1. Two world wars engulfed the industrial nations, producing enormous costs in terms of labor, capital, and human suffering. The United States emerged from each conflict with its domestic capital intact and with an enhanced position relative to that of its economic rivals.
2. A communist government came to power in Russia. The Soviet Union engaged in a long rivalry, first with Germany and then with the United States that dominated worldwide big-power politics for most of the century.
3. The stock market boom of the late 1920s was based on widespread expectations that a new age of continuous prosperity had dawned. The great crash of 1929 dashed those hopes and ushered in a severe economic contraction.
4. The Great Depression of the 1930s was a cataclysm of unparalleled magnitude. The banking system collapsed, farm prices fell, and industrial production plummeted. At the lowest point, in 1933, one worker in four was unemployed.
5. As a result of the depression, the federal government took a much larger role in the economic life of the nation. Regulation of the private sector and expenditures for social welfare increased. In 1929, federal spending amounted to 3 percent of the gross national product (GNP); in 1947, it amounted to 15 percent.
6. The nation’s financial system was changed radically as a result of the depression. Deposit insurance was introduced, the payment of interest on deposits was prohibited, and the Securities and Exchange Commission was set up to regulate the stock market. The world’s monetary system, moreover, was radically altered. The gold standard disappeared, and at the end of World War II, a new exchange rate system was established in which the dollar was given the central role.
World History
