Without WWI, is there actually going to be a Great Depression?

Futurist

Ad Honoris
May 2014
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SoCal
Without WWI, is there actually going to be a Great Depression? Also, if so, would it have occurred at the same time as in real life or at some other time--and if so, when?
 

Chlodio

Forum Staff
Aug 2016
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I think any links between WW1 and the stock market crash are tenuous at best. The crash of '29 was the inevitable end to a market bubble, but I doubt that bubble had anything to do with WW1. Up until the Crash of '29 market panics had occurred at fairly regular intervals every twenty years or so. There had been panics in the 1830s, 1850s, 1870s, 1890s, and in the early 1900s. A crash in '29 was right on schedule.
 
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pugsville

Ad Honorem
Oct 2010
9,504
I think there are some large factors that played into the great depression from WW1,

rapid US industrialization leading to over investment of US industrial plant) ,
decline of European Economies, (this leading to lack of competition for US )
flow of cash (rather than two way trade) caused by war debt payments,

leading to large US tariffs to try and persevere the WW1 trade dominance, and insistence iof payments of ww1 debts. bUt the high tariffs meant other countries could not earn US dollars to pay the debts,

All this feeds into over heating the US economy.

IF US industry and developed gradually during peace rather than rapid wartime expansion, and the world trade had been constant rather than the interruption of the war, and US industry has developed constantly against European competition and the war debts had not constantly pumped unearned money into the US economy , the great Depression might have been much less. (I agree that there was/is a boom bust cycle)

Howwver this is all just my opinion.
 
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stevev

Ad Honorem
Apr 2017
3,525
Las Vegas, NV USA
The Panic of 1907 in the US was severe and led to significant job losses over a 4 year period. Massive bank failures caused the financial titan JP Morgan to loan banks money to alleviate the crisis. The government which relied on tariffs and liquor taxes was in no position to help. The panic lead to the eventual creation of a Central Bank which had not existed in the US since 1836. While the effects were mostly felt in the US it did affect foreign markets. Clearly this was not related to WW1.

Panic of 1907 - Wikipedia

The Great Depression of the 1930's has been blamed on the Smoot Hawley tariff passed by the US Congress in 1930. This led to retaliatory tariffs that seriously affected markets. Market economies normally have periods of recession and even depressions but the Great Depression was unprecedented. The increase in world trade and economic interdependence was going to happen with or without WWI. Perhaps the excesses of the 1920's made it come sooner but the failure to understand how a world economy works made the Great Depression inevitable IMO.
 
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Futurist

Ad Honoris
May 2014
21,877
SoCal
The Panic of 1907 in the US was severe and led to significant job losses over a 4 year period. Massive bank failures caused the financial titan JP Morgan to loan banks money to alleviate the crisis. The government which relied on tariffs and liquor taxes was in no position to help. The panic lead to the eventual creation of a Central Bank which had not existed in the US since 1836. While the effects were mostly felt in the US it did affect foreign markets. Clearly this was not related to WW1.

Panic of 1907 - Wikipedia

The Great Depression of the 1930's has been blamed on the Smoot Hawley tariff passed by the US Congress in 1930. This led to retaliatory tariffs that seriously affected markets. Market economies normally have periods of recession and even depressions but the Great Depression was unprecedented. The increase in world trade and economic interdependence was going to happen with or without WWI. Perhaps the excesses of the 1920's made it come sooner but the failure to understand how a world economy works made the Great Depression inevitable IMO.
Makes one wonder if the Smoot-Hawley Tariff would have still been passed if Democrats rather than Republicans would have been in charge of the US in 1930. (This is actually very possible if Hughes wins in 1916, takes the US into WWI, and then the Democrats win in 1920 as a result of backlash over US involvement in WWI--with the Democrats subsequently winning in both 1924 and 1928 as well due to the good condition of the US economy.)
 
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Mar 2019
1,837
Kansas
Makes one wonder if the Smoot-Hawley Tariff would have still been passed if Democrats rather than Republicans would have been in charge of the US in 1930. (This is actually very possible if Hughes wins in 1916, takes the US into WWI, and then the Democrats win in 1920 as a result of backlash over US involvement in WWI--with the Democrats subsequently winning in both 1924 and 1928 as well due to the good condition of the US economy.)
I think what you are overlooking is the inherent weakness in the banking and financial industry at the time. Manufacturing was not the root cause of the depression. Very similar to the recent Global Financial Crisis.
 

Chlodio

Forum Staff
Aug 2016
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Makes one wonder if the Smoot-Hawley Tariff would have still been passed if Democrats rather than Republicans would have been in charge of the US in 1930. (This is actually very possible if Hughes wins in 1916, takes the US into WWI, and then the Democrats win in 1920 as a result of backlash over US involvement in WWI--with the Democrats subsequently winning in both 1924 and 1928 as well due to the good condition of the US economy.)
The Democrats were an incredibly weak party prior to 1932. They were still recovering from the Civil War. Wilson only won in 1912 because the Republicans split between Roosevelt and Taft. Wilson in 1916 had the advantage of incumbency. Republican wins in 1920, '24, and '28 were a return to normal. The Republicans would have won in '32 also except for the Depression. It's true that Democrats still didn't like tariffs, but remember, FDR didn't end the Depression either. WW2 did. The Depression started before Smoot-Hawley. Smoot-Hawley only made it worse, but no one really had a solution.
 
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stevev

Ad Honorem
Apr 2017
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. The Depression started before Smoot-Hawley. Smoot-Hawley only made it worse, but no one really had a solution.
The Dow Jones Industrial Average (DJIA) was rising during most of the first half of 1930. This looked like a sharp V shaped recession. After the Smoot Hawley tariff , there was a slow steady decline until 1933 when it hit bottom. The DJIA lost nearly 90% of its peak value in 1929.
 

Futurist

Ad Honoris
May 2014
21,877
SoCal
The Democrats were an incredibly weak party prior to 1932. They were still recovering from the Civil War. Wilson only won in 1912 because the Republicans split between Roosevelt and Taft. Wilson in 1916 had the advantage of incumbency. Republican wins in 1920, '24, and '28 were a return to normal. The Republicans would have won in '32 also except for the Depression. It's true that Democrats still didn't like tariffs, but remember, FDR didn't end the Depression either. WW2 did. The Depression started before Smoot-Hawley. Smoot-Hawley only made it worse, but no one really had a solution.
The Dems were able to quickly become a powerful party after 1932 in real life, though. Had Hughes won in 1916, the effects of WWI could have resulted in Democrats gaining significant strength a decade earlier than in real life.
 

Chlodio

Forum Staff
Aug 2016
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The Dems were able to quickly become a powerful party after 1932 in real life, though. Had Hughes won in 1916, the effects of WWI could have resulted in Democrats gaining significant strength a decade earlier than in real life.
I don't think the Dems would have recovered completely on their own. They benefited greatly from the Crash of '29 which exposed the fallacy of Republican laissez-faire economics. Democratic success after '29 depended greatly on convincing several traditionally Republican constituencies to switch parties, including blacks, women, and labor. I don't think these groups would have left the GOP without the Depression.