The World Economy between the World Wars

The World Economy between the World Wars

The World Economy between the World Wars

The World Economy between the World Wars


The European Economy between the Wars, (OUP, 1997) has become the definitive economic history of Europe in the inter-war period. Placing the Great Depression of 1929-33 and the associated financial crisis at the center of the narrative, the authors comprehensively examined the lead-up to and consequences of the depression and recovery. Peter Temin and Gianni Toniolo (their former co-author, Charles H. Feinstein, has died) now expand their scope to include the entire world economy, and have created a new edition: The World Economy between the Wars. New material focuses on the structure of the world economy in the 1920s, including a special focus on the United States, Japan, and Latin America. In addition, chapters that discuss the post-depression recovery now cover The New Deal and recovery in general in the United States and Japan. This new edition is a necessary update, and invaluable resource for those who desire an overview of the inter-war area beyond the usual discussionof the 1929 stock market crash. The book's broad geographic coverage, as well as its clarity and chronological execution, will appeal to students of economic history, as well as those academics in other fields whose research involves the inter-war period.


When this crisis is looked back upon by the economic historian of the future it
will be seen to mark one of the major turning-points [of history].

— John Maynard Keynes, “An Economic Analysis of Unemployment”

Chaos, crisis, and catastrophe are terms that feature prominently in the economic history of the interwar world economy. They are applied to price and money supplies, foreign-exchange rates, gold and capital movements, banking systems, external trade, and, worst of all, mass unemployment. Early in the period there were several spectacular episodes of hyperinflation in central and eastern Europe, and many other countries suffered severe though less drastic inflation and corresponding depreciation of the external value of their currencies.

There was a short-lived postwar boom followed by a slump, and a number of countries experienced serious banking crises in 1920–1921. These inflationary and financial problems were a direct consequence of the First World War. So too was the colossal burden of inter-allied debts, as were the attempts of the allies, particularly France, to extract huge sums in reparations from Germany. The struggle to cope with these enormous obligations was one of the critical factors in the financial instability of the 1920s.

A further aspect of great significance was the widespread belief in financial and political circles that it was essential to return to the prewar gold standard if the growth and prosperity of the pre-1914 era was to be reestablished, regardless of the sacrifices their countries would have to make in order to force down wages and prices so that the prewar value of the currency could be restored. The attempt to achieve this reconstruction of the gold standard dominated the financial policies of many nations.

An apparent measure of progress was achieved by the mid-1920s, and confidence and production revived. Improved economic understanding among the major European powers was reflected in the acceptance in 1924 of the Dawes Plan for the future payment of reparations. A new measure of political agreement was achieved with the ending of the French occupation of the Ruhr and the signing of the Locarno Pact. A brief interlude of relative stability and economic growth followed but could not be sustained. In the mid-1920s, agricultural . . .

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