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 million—between 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 pattern—most

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, 1929–1935 195