The post–World War I recession was an

economic recession In economics, a recession is a business cycle contraction when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending (an adverse demand shock). This may be triggered by variou ...

that hit much of the world in the aftermath of

World War I World War I (28 July 1914 11 November 1918), often abbreviated as WWI, was List of wars and anthropogenic disasters by death toll, one of the deadliest global conflicts in history. Belligerents included much of Europe, the Russian Empire, ...

. In many nations, especially in North America, economic growth continued and even accelerated during World War I as nations mobilized their economies to fight the war in Europe. After the war ended, the

global economy The world economy or global economy is the economy of all humans of the world, referring to the global economic system, which includes all economic activities which are conducted both within and between nations, including production, consumptio ...

began to decline. In the

United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...

, 1918–1919 saw a modest economic retreat, but the second part of 1919 saw a mild recovery. A more severe recession hit the United States in 1920 and 1921, when the global economy fell very sharply.

North America

In North America, the recession immediately following World War I was extremely brief, lasting for only seven months from August 1918 (even before the war had actually ended) to March 1919. A second, much more severe recession, sometimes labeled a depression, began in January 1920. Several indices of economic activity suggest the recession was moderately severe. The Axe-Houghton Index of Trade and Industrial Activity declined by 14.1% in this recession (compared to a 31% decline in the

Panic of 1907 The Panic of 1907, also known as the 1907 Bankers' Panic or Knickerbocker Crisis, was a financial crisis that took place in the United States over a three-week period starting in mid-October, when the New York Stock Exchange fell almost 50% fro ...

). The Babson index of physical volume of business activity declined by 28.6% in the immediate postwar recession (compared to a 32.3% decline in the 1921 recession and a 22.7% decline in the Panic of 1907).

Germany

Germany Germany,, officially the Federal Republic of Germany, is a country in Central Europe. It is the second most populous country in Europe after Russia, and the most populous member state of the European Union. Germany is situated betwee ...

, the economic recession and inflation was harder due to the imposition of the

Treaty of Versailles The Treaty of Versailles (french: Traité de Versailles; german: Versailler Vertrag, ) was the most important of the peace treaties of World War I. It ended the state of war between Germany and the Allied Powers. It was signed on 28 June 1 ...

. A period of hyperinflation severely devalued the

Mark Mark may refer to: Currency * Bosnia and Herzegovina convertible mark, the currency of Bosnia and Herzegovina * East German mark, the currency of the German Democratic Republic * Estonian mark, the currency of Estonia between 1918 and 1927 * Finn ...

and nearly crippled the German economy.

United Kingdom

Britain initially enjoyed an economic boom between 1919–1920, as private capital pent-up over 5 years of war was invested into the economy. The shipbuilding industry was flooded with orders to replace lost shipping (7.9 million tons worth of merchant shipping stock was destroyed during the war). However, by 1921, the British transition from a wartime to a peacetime economy faltered, and a serious recession struck the economy between 1921–1922. With other major economies also mired in recession, the export-dependent economy of Britain was particularly hard-hit. Unemployment reached 17%, with overall exports at only half of their pre-war levels.

Global pandemic of 1918

The 1918

Spanish flu The 1918–1920 influenza pandemic, commonly known by the misnomer Spanish flu or as the Great Influenza epidemic, was an exceptionally deadly global influenza pandemic caused by the H1N1 influenza A virus. The earliest documented case wa ...

pandemic had an adverse economic impact. Many businesses were shuttered during the worst of the outbreak and the sheer numbers killed reduced the workforce population significantly. Work by economists

Robert Barro Robert Joseph Barro (born September 28, 1944) is an American macroeconomist and the Paul M. Warburg Professor of Economics at Harvard University. Barro is considered one of the founders of new classical macroeconomics, along with Robert Lucas, J ...

and Jose Ursua suggests that the flu was responsible for declines in gross domestic product of 6 to 8 percent worldwide between 1919 and 1921.

North America

Germany

United Kingdom

Global pandemic of 1918

See also

References

Further reading