The Great Depression (1929–39) affected nations differently.  By 1933, industrial output had plunged 30–50% in many countries, and unemployment soared into double-digits (Romer 2003).  Yet the timing and strength of recovery varied dramatically.  For example, Sweden and the United Kingdom were largely back to or above 1929 output levels by the mid‑1930s, whereas the United States and France lagged, and Germany’s rebound was tied to its rearmament policies.  This article examines case studies of the United States, the United Kingdom, Germany, France, and Sweden, analyzing how policy choices – abandoning the gold standardGold Standard Full Description:The Gold Standard was the prevailing international financial architecture prior to the crisis. It required nations to hold gold reserves equivalent to the currency in circulation. While intended to provide stability and trust in trade, it acted as a “golden fetter” during the downturn. Critical Perspective:By tying the hands of policymakers, the Gold Standard turned a recession into a depression. It forced governments to implement austerity measures—cutting spending and raising interest rates—to protect their gold reserves, rather than helping the unemployed. It prioritized the assets of the wealthy creditors over the livelihoods of the working class, transmitting economic shockwaves globally as nations simultaneously contracted their money supplies., fiscal and monetary stimulus, and political upheavals – influenced the speed of recovery.  Key economic indicators (GDP/output, unemployment, trade) are compared, and insights from economic historians (Eichengreen, Temin, Romer, and others) are highlighted.

The Great Depression: A Varied Landscape

The Depression began in 1929, but its depth and duration differed by country (Romer 2003; Jonung 1981).  In the U.S., industrial production fell by nearly half (–47%) and real GDP by about 30% between 1929 and 1933 , and unemployment peaked above 20% .  Germany also experienced catastrophic job losses; between 1930–33 its average unemployment rate was roughly 34%, higher than the U.S. rate of ~28% in the same period .  Even so, these were not the worst affected nations worldwide (some small countries and farmers were hit harder).  Economists emphasize that the gold standard amplified the slump: fixed exchange rates transmitted deflationDeflation Full Description:Deflation is the opposite of inflation and is often far more destructive in a depression. As demand collapses, prices fall. To maintain profit margins, businesses cut wages or fire workers, which further reduces demand, causing prices to fall even further. Critical Perspective:Deflation redistributes wealth from debtors (the working class, farmers, and small businesses) to creditors (banks and bondholders). Because the amount of money owed remains fixed while wages and prices drop, the “real” burden of debt becomes insurmountable. This dynamic trapped millions in poverty and led to the mass foreclosure of homes and farms. and banking panics across borders (Eichengreen 1992; Romer 2003).  As long as most countries remained on gold, they were constrained from loosening monetary or fiscal policy (Eichengreen 2008).  In effect, the Depression’s origin in the U.S. spread through a fragile international financial system, producing asynchronous troughs around 1932–33 in many economies (Romer 2003).

By contrast, Japan and Scandinavia were less severe, and Latin America largely recovered sooner (many left gold or undertook early devaluations).  Table 1 illustrates roughly when the downturn ended in each country and how far output had fallen.  For example, Sweden’s economy fell only about 10% from 1929 to its trough in 1932, whereas the U.S. lost roughly one-third .  Because of these differences, Sweden’s recovery outpaced America’s: by 1934 Sweden had regained its 1929 output level, whereas the U.S. would not do so until the eve of World War II .  Similarly, Britain’s exit from gold in 1931 enabled it to recover faster than France, which clung to gold until 1936 (Eichengreen 1992; Crafts 2013).  Table 1 (below) summarizes these patterns qualitatively:

United States – Sharp slump (–30% GDP, –47% industry). Recovery began in 1933; real GNP then grew ~8%/yr (1933–37) and ~10%/yr (1938–41) , though output did not reach 1929 levels until the late 1930s. New Deal policies (bank holidays, financial reform, public works) helped restore confidence, but Romer (1992) argues the key spur was monetary expansion (gold inflows, looser Fed policy) . Unemployment peaked above 25%, and remained in double digits through the 1930s. United Kingdom – Moderate slump (~–20% output). Left gold in Sept 1931, sharply devaluing sterling. This prompted a quick turnaround: real GDP had fallen only ~7% by Sep 1931 and then began to recover . From 1932 on Britain grew strongly (average ~3.6%/yr GDP growth, 1932–38) . Deflation was ended (“cheap money” policy, Ottawa trade agreements) and the unemployment rate, which had been ~20–22%, fell below 10% by 1937. Britain’s early devaluation and coordinated policy change are widely credited with driving its robust recovery (Crafts 2013; Lennard and Paker 2024). Germany – Deep early slump; by 1932 average unemployment ~34% . Germany left the gold-exchange standard in summer 1931 (before the Nazis took full power). Industrial output fell steeply, but after Hitler’s 1933 takeover a massive fiscal stimulus (rearmament, public works like autobahns) and cred expansion produced very rapid growth. Unemployment plunged from ~30% in 1933 to under 5% by 1936. Historians debate how much this was due to Nazi policy versus the global upturn: Temin (1989) noted that conscription and reduced labor supply account for part of the decline, while others point to the effect of huge deficit spending. In any case, by the late 1930s Germany’s output was well above its 1929 level. France – Relatively mild initial shock. France had little unemployment in 1929–30 (still recovering from WWI manpower losses) and production fell only moderately.  But the government was committed to sound money and kept the franc overvalued and on gold. Strict fiscal austerity and deflationary policy were maintained through 1934.  Output and prices stagnated, and unemployment crept into the mid-teens. It was only with the Popular Front government of 1936 that France devalued (~30%), cut hours and introduced public spending.  These late measures produced a modest rebound in 1937–38.  In short, France’s recovery was much slower: it saw near-recession output until mid‑1930s, and only by WWII did French GDP approach or exceed its 1929 level. Eichengreen (1992) points out that France’s decision to remain on gold throughout the early Depression effectively locked it into deflation and delayed recovery. Sweden – Smaller open economy, hit by collapse in exports (about 20% of GDP). Left gold in August 1931, devaluing the krona. Industrial production fell about –21% in 1929–32 (versus –47% in the U.S.), and unemployment peaked around 23% in 1933 . Crucially, Sweden then adopted countercyclical policies: the central bank stabilized prices (no deflation after 1931) and in 1933 the government began running small deficits and public works (Myrdal-inspired policy). The recovery started in 1933, and by 1934 Swedish real income exceeded its 1929 level . By 1937, Sweden’s GDP was about 20% above the U.S. level in real terms . Compared to the U.S., which had not regained 1929 output by 1937, Sweden’s economy grew faster after 1933. This was due partly to leaving gold (stabilizing prices) and partly to pragmatic fiscal policy (countercyclical spending, as emphasized by Jonung 1981).

In sum, timing of recovery varied: Britain and Sweden (left gold in 1931) were among the first to rebound in 1932–34.  The U.S. recovery began in 1933 (after Roosevelt took office and devalued the dollar), but was initially slower in percentage terms due to a deeper fall. Germany’s turnaround accelerated under the Nazis by 1934–36. France, late to abandon gold (1936), did not recover until the late 1930s. These patterns suggest a correlation: early departure from gold often coincided with earlier recoveries (a point made by Eichengreen and others). We analyze this and other factors below.

United States: New Deal and Monetary Expansion

The U.S. economy entered freefall in late 1929.  By early 1933 industrial production had collapsed 47% and GDP fallen 30% . Unemployment topped out at over 20% .  The Hoover administration had limited success: banking panics were only partly contained by deposit insurance experiments and Federal Reserve action.  The turning point came in early 1933, after Roosevelt’s inauguration.  Key policy changes included a national bank holiday, the Glass-Steagall ActGlass-Steagall Act Full Description:A key piece of banking legislation passed as part of the New Deal financial reforms. It separated commercial banking (taking deposits) from investment banking (speculating on the stock market), designed to prevent banks from gambling with ordinary people’s money. The Glass-Steagall Act was established to restore public confidence in the banking system. It built a firewall between the boring, necessary utility of storing money and the high-risk, high-reward world of Wall Street speculation. For decades, it prevented the kind of financial contagion that triggered the crash. Critical Perspective:The repeal of this act in the late 20th century (under neoliberal deregulation) is often cited as a major cause of the 2008 financial crisis. Its history illustrates the cyclical nature of regulation: a disaster forces the state to curb the excesses of finance, but over time, the financial lobby erodes those protections, leading inevitably to the next disaster.
Read more (bank reform), and most importantly abandoning the gold standard.  In April 1933 Roosevelt devalued the dollar: he raised the gold price from $20.67 to $35/oz and forbade private hoarding of gold.  This effectively flooded the economy with money (gold reserves swelled) and enabled the Federal Reserve to expand credit (Romer 1992).

Christina Romer’s seminal study finds that monetary policy drove the U.S. recovery: the surge in money supply from gold inflows and lower interest rates can account for most of the 1933–38 output growth .  Between 1933–1937 U.S. real GNP grew by about 8% per year on average, and 1938–1941 by over 10% .  Notably, these fast growth rates followed the sharp 1933 turning point. Romer (1992) emphasizes that fiscal stimulus was limited: New Deal spending certainly provided jobs and wages, but overall budget deficits were small (except in 1933–34), and some New Deal policies (e.g. higher taxes after 1936, WPA cuts) even slowed growth.  In fact, government historians and economists (e.g. Romer 1992; Parker 1997) argue that a large share of the rebound was self-sustaining once monetary policy eased. For example, consumer prices rose 25% from 1933 to 1937, reversing earlier deflation, which encouraged investment in durable goods and production . In other words, the collapse gave way to a classic business expansion once liquidity was ample.

The New DealThe New Deal Full Description:A comprehensive series of programs, public work projects, financial reforms, and regulations enacted by President Franklin D. Roosevelt. It represented a fundamental shift in the US government’s philosophy, moving from a passive observer to an active manager of the economy and social welfare. The New Deal was a response to the failure of the free market to self-correct. It created the modern welfare state through the “3 Rs”: Relief for the unemployed and poor, Recovery of the economy to normal levels, and Reform of the financial system to prevent a repeat depression. It introduced social security, labor rights, and massive infrastructure projects. Critical Perspective:From a critical historical standpoint, the New Deal was not a socialist revolution, but a project to save capitalism from itself. By providing a safety net and creating jobs, the state successfully defused the revolutionary potential of the starving working class. It acknowledged that capitalism could not survive without state intervention to mitigate its inherent brutality and instability.
Read more’s other innovations (SEC, Social Security, agricultural adjustment) had important social effects, but their macroeconomic impact is debated.  Some (Temin 1989) even argue New Deal fiscal policy did “little to recovery” and may have hurt by raising costs (e.g. the Agricultural Adjustment Act cut farm output).  Still, deficit spending on public works (WPA, PWA) did provide hundreds of thousands of jobs, and the Farm Credit Act helped stabilize rural incomes. Unemployment nonetheless remained in double digits (about 15–20%) from 1934 until the 1937–38 recession.  It was only the massive wartime mobilization that finally pushed American output above its 1929 peak and ended involuntary unemployment.

In summary, the U.S. recovery was gradual and mixed: after 1933 output growth was high in percentage terms, but because the collapse was so deep, full recovery lagged.  This partly reflects institutions – as Eichengreen (2008) notes, the U.S. too was constrained by the gold standard until 1933 (and even after, institutions like balanced‑budget sentiment limited stimulus).  Even so, by 1937 U.S. industrial production was only about 80% of 1929 levels .  Historians agree that leaving gold was “a very good idea” (per one commentator) – it allowed the Fed to inflate – but whether the New Deal itself materially shortened the Depression remains contentious (Romer 1992; Temin 1989).

United Kingdom: Cheap Money and Early Devaluation

Britain’s path was different. In 1925 the UK had re‑pegged the pound at its prewar gold parity (overvaluing sterling).  By 1929 its economy was already slowing.  After 1929, Britain suffered mild deflation and rising unemployment (about 22% by 1932).  Crucially, Britain left the gold standard in September 1931.  The pound instantly fell (about 25%), boosting export competitiveness.  Royal Commission on Gold and other studies highlight that this devaluation was Britain’s turning point.

Empirical evidence supports this: real GDP had fallen only 7% from Jan 1930 to Sept 1931, but then began to climb steadily .  In the year after abandoning gold, sterling imports became cheaper and exports increased, and inflation expectations turned positive.  As Lennard & Paker (2024) note, “Britain’s unexpected departure from gold … decisively benefited Britain’s economy and started its recovery” . By mid-1932 most of the initial decline had been made up.  Over 1932–38 Britain grew robustly; one estimate is 3.6% per year average GDP growth .

After leaving gold, the UK also adopted the “managed economy” approach. The Ottawa Agreements of 1932 created preferential imperial trade blocs, supporting exports.  Policymakers publicly targeted a modest rise in prices to end deflation (the “cheap money” policy): the Bank of England cut its discount rate from 6% to as low as 2% by mid-1932 , and the government ran small deficits.  These moves spurred private investment and employment. By 1936–37 unemployment had fallen to ~10%.  Industrial output and national income by then were roughly back to late-1920s levels.  In fact, some historians point out that among major nations, only the UK (and open economies like Sweden) surpassed its 1929 output by the late 1930s; the U.S. and France had not .

Thus Britain’s example shows the effect of early devaluation plus monetary easing.  Historians (Crafts 2013, Lennard & Paker 2024) concur that leaving gold was critical.  In effect, Britain’s recovery was driven by a change in regime: once policymakers dropped deflationary orthodoxy, even without massive fiscal spending, output rebounded.  (It is notable that fiscal policy was initially tight in Britain – the National Government balanced budgets in 1931–32 – yet recovery followed monetary loosening.)  Compared to the U.S., where Roosevelt took two more years to leave gold, Britain’s advance exit gave it a head start.

Germany: From Deflation to Rearmament

Germany was hit hard.  Under the Weimar Republic, output had already stalled by 1928 and a banking crisis in 1931 (triggered by Austria’s Creditanstalt) forced Germany off the gold standard in June 1931.  Industrial production fell sharply (over 40% from 1929 to 1932 according to some accounts), and by 1932 unemployment was catastrophic (~30% of the workforce, or 34% on average 1930–33 ).  The earlier government of Brüning pursued harsh deflationary policies (tight budgets and credit) to balance the currency; this deepened the slump.

The key change came in 1933, when Hitler became chancellor.  The Nazi regime immediately embarked on aggressive public spending: infrastructure (roads, bridges), the Four-Year Plan, and rapid rearmament.  Historians note that between 1933–36 Germany’s economy grew at rates rivaling America’s, and by 1936 the Great Depression’s unemployment was essentially eliminated.  Industrial output soared – by 1938 it was far above 1929 levels.  Peter Temin (1989) originally argued that this boom was partly illusory: much of the improvement was due to conscripting millions into the army (thus removing them from the labor force) and to systematic under-reporting of unemployment.  More recent work (Buchheim 2001; Hoffmann 1985) confirms that official Nazi figures masked stubborn joblessness until mid‑1930s.

Nonetheless, no serious scholar doubts that Germany’s recovery in the mid‑1930s was extraordinary.  The government ran large deficits through “Mefo bills” (off-budget debt instruments), financed by printing money.  Inflation (or reflation) returned.  Wages were controlled and directed into savings.  Economist Barry Eichengreen notes that like other gold‑abandoning countries, Germany freed its monetary policy in 1931 and gained competitiveness.  But in Germany’s case, fiscal policy played an outsized role, much more than in Britain or the U.S.  Hitler’s public works (e.g. Autobahns) provided immediate jobs, and by 1936 the economy was running at near full capacity on a war footing.

Of course, this recovery was not the same as others.  It rested on authoritarian political changes and a shift in national priorities.  Nevertheless, Germany’s case underscores that abandoning gold and pursuing aggressive counter‑deflationary policies can lift an economy – albeit via war-driven planning rather than consumer-driven growth.  In the context of comparison, Germany’s output by 1938 exceeded its 1929 level, but at the cost of militarization.

France: Deflation and Delay

France suffered a delayed and prolonged depression.  Unlike the UK or U.S., France’s economy did not collapse dramatically – output actually dipped only modestly (one estimate is a 10–12% drop by 1935) and unemployment never exceeded ~5% of the workforce.  This resilience was due to France’s post-WWI demographics (heavy war losses meant fewer young workers, keeping unemployment low) and a historically cautious financial system.

However, this “mild” initial downturn came with a price: the French currency remained grossly overvalued.  From 1928 until 1936, the franc was maintained at a high parity on gold.  Successive governments followed austerity: budgets were balanced, taxes high, and deflation was tolerated to defend the currency (Elie Cohen 2002).  The result was economic stagnation.  Industrial production and trade volumes barely budged in the early 1930s.  French farmers and businesses struggled with a strong franc.  As the Encyclopedia of France (Derrouet 2008) notes, “successive governments maintained restrictive policies until 1934” , underscoring that France treated the Depression as a budgetary “purge.”

Only in 1936, after political turmoil (the Stavisky crisis and riots) brought the Popular Front (Blum’s socialist–radical coalition) to power, did France abandon deflation.  The new government devalued the franc by about 30% and introduced a 40-hour week, wage hikes and limited public spending.  These measures yielded some recovery in 1937, but they were short-lived in the face of capital flight and the looming war.  By the late 1930s France’s GDP was slowly rising again, but still not much higher than before 1929.

In short, France’s strategy – hesitating on devaluation and staying on gold – meant its recovery only came once others had surged ahead.  Eichengreen (1992) uses France as a prime example of a “deficit country” on the gold standard that endured prolonged deflation.  It shows that steadfast commitment to the gold parity can delay recovery: France essentially missed the early 1930s rebound and only began growing after 1936.  Ironically, by 1939 some French economists concluded that this delay had given their economy a later industrial cycle that would persist into the war years, but the costs (high unemployment and unrest in 1933–36) were severe.

Sweden: Early Departure and Active Policy

Sweden offers a classic case of rapid recovery in a Depression.  In early 1930 Sweden, like other exporters, saw output and trade collapse; exports fell by half between 1929–32 , and unemployment rose to roughly 20–23% by 1933 .  However, two features set Sweden apart.  First, Sweden abandoned the gold standard in March 1931 (just after Britain), letting the krona devalue.  This immediately eased the collapse: after gold exit Swedish consumer prices stabilized (avoiding deep deflation) , and by 1933–34 exports and industrial production were rebounding.  Second, Swedish policymakers applied Keynesian ideas before Keynes: in 1933 they began deliberate countercyclical fiscal policy (deficit budgets, public works) and the central bank embarked on a price-stabilization program (following economist Knut Wicksell’s recommendations) .

The result was impressively quick recovery.  Jonung (1981) shows that by 1934 Swedish real income had surpassed its 1929 level (indeed, in 1937 Sweden’s per-capita real income was ~20% higher than in the U.S.) .  Industrial output and GDP growth were strong through the mid-1930s.  Inflation, which had been 6–8% in 1931, was fully reversed; by the mid-1930s prices were basically back to 1929 levels (Figure 2 in Jonung).  Unemployment, though high in 1932–33, fell rapidly as demand recovered (the Swedish labor force was relatively small, so employment measures are tricky).  Crucially, Sweden’s fiscal deficits remained moderate (never above 2–3% of GDP), but the combination of monetary ease (via devaluation and open-market buying) and expansionary budgets was enough to counter the export slump.

In many ways, Sweden exemplifies Eichengreen’s thesis: by leaving gold early, it regained the ability to print money and run deficits.  As Jonung stresses, Swedish economists (like Gunnar Myrdal) were influential in government, which helped coordinate policy.  Relative to the U.S., Sweden’s depression was shallower (–10% vs –30% drop in income) and shorter.  By 1935–36 Sweden’s economy had largely healed.  This contrasted strongly with France’s outcome; it supports the view that policy flexibility mattered.  In modern retrospectives, Sweden’s 1930s performance is often held up as a success of intervention: it left gold, stabilized prices, and applied Keynesian spending early (Jonung 1981; Winer 2000).

Comparative Factors in Recovery

What explains why some countries bounced back quickly and others did not?  Three broad factors emerge:

Abandoning the Gold Standard.  A widely agreed insight (from Eichengreen 1992, Temin 1989, Romer 2003, and others) is that countries on the gold standard were locked into deflation.  Once a country devalued or left gold, it gained monetary freedom.  In practice, nations that devalued earliest (Britain, Sweden, then the U.S.) saw faster recoveries.  For example, Lennard & Paker (2024) find that early leavers enjoyed higher industrial output and exports (building on Eichengreen & Sachs 1985) .  In Britain, leaving gold in Sept 1931 triggered an immediate rise in stock indices and output .  By contrast, France and the Netherlands (gold until 1936) experienced protracted downturns.  Eichengreen (1992, 2008) emphasizes that the gold standard acted as a powerful “fetter” on policy: nations left on gold could not cut interest rates or run deficits without risking a run on their currency . Thus timing of gold abandonment was a key differentiator. Monetary vs Fiscal Stimulus.  Even after leaving gold, governments could pursue monetary expansion (lower rates, credit) or fiscal stimulus (deficits, public works).  Studies suggest monetary factors dominated overall recovery.  Romer (1992) found that virtually all U.S. growth 1933–38 was due to monetary expansion (mainly via gold inflows) , not fiscal policy.  Eichengreen and Temin similarly argue that most countries owed their upturn to increased money supply.  Eichengreen’s analysis shows that after 1933 the “huge gold inflow” across countries expanded money stocks and lowered real rates .  By contrast, fiscal stimulus tended to be small until the late 1930s.  (France deliberately ran budget surpluses, Britain only modest deficits, and even the U.S. had balanced budgets after 1936.)  The one major exception was Germany, where Nazi rearmament created massive deficits.  On balance, modern historians believe that monetary ease was the common element – countries that could inflate generally recovered faster (Eichengreen 2008; Temin 1976). Political/Institutional Context.  Political changes affected recovery speed.  Britain and Sweden had stable democracies that nonetheless allowed technocratic policy shifts (Chancellor statements, coordinated actions) to end deflationary expectations.  France’s political fragmentation delayed coherent action (no devaluation until the Popular Front).  The most striking case is Germany: only an authoritarian regime could mobilize the economy through deficit spending on rearmament.  In that sense, autocracy hastened recovery in one country – but at the expense of aggressive military buildup.  In the U.S., Roosevelt’s political mandate (New Deal) allowed emergency banking actions and Keynesian experimentation.  In short, countries that were willing and able to shift away from orthodox policies (Britain, Sweden, later USA) recovered sooner.  Those clinging to old political orders (France, many smaller democracies) lagged behind. Global Trade and ProtectionismProtectionism Full Description:Protectionism involves the erection of trade barriers ostensibly to “protect” domestic industries from foreign competition. As the global economy contracted, nations panicked and raised tariffs to historically high levels in a desperate attempt to save local jobs. Critical Perspective:This created a “beggar-thy-neighbor” cycle of retaliation. When one dominant economy raised tariffs, others followed suit, causing international trade to grind to a halt. Instead of saving industries, it choked off markets for exports, deepening the crisis. It illustrates how the lack of international cooperation and the pursuit of narrow national interests can exacerbate a systemic global failure..  Finally, international trade patterns affected recovery.  The Depression saw a collapse in world trade (roughly a 50–60% fall by 1932).  Countries that left gold gained price competitiveness and boosted exports.  In Sweden and Britain, exports bottomed in 1932–33 and then grew with devalued currencies.  By contrast, the U.S. had high tariffs (Smoot-Hawley Act 1930) which slowed export growth.  Overall, Eichengreen & Sachs (1985) and others argue that a lost external market was a drag on many economies, so regaining export demand was critical.  (This partly explains why open economies like Sweden rebounded strongly.)  However, trade was a secondary factor compared to domestic monetary policy.

Key Indicators: Across these countries, by the mid-1930s the differences are clear.  In 1935 industrial output indices (peak=100 for 1929) were roughly: UK ~115, Sweden ~110, Germany ~95, USA ~79, France ~77 (these numbers come from Parker 2008 and Steindl 2008, as cited by modern sources).  Unemployment in Britain/Sweden had halved by 1937, whereas in the U.S. it remained around 15–18%.  Trade volumes rebounded earlier in countries off gold (Sweden’s export share climbed back to ~20% of GDP by 1935 , whereas France’s export sector remained depressed).

Insights from Economic Historians

Economic historians provide vital interpretation.  Barry Eichengreen (1992, 2008) emphasizes the international monetary system: the prewar-style gold standard was “a gold exchange standard” that forcibly deflated economies.  He famously coined “Golden Fetters” to describe how gold ties held output down.  In this view, abandoning gold was the turning point.  Eichengreen (1985) also showed that countries that devalued saw their manufacturing exports recover faster, fueling growth.  His later work (Hall of Mirrors, 2015) warns of parallels in modern recessions, but specifically praises 1930s policy shifts (leaving gold, stabilizing prices) for enabling expansion.

Peter Temin (1989, 1976) also agrees on money’s primacy.  He argued that the Fed’s mistakes (allowing money supply to shrink) were the main cause of the crash, and that recovery came only after monetary policy eased.  Temin was skeptical that New Deal fiscal programs had a large macro effect.  He notably pointed out that much of Germany’s recovery would have happened even without Hitler (due to global trade revival), and that the American New Deal alone did not achieve full recovery.  (Temin’s views provoke debate: Romer and Friedman–Schwartz differ on money’s role, but Temin’s focus on real versus nominal factors remains influential.)

Christina Romer (1992, 2003) provides detailed studies of the U.S. case.  In her 1992 JEH paper, she quantified how money (via gold inflows) explained almost all recovery.  She noted that once the Fed added liquidity, output growth was sustained until WWII.  More recent work by Romer (2003) summarizes the global picture: she explicitly states “the recovery from the Great Depression was spurred largely by the abandonment of the gold standard and the ensuing monetary expansion.” .  This echoes Eichengreen.

Others have nuanced these views.  For instance, Randall Parker and Frank Steindl (2008) compared output indices across countries, showing that in 1935 the UK and Sweden were already above 1929 levels, whereas the US and France were not.  Parker suggests this was less due to public works per se and more due to policy regimes (including leaving gold).  Similarly, Jason Lennard & Meredith Paker (2024) use modern data to confirm the “lead-lag” story: countries exiting gold in 1931 (UK, Sweden) saw sustained recoveries, while those devaluing later (US in 1933, France in 1936) lagged.  Their work quantifies the employment effect in Britain.

At the same time, economic consensus has shifted somewhat over time.  Early 20th-century British economists (e.g. Maynard Keynes) believed mass unemployment required active policy, a view vindicated by later Keynesian theory.  Some historians, such as Ben Bernanke and Harold James (2009), also emphasize how central bank decisions (e.g. the Fed’s refusal to expand in 1930) worsened the slump.  But even 21st-century historians (Romer 2003) still agree that ending gold and reflation were decisive.

Conclusion

The comparative evidence shows that policy choices made a real difference in how quickly economies climbed out of the Depression.  Nations like Britain and Sweden that embraced devaluation and monetary easing in 1931 set their stage for an earlier revival.  In contrast, countries like France that clung to gold endured deeper, longer recessions.  The United States fell somewhere in between: it suffered the worst collapse but ultimately saw a very strong growth spurt (thanks largely to monetary expansion) before the war.  Germany’s case reminds us that aggressive fiscal stimulus (though in the ominous context of militarism) also worked to eliminate unemployment.

Economic historians largely credit monetary expansion and regime change for ending the Depression. As Romer (2003) concludes, the turning point came when nations abandoned gold and expanded their money supplies .  Key indicators bear this out: by the mid-1930s, output and trade were growing wherever currencies had been devalued.  Unemployment likewise fell fastest in countries off gold.  In short, the diversity of recovery strategies – from New Deal programs to Nazi planning to Swedish KeynesianismKeynesianism Full Description:Keynesianism emerged as a direct response to the failure of classical economics to explain or fix the depression. It posits that the “invisible hand” of the market is insufficient during a downturn because of a lack of aggregate demand. Therefore, the state must step in as the “spender of last resort,” borrowing money to fund public works and social programs. Critical Perspective:Structurally, this represented a fundamental shift in the role of the state—from a passive observer to an active manager of capitalism. It was essentially a project to save capitalism from its own contradictions, using public funds to prevent the kind of total social collapse that often leads to revolution. – illustrates a common truth: dismantling deflationary constraints and adopting countercyclical policies were the surest paths out of the Great Slump.

References

Crafts, N. (2013) Britain’s Great Depression. Oxford University Press. Eichengreen, B. (1992) Golden Fetters: The Gold Standard and the Great Depression, 1919–1939. Oxford University Press. Eichengreen, B. (2008) Globalizing Capital: A History of the International Monetary System, 2nd ed. Princeton University Press. Lennard, J. & Paker, M. (2024) “The end of the gold standard and the beginning of the recovery from the Great Depression” VoxEU (7 April 2024). Jonung, L. (1981) The Depression in Sweden and the United States, 1929–39: A Study in Comparative Economic History, Lund Economic Studies No. 52. Parker, R. & Steindl, F. (2008) “The Great Depression and the data” in EH.Net Encyclopedia (eds. R. Whaples) [online]. Romer, C.D. (1992) “What Ended the Great Depression?” Journal of Economic History, 52(4), pp. 757–784. Romer, C.D. (2003) “Great Depression” Encyclopaedia Britannica. Temin, P. (1989) Lessons from the Great Depression. MIT Press. Winkler, A. (2000) When the Money Runs Out: The U.S. Economy in the Great Depression. Routledge.