The welfare state policies you cite were created in 1911 and found to be inadequate to deal with the market crash of '29. They were replaced by new welfare policies in 1931.
And these old welfare policies and new welfare policies saw to it that the British economy did not suffer as much during the Great Depression and had a faster recovery than the U.S. did.
The Great Depression is known in Britain as the Great Slump. It never reached Great Depression levels. British economic output saw a smaller decline than what the rest of the world experienced. Britain also did not see the unemployment that America saw. There was no nation-wide mass unemployment in Britain as there was in the U.S.
The U.S. had an estimated unemployment rate of just under 5% when the market crashed in 1929. It was around 25% by 1933 and did not return to pre-crash levels until 1942 or 1943. The unemployment insurance plan that had been enacted in Britain in 1911 was inadequate because benefits were based on contributions rather than actual economic need. This system was replaced in 1931 with a plan that paid benefits based on need and the British economy began a steady recovery by the end of 1933. The U.S. economy began a modest recovery by the end of 1933, but the recovery stalled in 1934 and 1935 and by the end of 1937 we had another stock market crash and a recession that sent unemployment souring back to Great Depression levels.
http://en.wikipedia.org/wiki/File:International_depression.png
Also Great Britain did not see the massive decline in per capita income that the U.S. had during the Great Depression period.
Britain was already suffering from a depression that began in 1918 and was exacerbated by the market crash of '29,
Britain never saw U.S. type economic prosperity, i.e., the economic bubble, during the 1920s because World War I had devastated Britain’s export-based economy. But Britain didn’t have an economic depression in the 1920s either because domestic industries (mainly automobiles) managed to compensate for the loss of export industries (coal, steel, textiles).
Also, the prosperity of the 1920s was very uneven in the U.S. American farmers were having a hard time throughout the 1920s because they wouldn’t cut production to increase prices- trying instead to grow as much as they could to pay off the debts they took on trying to feed Europe during World War I. And overall U.S. unemployment rates for the 1920s were higher than they were before the market crashed in 1929.
It was the Treaty of Versailles that crippled Germany after WWI, not the welfare state.
No it was not the Treaty of Versailles. The war reparations that were imposed on Germany were no more severe than what the Germans had imposed on the Russians a year before the armistice of 1918. These reparations were not more than the German economy could handle. In June of 1929- months before the Great Depression began- the Young Plan was announced whereby Germany’s reparations payments are reduced by about 90% and payments were to be made at 5.5% interest paid over a 58 1/2 year period. And then when the Depression began President Hoover imposed a one year moratorium on reparations payments.
The NSDAP was promising to disregard the Treaty of Versailles, to repatriate lost land for the Reich, and ignore the financial obligations of reparations. They also promised to continue, and expand, the cradle to grave welfare state, a task that could only be accomplished if the German people were able to get out of their treaty obligations.
All of which I am well aware of. I am also aware that Germany had an unemployment rate of over 40% by 1932.
Do you realize what you are doing? On the one hand you claim that Britain’s modest welfare system didn’t help that country avoid the Great Depression, but then on the other hand you argue that Germany’s more extensive welfare system didn’t exacerbate the Great Depression. Make up your mind.
That's precisely what I said earlier. That money was supposed to be backed by gold but the Federal Reserve printed money in such quantities that the gold reserves were inadequate to cover the notes. It was the crash that popped the Fed's bubble and set off the run on the banks, causing many of them to collapse, and resulted in the US abandoning the gold standard in favor of fiat currency.
I am not talking about printed money. I am talking about money that is represented by debt. If person A borrows money from a bank and then pays person B for a good or service, person B can deposit that money in the bank which will then loan it to person C thus increasing the money supply but only in bookkeeping records.
Also, the stock market crash came in 1929. The U.S. did not abandon the gold standard until 1933 on President Roosevelt’s orders- not the FED’s.
