The severity of the 1929-32/33 super-crisis in a particular country can be measured by the decline in the country’s index of industrial production from peak to trough.
Figures compiled by the League of Nations — the forerunner of the United Nations — for the super-crisis years divide countries into seven groups according to each country’s decline in industrial production. The countries in group one experienced the least decline — less than 10 percent — equivalent to an “ordinary” recession. Those in group seven experienced between 60 and 70 percent declines from peak to trough — economic disaster.
Among the major imperialist countries, rising Japan, then rapidly expanding its share of the world market, was in group one, along with Greece and New Zealand. Britain was in group two, which experienced a 10 to 20 percent decline in industrial production. Germany was in the sixth group, which experienced 50 to 60 percent declines, a position it shared with Canada and Czechoslovakia, then the most industrialized country in Eastern Europe. The United States was in group seven—declines in industrial production from peak to trough of 60 to 70 percent, an “honor” shared only with Poland.
The extreme severity of the crisis in Germany is not surprising. Germany was the biggest loser in the war, stripped of all its colonies and a significant part of its European territories. In addition, due in part to the disastrous hyperinflation of 1923, the German credit system was highly dependent on money market conditions in the United States. When credit froze up, first because of the industrial and stock market boom of 1928-29, then the Smoot-Hawley tariff of 1930, and finally the massive U.S. banking and credit collapse of 1931-32, it is not surprising that effective demand, industrial production, and employment contracted with extreme violence in Germany.
But what about the United States? After all, the United States was the big winner — perhaps the only winner — in World War I. It had the largest gold reserves in the world. Yet its economy collapsed more than that of any other major imperialist power.
Indeed, the U.S. economic collapse didn’t have the disastrous political consequences that Germany’s slightly lesser economic collapse had. Germany had suffered the terrible effects of the blockade of 1914-1918, the shock of the lost war, the abortive revolution of 1918, and the hyperinflation of 1923. The super-crisis of 1929-32 was only the final blow that pushed Germany into the fascist nightmare of the Third Reich.
But this doesn’t change the fact that in a purely economic sense, the super-crisis of 1929-33 was more extreme in the United States than in any other large capitalist country in the world. Why was this? The reason lies in the extraordinary growth of the U.S. economy in the decades preceding the super-crisis.
A Critique of Crisis Theory 