How Sweden Overcame the Depression, 1930-1933

How Sweden Overcame the Depression, 1930-1933

How Sweden Overcame the Depression, 1930-1933

How Sweden Overcame the Depression, 1930-1933

Excerpt

The improvement in economic conditions that occurred in Sweden in 1933 and which gradually developed into a veritable boom has been the subject of extraordinarily lively discussion. This is partly to be attributed to the fact that at a fairly early stage the revival in Sweden became more intense than in most other countries, although that can hardly be the primary cause of Sweden's having attracted worldwide attention. What has mainly evoked such keen interest abroad in the course of developments in Sweden has rather been the fact that in many quarters it has been regarded as a result of a deliberate economic policy. The question of the possibility of moderating and mitigating the cyclical trade fluctuations has become one of greater urgency than ever before on account of the recent depression, and, therefore any attempt to pursue a deliberately planned economic policy is sure to arouse interest, especially when, as in the case of Sweden, it appears to have been a great success.

If we examine it closely, however, we shall find that the economic development in Sweden was a highly complex phenomenon, and that it is very difficult in this case to determine the relative significance of different contributory factors. It is, however, pretty generally recognized that the country's monetary policy played a very important part in combating the depression. The transition to a paper standard in September 1931 was, it is true, no more a voluntary step in Sweden than it was in England, but it made it possible to restrict the fall in prices. In Sweden the main principle governing the monetary policy was as far as possible to keep the price level stable as regards consumers' goods, or, as the programme was formulated somewhat later, to seek within certain limits to raise the wholesale price level, provided the cost of living was not too seriously affected thereby.

In its essentials this programme was actually put into operation. According to the Riksbank's index, the prices of consumers' goods underwent but slight fluctuations, and in December 1936 they were only about 1 per cent. above the figure for September 1931. Wholesale prices, on the other hand . . .

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