Prof. Antony Davies: Was the Great Depression a Global Crisis? #shorts

The Great Depression was not a global crisis. Now, let me be careful about this. There was a global recession. It was felt differently in different places. In the United States, it was felt the worst. I would say the United States and Canada, Europe next, and China, India, Japan, much less so. Outside of the United States, it looked a lot more like a protracted recession rather than the Great Depression that we experienced here. This is another indication that the problem had to do with governmental policy. That is, the difference between the United States and Europe, largely speaking, was the governmental policies that we put in place in response to the stock market crash of 1929.

The policies in this country actually exacerbated the problem, turning what would otherwise be a recession into not only a depression, but a Great Depression.

How do we know this? We know this by looking at what happened. For example, in the United States, 1929 to 1933, the first four years of the Great Depression, the worst years of the Great Depression, the US economy shrank nine percent per year over those four to five years. That's a total of a 30% shrinkage. That's, in effect, erasing every economic gain this country had experienced from 1900 all the way up to 1929. All of that growth was erased in those first four years of the Great Depression. Now look at the UK, for example. During those same four years, the UK economy shrank not nine percent a year, but one percent per year. Switzerland's economy was pretty stagnant. It neither grew nor shrank over those years. Belgium, France, Italy, their economies actually grew. Not by much, but they did grow over those same four years. What's the difference? The difference was one of policy.

Now, there is an exception to all of this. The exception is Canada. Canada felt the Great Depression probably as much as the United States did. The massive unemployment, the sustained economic downturn, the magnitude of the economic downturn. But what's noteworthy here is that, not coincidentally, Canada was also the largest trading partner of the United States. That is, if there's any country that would feel most keenly the pain that was going on in the United States, it would've been Canada. Indeed, that's what the data seemed to indicate.
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