(i) After the First World War, the U.S. economy became stronger. America followed the capitalist system of production in which maximum profit was made by the owners of industry.
(ii) Most of the workers, however, lived below the poverty line. Thus, not many people had the means to buy goods, which were being produced by the industries.
(iii) Overproduction and maldistribution of purchasing power were the two main causes of the Great Depression which hit U.S.A. in Oct. 1929 and then spread worldwide.
(iv) The crisis started with a fall in the share prices leading to a collapse of the U.S. stock market. In one day, nearly 16 million shares were sold on the New York stock exchange.
(v) During the next four years, almost 9000 banks closed operations and millions of people lost their life's savings.
(vi) Goods remained unsold and as a result thousands of factories shut down, resulting in unemployment, poverty and starvation.
(vii) Most of the European countries, except Soviet Union, also suffered as they had become dependent on the U.S. economy, especially on the American bank. The effects of the crisis in these countries were similar. The number of unemployed in the world rose to over 50 million, of which 15 million were in U.S. alone.
(viii) The economic crisis also affected the political conditions in countries. In U.S. the Democratic Party came to power with Franklin D. Roosevelt as President. He introduced a programme of economic reform and social welfare called New Deal.
(ix) In Britain and France, labour friendly governments came to power. Though fascist movements arose in Britain and France they I were not successful.
(x) In Germany and Italy post war discontent and Depression led to victories of fascist parties.
(xi) During the 1930s the foreign policies of U.S., Britain and France were also similar. They did not adopt a strong position against the fascists. Their main concern was to check the spread of socialist ideas and workers' movements. Thus when fascist aggression began, they did nothing to check it. Instead they chose to appease Fascism in the hope that it would destroy communism.
