How Did the Great Depression Lead to WW2

World War Two was a global war in the first half of the twentieth century. It proved the Latin adage Homo Homini Lupus – ‘Man is wolf to man’. The war caused unbridled suffering, claiming the lives of 70 million to 85 million people with around 50-56 million caused by the war, with a further 19-28 million deaths from secondary effects (famine and war-related disease). It brought along advancements in weaponry, logistical support, communications and intelligence and medicine. It was directly caused by economic reasons: the search for Capital, Land and Labour. This in turn was caused by the rise of fascism in Europe, aided by the economic downturn caused by the Great Depression in 1929. So this is “How did the Great Depression lead to WW2” essay in which we will analyse the most important economic issues that les to the global war. 

The Great Depression was a result of the biggest market crash, and it made wall-street panic a lot. Many of the investors wiped out of the market. The effect lasted long for 10 years and it is also known as biggest economic downturn. During the Great Depression banks had an excess of long term loans and these could not be liquidated. The banks wiped out of market as the investors demanded their deposits in the form of cash and banks were unable to provide that, making investors lose their confidence on banks. Seeing the worsening conditions of bank, the government tried providing help to the banks. The great depression lead to a huge rate of unemployment. After the effects of great depression, the government decided to reform financial system by creating FDIC (Federal Deposit Insurance Corporation) and SEC (Securities and Exchange Commission). These were formed to regulate the stock market and also prevent the interest of the investors, and avoid the abuses that lead to the great depression.

A major factor that caused the war was the 1929 ‘Great Depression’ which directly caused the rise of fascism in Europe, which consequently resulted in an attempt at self-sufficiency. The Great Depression was a massive worldwide economic depression that, despite starting in 1929, lasted well into the late 1930s. Between 1929 and 1932, worldwide gross domestic product (The total amount of goods or service produced) fell by 15%. This had wide ranging consequences – personal income (an individuals total earnings), tax revenue, profits and prices fell drastically, while international trade was cut by over 50%. This hit all belligerents of the forthcoming war hard. In Germany, the Wall Street Crash caused banks that had loaned Germany money to finance its increasing domestic debt (Under the Dawes Plan and Young Plan) were recalled, which caused a financial crisis in the country. This caused the collapse of several financial institutions such as the Credit Anstalt in Vienna in May 1931. This in turn caused consumer confidence to plummet – an integral part of investment and consumption – which caused investors to withdraw their money from the Reichsbank. Around 840 million marks were withdraw in 16 days. Similarly in the United Kingdom, investors across the world started withdrawing their gold from London (which had served as a safety net to store money due to the relaxed financial regulations) at a rate of £2.5 Million a day. In the ‘northern powerhouse’ the effects were even more catastrophic – demand for products collapsed, causing unemployment to 2.5x from 1 million to 2.5 million by the end of 1930. In some northern towns, unemployment was as high as 70%. Moreover, in the United States, bank failures occurred throughout 1930, as banks had no money to give to the thousands of depositors wanting to withdraw their investments. As a result of this, deflation occurred, which caused unemployment. This was in complete contrast to Japan. The Japanese finance Minister, Takahashi Korekiyo, quickly implemented economic policies such as devaluing the currency and increasing government spending. This minimised inflationary pressures, which caused the economy to shrink by only 8% between 1929-1931 (which was less than the 12.9% in the United States). This is important, as economic failure, almost universally, cultivates the rise of fringe parties through social discontent. This is perfectly exemplified as in this case, German unemployment hit 30% in 1932 which doubled support for the NSDAP party from 15% in 1930 to 35% in 1932. This suggests that the great depression lead to the second world war, but had a limited impact on the outcome of the war.

On the other hand, it could be argued that economics was simply a supporting factor, with the main cause of the war being a simplistic battle between the “good” allies and the “evil” axis powers. This theory fits with the notion of “just war theory”, which posits that a war may be justified if atrocities or other outcomes occur, and war is needed to stop it. In Nazi Germany, Jews, ethnic minorities, homosexuals, gypsies and “habitual criminals” were rounded up and sent to concentration camps, where over 11 million died by 1945. But we can deny the huge influence of the Great Depression as one of the main causes of WW2.