Russian Revolution, Great Depression and the New Deal
The February Revolution of 1917
The situation of Russia in World War I (WWI) created the conditions for a revolutionary explosion. Neither the economy nor the Russian political and military organizations were ready for a war so long, hard, and costly. Consequently, military disasters ensued. The mobilization of millions of farmers led to a decline in agricultural production; famine appeared in the cities and spread unrest among workers and peasants, which discredited Tsar Nicholas II and his government. The population was demoralized and began to organize themselves into soviets (councils of workers, peasants, and soldiers), who demanded the withdrawal of the Tsar and the end of autocracy.
The October Revolution and Bolshevik Rise
The slow pace of land reform and the maintenance of Russia in the war led to increased popular discontent and the growing influence of the Bolsheviks, who wanted to overthrow the provisional government and establish socialism. On October 25, the Soviets rose up, seized power, and deposed the provisional government. Lenin formed a workers' government. The first revolutionary measures were implemented: land was expropriated to be handed out to the peasants, and factories were placed under the control of workers' committees.
The 1929 Stock Market Crash and Great Depression
Many shareholders were aware that stock prices were much higher than their real value and could not continue to rise indefinitely. Mistrust spread among investors, and on October 24, 1929 (Black Thursday), a massive wave of selling affected the New York Stock Exchange, triggering the Stock Market Crash of 1929. Many investors were ruined, and panic spread among citizens who rushed to banks to withdraw their money. Banks were forced to close due to a lack of funds. Within a few years, the crisis spread to industry, commerce, and agriculture, causing a widespread economic recession known as the Great Depression.
Combating the Crisis: The New Deal
In 1932, during one of the worst years of the Great Depression, Franklin D. Roosevelt won the presidential election. He proposed a new program to promote economic recovery called the New Deal, which advocated state intervention to revive the economy. To halt the fall in prices and boost business activity, the New Deal proposed a series of economic measures:
- Assistance to enterprises
- Creation of public enterprises
- Destruction of agricultural stocks to stabilize prices
- State control over banks, forcing them to provide low-interest loans
These economic reforms were accompanied by a set of social reforms, a major public works agenda, a policy of support for agricultural prices, and rising wages. All these measures caused a revival of the U.S. economy and a significant decrease in unemployment, but the crisis was not fully overcome until the outbreak of World War II (WWII).