Even today, almost a century on, the shadow of the Great Depression hangs heavy.
To most of us, the very phrase conjures up images of the winding dole queues, haggard faces and starving children that we associate with the 1930s.
And, of course, we all know how that particular story ended. The crowds in Berlin, the outstretched arms, the broken glass, the rumbling tanks, the death camps and gas chambers.
So when, earlier this week, economic experts began talking of a new Great Depression, it was hard not to feel a shiver down your spine. The coronavirus itself, silent and deadly, has been terrifying enough.
Even today, almost a century on, the shadow of the Great Depression hangs heavy. To most of us, the very phrase conjures up images of the winding dole queues, haggard faces and starving children that we associate with the 1930s. Unemployment marchers are pictured in Newcastle in 1931
But how grim it is to think that, when the lockdown is finally lifted, we may find our economic landscape blighted beyond recognition, and perhaps even beyond recovery.
So perhaps I should say at once that despite all the dreadful economic headlines — and as a historian who has studied Britain in the 20th century closely — I believe we will come through this.
That said, there is no point in denying that right now, many of the omens are very bleak indeed.
A brief recap, then, of the doom-mongering. On Tuesday, the International Monetary Fund (IMF) predicted that every major economy will be in recession by this time next year.
Even optimists admit that some businesses will not be replaced. Not every neighbourhood restaurant will reopen. Not every furloughed worker will stroll back into a job. A 1930s poster urging the public to ‘Buy British’ is pictured above
In Britain, GDP is forecast to fall by 6.5 per cent in 2020, the worst figure for a century. Eurozone GDP is expected to shrink by 7.5 per cent, while the U.S. economy is predicted to contract by almost 6 per cent, its worst performance since 1938.
Even China is facing its first recession since 1976, a huge psychological shock for a society used to breakneck growth.
And if that’s not bad enough, the IMF warns of ‘severe risks of a worse outcome’ if the pandemic is repeated next year.
That was bad enough. Then on Thursday, new figures showed that a staggering 22 million Americans have lost their jobs in four weeks, with U.S. unemployment likely to hit 20 per cent by the end of April.
So we should be honest with ourselves. We are facing the greatest economic challenge in our lifetimes, far more dangerous than the inflation of the 1970s, the recessions of the 1980s and 1990s or even the financial crisis of 2007-8.
And some experts think this is not even the worst of it. There are no guarantees, they argue, that the world economy will simply bounce back once the pandemic has passed.
Even optimists admit that some businesses will not be replaced. Not every neighbourhood restaurant will reopen. Not every furloughed worker will stroll back into a job.
In some cases, the lockdown has accelerated economic changes that were already under way. Computers have taken over clerical workers’ jobs. Working from home has replaced the old office routines. There are more freelancers and fewer jobs for life than ever before.
Perhaps above all, the coronavirus is going to leave us with astronomical levels of public debt. Before the financial crisis of 2007-8, our national debt was hovering at between 35 and 40 per cent of GDP.
Today it is 79 per cent. Thanks to Chancellor Rishi Sunak’s emergency measures, it is possible that by mid-2021 it could stand at 200 per cent — a figure unimaginable just months ago.
For many families in the South and Midlands, which were much less savagely scarred by unemployment, life returned to normal remarkably quickly. And for these people, as the social historian Juliet Gardiner writes in her book The Thirties, this was an age of tremendous colour, opportunity, novelty and excitement
The Government is going to have very little financial room for manoeuvre in the next few years. One way or another, we and our children are going to be paying off that debt for the rest of our lives.
So far, so bleak, then. And it’s easy to imagine a scenario in which all this could have devastating political and social consequences.
A short recession could become a long depression. Millions could be thrown out of work. Politics, both at home and abroad, could spiral towards the extremes.
And nationalist rhetoric —including the ‘blame game’ raging between Donald Trump’s America and Xi Jinping’s China — could escalate into a full-blown protectionist trade war. In those circumstances, the world would become a very dangerous place indeed.
That’s the bad news, then. But here’s the good news.
Things don’t have to turn out that way. With clear-headedness, vision and pragmatic good sense, the world can learn the lessons of the Depression and steer a course towards calmer waters.
Before the financial crisis of 2007-8, our national debt was hovering at between 35 and 40 per cent of GDP. Today it is 79 per cent. Thanks to Chancellor Rishi Sunak’s emergency measures, it is possible that by mid-2021 it could stand at 200 per cent — a figure unimaginable just months ago
And if we’re looking for a model, then, ironically enough, there’s none better than 1930s Britain, which was very different from the ravaged economic wasteland of so many lazy Left-wing caricatures.
It’s true that like every other industrial society, Britain suffered an enormous economic shock in the early 1930s. (Although contrary to popular belief, the real trigger wasn’t the Wall Street Crash of September 1929, but the collapse of the Credit-Anstalt bank in Vienna in May 1931.)
In any case, the short-term consequences for many families were dreadful. By the end of 1930, the dole queues had doubled to almost three million.
With export figures in meltdown, coal mining, shipbuilding and steel-working areas were particularly hard hit, with unemployment as high as 80 per cent in some Northern towns.
As jobless men gathered on street corners, their faces drawn and haunted, many families were reduced to near-starvation.
Politics, both at home and abroad, could spiral towards the extremes. And nationalist rhetoric —including the ‘blame game’ raging between Donald Trump’s America and Xi Jinping’s China — could escalate into a full-blown protectionist trade war
In Scotland, one writer remarked on the ‘groups of idle, sullen-looking young men’, the houses ‘empty and unemployed like their tenants’.
In South Wales, another visitor watched ‘fifty or so men and women’ picking forlornly on a slag heap for lumps of coal.
And most famously of all, some 200 unemployed men marched from Jarrow to London, protesting against their ordeal in a North-eastern town where seven out of ten people were out of work.
But as grim as this was, it was not the whole picture. Indeed, it was not even half of the picture.
Yes, Britain’s economy took a dreadful hit in 1931 and 1932, shrinking by some six per cent — which, oddly enough, is almost identical to the downturn predicted this year.
By 1933, however, it was growing again, and for the next four years GDP grew by an average of almost five per cent a year.
For many families in the South and Midlands, which were much less savagely scarred by unemployment, life returned to normal remarkably quickly.
And for these people, as the social historian Juliet Gardiner writes in her book The Thirties, this was an age of tremendous colour, opportunity, novelty and excitement.
In towns like booming Coventry, the centre of the new car industry, life had literally never been better. Most people lived longer, healthier lives and took home more money than ever before.
Thanks to low taxes, they spent their winnings on radios, fridges, appliances and holidays. Theirs was a Britain with a branch of Woolworths on every High Street and a new mock-Tudor roadhouse pub on every corner.
It was a world in which people took their new cars on outings to the beach, invested thousands in their new suburban semis and snapped up cinema tickets, cosmetics, cheap thrillers and celebrity magazines. It was, in other words, an affluent society, decades before the phrase had even been invented.
Much of the credit for this belongs to the National Government, dominated by the Tory leaders Stanley Baldwin and Neville Chamberlain.
Because of their role in the appeasement of Hitler’s Germany, they get a bad press these days — usually from people who know next to nothing about them.
But under their quiet, undemonstrative leadership, Britain remained a bulwark of stability. While Hitler stalked the parade grounds of Nuremberg and Mussolini strutted on the balconies of Rome, life at Westminster seemed almost boring — which was precisely what most people wanted.
So what can we learn from their example?
The first and most obvious thing is the importance of stability. Formed in 1931, the National Government included politicians of all major parties, and even had a Labour figurehead in the dotty but well-meaning Ramsay MacDonald.
While extremists on the Left and Right called for Britain to ditch the parliamentary system and adopt anything from black-shirted Fascism to Soviet-style Communism, Baldwin and Chamberlain stuck to the centre ground.
They knew that a crisis is no time for wild experiments, and that what most ordinary people needed was the reassurance of the familiar.
So when Jeremy Corbyn’s former fan club, unabashed by their humiliation in last December’s election, insist that the crisis is a chance to drag Britain to the far Left, our politicians should close their ears.
We don’t need a new economic system, as the wilder Left-wing pundits claim. Quite the reverse. If we really want to help the poorest and most vulnerable, we need to get the old system up and running as before, generating the jobs and profits essential for recovery.
But that doesn’t mean ignoring the need for compassion and solidarity. Chamberlain, in particular, recognised that the only way to keep Britain together in an economic crisis was to give people a safety net. Contrary to what you often hear from the Left, Britain did have a welfare state before World War II.
Not only did the National Government build thousands of council houses, it offered more generous pensions and made some 15 million people eligible for unemployment benefit.
In South Wales, another visitor watched ‘fifty or so men and women’ picking forlornly on a slag heap for lumps of coal. And most famously of all, some 200 unemployed men marched from Jarrow to London, protesting against their ordeal in a North-eastern town where seven out of ten people were out of work
It was, in other words, a moderately activist One Nation government, in the same spirit as the interventionist emergency measures that were promised by Chancellor Rishi Sunak in recent weeks.
Finally, Baldwin and Chamberlain recognised that the key to recovery was not to suffocate businesses with high taxes, but to set them free to build and invest. And that, I think, will be our key to recovery in the mid-2020s.
Already you can hear calls from the Left for punishing taxes on business and high earners to pay the bills when the pandemic has passed. But that, I think, would be a dreadful mistake.
If we are to save our High Streets and revive our tourism, entertainment and leisure industries, then Britain’s entrepreneurs will need every bit of help they can get. Far from hammering small businesses, the Government should offer them incentives and opportunities.
There will, of course be casualties; we all recognise that. Similarly, we know that there will be many more gloomy economic figures before we even start to turn the corner.
But economic history — including the story of the Great Depression — tells us that there is always light at the end of every tunnel, if it sometimes takes a long time to get there.
One firm’s crisis is always another’s opportunity. Even as you are reading this, somebody, somewhere is working on a business idea that will take Britain by storm in the next few years — just like the car makers, motorbike manufacturers and radio salesmen of the 1930s.
And here’s one last thought to cheer us up.
Inspired by the Queen’s stirring broadcast and the example of heroes such as the 99-year-old Captain Tom Moore, there has been much talk of World War II in recent weeks.
But we often forget that quite apart from its military dimension, the war was one of the greatest economic shocks in history, massively disrupting daily life in every corner of the land.
By the time Britain celebrated victory in 1945, the Government had been forced to prop up almost every part of our economic life.
Our exports had collapsed, our gold reserves were exhausted and we had run up massive debts to the Americans, with our total national debt approaching a colossal 250 per cent of GDP.
But what happened next? After a brief period of austerity, the economy began at last to recover. As our businesses recovered their animal spirits, the shortages of wartime were gradually forgotten.
By the dawn of the 1950s, Britain was booming. People put away their ration books, and embraced the new age of washing machines, teenagers and televisions. That doesn’t sound so bad, does it?
Things may be grim for a while. But don’t panic. The dawn will come eventually. It always does.
Inspired by the Queen’s stirring broadcast and the example of heroes such as the 99-year-old Captain Tom Moore, there has been much talk of World War II in recent weeks