves homeless and began congregating in
shanty towns—dubbed "
Hoovervilles"—thatbegan to appear across the country. In response, President Hoover and Congress approved the
Federal Home Loan Bank Act, to spur new home construction and reduce foreclosures. The final attempt of the Hoover Administration to stimulate the economy was the passage of the
Emergency Relief and Construction Act (ERA), which included funds for
public works programs such as dams and the creation of the
Reconstruction Finance Corporation (RFC) in 1932. The Reconstruction Finance Corporation was a federal agency with the authority to lend up to $2 billion to rescue banks and restore confidence in financial institutions. But $2 billion was not enough to save all the banks, and
bank runs and bank failures continued. Shortly after President
Franklin Delano Roosevelt was inaugurated in 1933, drought and erosion combined to cause the
Dust Bowl, shifting hundreds of thousands of
displaced persons off their farms in the Midwest. From his inauguration onward, Roosevelt argued that restructuring of the economy would be needed to prevent another depression or avoid prolonging the current one. New Deal programs sought to stimulate
demand and provide work and relief for the impoverished through increased government spending and the institution of financial reforms. During a "bank holiday" that lasted five days, the
Emergency Banking Act was signed into law. It provided for a system of reopening sound banks under
Treasury supervision, with federal loans available if needed. The
Securities Act of 1933 comprehensively regulated the securities industry. This was followed by the
Securities Exchange Act of 1934, which created the
Securities and Exchange Commission. Although amended, key provisions of both acts are still in force. Federal insurance of
bank deposits was provided by the
FDIC and the
Glass–Steagall Act. The
Agricultural Adjustment Act provided incentives to cut farm production in order to raise farming prices. The
National Recovery Administration (NRA) made a number of sweeping changes to the American economy. It forced businesses to work with the government to set price codes through the NRA to fight
deflationary "cut-throat competition" by the setting of minimum prices and
wages, labor standards, and competitive conditions in all industries. It encouraged unions that would raise wages to increase the
purchasing power of the
working class. The NRA
was deemed unconstitutional by the
Supreme Court of the United States in 1935. workers constructing drainage culvert, 1933. Over 3 million unemployed young men were taken out of the cities and placed into 2,600+ work camps managed by the CCC. These reforms, together with several other relief and recovery measures, are called the
First New Deal. Economic stimulus was attempted through a new
alphabet soup of agencies set up in 1933 and 1934 and previously extant agencies such as the
Reconstruction Finance Corporation. By 1935, the "
Second New Deal" added
Social Security (which was later considerably extended through the
Fair Deal), a jobs program for the unemployed (the
Works Progress Administration, WPA) and, through the
National Labor Relations Board, a strong stimulus to the growth of labor unions. In 1929, federal expenditures constituted only 3% of the
GDP. The national debt as a proportion of GNP rose under Hoover from 20% to 40%. Roosevelt kept it at 40% until the war began, when it soared to 128%. By 1936, the main
economic indicators had regained the levels of the late 1920s, except for unemployment, which remained high at 11%, although this was considerably lower than the 25% unemployment rate seen in 1933. In the spring of 1937, American industrial production exceeded that of 1929 and remained level until June 1937. In June 1937, the Roosevelt administration cut spending and increased taxation in an attempt to balance the federal budget. The American economy then took a sharp downturn, lasting for 13 months through most of 1938. Industrial production fell almost 30% within a few months, and production of
durable goods fell even faster. Unemployment jumped from 14.3% in 1937 to 19.0% in 1938, rising from 5 million to more than 12 million in early 1938. Manufacturing output fell by 37% from the 1937 peak and was back to 1934 levels. employed 2–3 million at unskilled labor. Producers reduced their expenditures on durable goods, and inventories declined, but personal income was only 15% lower than it had been at the peak in 1937. As unemployment rose, consumers' expenditures declined, leading to further cutbacks in production. By May 1938 retail sales began to increase, employment improved, and industrial production turned up after June 1938. After the recovery from the recession of 1937–38, conservatives were able to form a bipartisan
conservative coalition to stop further expansion of the New Deal, and when unemployment dropped to 2% in the early 1940s, they abolished WPA, CCC and the PWA relief programs. Social Security remained in place. Between 1933 and 1939, federal expenditure tripled, and Roosevelt's critics charged that he was turning America into a
socialist state. The Great Depression was a main factor in the implementation of
social democracy and
planned economies in European countries after World War II (see
Marshall Plan).
Keynesianism generally remained the most influential economic school in the United States and in parts of Europe until the periods between the 1970s and the 1980s, when
Milton Friedman and other
neoliberal economists formulated and propagated the newly created theories of
neoliberalism and incorporated them into the
Chicago School of Economics as an alternative approach to the study of economics. Neoliberalism went on to challenge the dominance of the Keynesian school of Economics in the mainstream academia and policy-making in the United States, having reached its peak in popularity in the election of the presidency of
Ronald Reagan in the United States, and
Margaret Thatcher in the United Kingdom. ==Literature==