The Great Depression: Economic Collapse and Social Impact

From Market Crisis to the Great Depression

The stock market crash forced banks to attempt to restore stability. While some credits were granted, banks struggled to survive, and many companies saw their possibilities wiped out as they were forced into the suspension of payments.

This crisis severely impacted business investment. The overproduction that began in 1929 triggered falling prices and reduced demand, which particularly devastated the agricultural sector and led to widespread banking bankruptcies.

Social Consequences of the Depression

The Working Class

Workers in industry and services were primary victims of the crisis. They faced lower wages, reduced working hours, and mass unemployment. Without social security coverage, the lack of job security led to increased social confrontations, despite the temporary relief provided by falling prices.

The Agricultural Sector

Farmers were plagued by falling prices, leading many to ruin. Consequently, many migrated to cities in search of work.

The Middle Class

Annuitants were devastated by the loss of currency value. Small and medium entrepreneurs faced bankruptcy and declining sales, forcing them to reduce staff and abandon traditional values.

Deflationary Policies

At the beginning of the crisis, governments relied on classic liberal recipes known as deflationary policies. The goal was to let the market economy correct itself by reducing state costs and taxes, and by lowering prices to maintain currency value in the international market. The results were disastrous, leading to salary reductions, increased unemployment, and a collapse in production.

Autarky

Autarky was the economic model adopted by totalitarian systems in Italy, Germany, and the USSR. It consisted of minimizing dependence on external markets by controlling imports and focusing only on the most indispensable goods. The state aimed for total self-sufficiency by stimulating agricultural production, organizing the exploitation of metals, and developing domestic products to replace imports. This autarkic policy required strict social control and authoritarian governance.