what it had been in 1930.

Of all the manifestations of the Great Depression, however,

unemployment was the most grievous and the one which most clearly left its mark on the whole
era. In this respect, France was the least seriously affected; the number of those out of work
never rose above 850,000. But here, as in Italy and in the agricultural nations in general, there
was much semiemployment and concealed unemployment in the countryside. In Britain, the
jobless numbered nearly three millionbetween a fifth and a quarter of the whole labor force. In
Germany, unemployment mounted to the horrifying total of six million; trade-union executives
estimated that more than two-fifths of their members were out of work entirely and another fifth
employed only part time (see Figure 8.1). With roughly half the population in desperation and
want, it was no wonder that the Germans turned to the extremist leadership that they had so
narrowly avoided in the crisis of 1923.
Social unrest never reached such grave proportions elsewhere, but throughout Europe
governments and peoples felt themselves on the edge of a precipice, as the turbulent and
questioning mood of the immediate postwar years returned with redoubled intensity. What could
be done to reverse this economic calamity? Economic experts proposed two contrasting and
mutually exclusive solutions: one deflationary, the other inflationary. Those favoring deflation
(generally on the political Right) argued that in a contracting economy, the government should
live within its means by ruthlessly cutting expenditures. As incomes declined and tax revenues
fell proportionally, governments should simply spend less. The danger of this strategy, however,
was that the depression would become permanent. If government employees lost their jobs, if
millions of other workers received nothing in unemployment compensation, then prices could fall
without spurring an economic revival. The inflationary alternative required governments to
borrow money. Only increased government spending, argued its advocates, could lift a coun
try out of depression, since consumer purchasing power had effectively vanished. Here the
danger was that increased money in circulation might cause prices to rise in turn, threatening
the value of the currency,
Despite this danger, most European states opted in the end for inflation. Pressed by
events, they reluctantly resorted to all sorts of measures of which the conservatives had initially
disapproved. These measures came to follow a common patternmost
6,000,000
5,000,000
4,000,000 /- \ 3,000,000 / 2,000,000 Z N FIGURE 8.1 German unemployment
statistics from the onset of the Great Depression to the eve of the Second 1,000,000 - World War.
Note that the peak level
began to fall before Hitler assumed i i power in 1933; the continued decline 1932 1935 during the late 1930s was
largely due Year to Hitler's rearmament policy.

The Great Depression, 19291935 195