The ILO and the Economic Depression

In 1929 American prosperity, which had seemed to all to be on the way to becoming a permanent feature of national life, crumbled with disastrous international repercussions. During the first part of the year the prices of stocks had soared to fantastic levels, but in October the market broke and the wild rush to buy was replaced by an equally wild rush to sell. On Black Monday, 29 October, over 16 million shares were thrown on the market for what they could bring, and the value of prime securities tumbled like bogus gold shares. American loans to Europe ceased. Purchasing power dried up all over the world, and prices fell catastrophically. The European debtor countries were doubly hit. They could no longer borrow from America the dollars with which to pay their debts, and the commodities with which they might have paid them now possessed only a franction of their value before the Slump. In order to keep their own agriculture and industry alive and to maintain a favourable trade balance, these countries were driven to every kind of expedient in the form of tariffs, import restrictions and quotas, export subsidies and exchange restrictions, amounting in some cases to complete state control of foreign trade. Over the next three years the normal flow of commerce was almost completely interrupted. Unemployment leapt up everywhere. Half Europe was bankrupt and the other half threatened with bankruptcy. States withdrew into themselves, sceptical or uncertain as to the utility of internationalism.