In This Article Expand or collapse the "in this article" section World Economy 1919-1939

  • Introduction
  • Global Overviews
  • The US Economy
  • The European Economy
  • Sovereign Debt and the Origins of the Great Depression
  • Unemployment
  • Economic Ideas

International Relations World Economy 1919-1939
Patricia Clavin
  • LAST REVIEWED: 11 July 2019
  • LAST MODIFIED: 15 January 2015
  • DOI: 10.1093/obo/9780199743292-0084


The “Great Depression” is a term that has come to describe the severe economic downturn that gripped the world economy after 1929. In Great Britain the collapse in the demand for goods, employment, and economic confidence was first called “the slump” because the British economy had been affected by an earlier Great Depression in the 1870s. Other European countries preferred the term “crisis.” Over time, however, the American term has come to dominate. In the worst-affected parts of the world, one in five of the adult population was unemployed, and estimates of US unemployment range from 15 million to almost 23 million. (Only Germany was more severely affected.) Although by 1934 some semblance of recovery had been achieved in a number of leading economies—the United States, Great Britain, and Germany—it was fragile. Other countries that remained on the gold standard, such as France, had yet to experience the worst of the downturn. The revival of the world economy was only completed by rearmament; without the expansion of state expenditure triggered by the World War Two, it is possible the world would have entered a new Great Depression after 1937. The Great Depression had a profound impact on international relations as moderate political parties lost out to extremist parties—especially in Germany and Japan—and countries adopted protectionist measures, which they believed to be in their national interest. By 1933, the world was divided into competing monetary and trading blocs that, in some cases, posed a grave threat to international peace. There are many parallels between the supercharged information-age economy of the 21st century and the history of the 1930s, both marked by currency crises, high unemployment, failing banks, and volatile financial markets. However, researchers also explore the Great Depression in its own historical context in order to understand why the economic downturn became so severe and had such far-reaching international consequences. They also examine how societies and states understood what was happening at the time and assess which social groups and regions of the world were most affected and why. Finally, it is important to understand how recovery was pursued, and whether it was achieved.

Global Overviews

To appreciate the wider context and character of the Great Depression, it is necessary to situate it in a wider context both within and beyond the period between World War One and World War Two. In the globalized world economy of the 20th century, as Findlay and O’Rourke 2007 shows, international trade relationships played a powerful role, and the breakdown of these relationships after 1929 proved critical in explaining why the world economy failed to recover. However, economists and historians have also highlighted the central role of international capital in oiling the wheels of global commerce and trade, and what happened after it dried up after 1929. This is convincingly suggested by the work of Eichengreen 2008 and Graff, et al. 2013 who offer a useful introduction to key concepts. Since the turn of the millennium, a new sensitivity emerged to the relationships that bind the world economy together, exemplified by the exploration of globalization by James 2001. A flourishing interest also appeared in the architecture of global governance and “world orders.” Clavin 2013 offers an archive-based account of transnational and institutional ties that developed between the wars to understand global economic variations and to combat the Great Depression. Aldcroft 1977 remains the best introduction to the impact of World War One which forms an important backdrop to global changes. A recent, detailed account is offered by Harrison and Broadberry 2005, with McElvaine 2004 offering a useful reference resource.

  • Aldcroft, Derek H. From Versailles to Wall Street, 1919–1929. London: Allen Lane, 1977.

    NNNAlthough dated in its treatment of the monetary aspects of the Depression, this remains an accessible and well-written introduction to the global economic and financial impacts of World War One for students who are new to the period and to economic concepts.

  • Clavin, Patricia. Securing the World Economy: The Reinvention of the League of Nations, 1920–1946. Oxford: Oxford University Press, 2013.

    DOI: 10.1093/acprof:oso/9780199577934.001.0001

    NNNThis text offers a helpful perspective on states’ economic and financial policies viewed through the lens of the world’s first multipurpose intergovernmental organization and on the role played by networks of economists and bureaucrats who sought to combat the economic nationalism that gripped the world economy in the interwar period.

  • Eichengreen, Barry. Globalizing Capital: A History of the International Monetary System. Princeton, NJ: Princeton University Press, 2008.

    NNNWritten by one of the world’s most renowned economists, this book explores the changing character of the international monetary system and its critical role in shaping the international economy. It helps readers understand why the ideology of the classical gold standard continued to be popular in the period after 1918, with catastrophic results. Readily accessible to students with a basic grasp of macroeconomic theory.

  • Findlay, Roland, and Kevin O’Rourke. Power and Plenty: Trade, War, and the World Economy in the Second Millennium. Princeton, NJ: Princeton University Press, 2007.

    NNNAn ambitious study of how international trade has shaped the modern world. Treatment in chapter 8 of the deglobalization of world trade between 1914 and 1939 affords an excellent overview of current scholarship, situated within the broader framework of the global economic history of the modern world.

  • Graff, Michael, Alan Kenwood, and Alan Lougheed. Growth of the International Economy, 1820–2015. 5th ed. London: Taylor and Francis, 2013.

    NNNNow in its fifth edition, this is widely recognized as the best introduction to the ways in which economic growth is diffused between nations. It is especially clear on the character and role played by international investment in facilitating the growth of the West and on the patterns of international trade.

  • Harrison, Mark, and Stephen Broadberry, eds. The Economics of World War I. Cambridge, UK: Cambridge University Press, 2005.

    NNNThe first systematic comparison of the wartime economic performance of Germany, Austria-Hungary, the Ottoman Empire, the Netherlands, France, Britain, Russia, Italy, and the United States. The book is primarily focused on exploring the degree to which economic development determined the outcome of the war (the answer is a great deal); however, it also teases out the effects of the war on development in the longer term.

  • James, Harold. The End of Globalization: Lessons from the Great Depression. Boston: Harvard University Press, 2001.

    NNNThis book offers a sobering perspective on the ways in which economic depression can unleash forces that cause the connections of the modern, globalized economy to break down through an incisive and commanding investigation of capital flows, trade, and migration.

  • McElvaine, Robert, ed. Encyclopedia of the Great Depression. 2 vols. New York: Macmillan Reference USA, 2004.

    NNNAn entry-level encyclopedia that is richly illustrated and addresses the cultural, social, and political dimensions of the crisis, as well as its more immediate economic and financial history. Although especially strong on the history of the US Depression, it also contains useful introductions to the history of the Great Depression around the world.

back to top

Users without a subscription are not able to see the full content on this page. Please subscribe or login.

How to Subscribe

Oxford Bibliographies Online is available by subscription and perpetual access to institutions. For more information or to contact an Oxford Sales Representative click here.