The post–World War I recession was an
economic recession
An economy is an area of the Production (economics), production, Distribution (economics), distribution and trade, as well as Consumption (economics), consumption of Goods (economics), goods and Service (economics), services. In general, it is ...
that hit much of the world in
the aftermath of
World War I
World War I or the First World War (28 July 1914 – 11 November 1918), also known as the Great War, was a World war, global conflict between two coalitions: the Allies of World War I, Allies (or Entente) and the Central Powers. Fighting to ...
. 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 in the world, referring to the global economic system, which includes all economic activities conducted both within and between nations, including production, consumption, econ ...
began to decline. In the
United States
The United States of America (USA), also known as the United States (U.S.) or America, is a country primarily located in North America. It is a federal republic of 50 U.S. state, states and a federal capital district, Washington, D.C. The 48 ...
, 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 suddenly fell almost ...
). 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
In
Germany
Germany, officially the Federal Republic of Germany, is a country in Central Europe. It lies between the Baltic Sea and the North Sea to the north and the Alps to the south. Its sixteen States of Germany, constituent states have a total popu ...
, the economic recession and inflation was harder due to the imposition of the
Treaty of Versailles
The Treaty of Versailles was a peace treaty signed on 28 June 1919. As the most important treaty of World War I, it ended the state of war between Germany and most of the Allies of World War I, Allied Powers. It was signed in the Palace ...
. A
period of hyperinflation severely devalued the
Mark 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 flu pandemic, also known as the Great Influenza epidemic or by the common misnomer Spanish flu, was an exceptionally deadly global influenza pandemic caused by the H1N1 subtype of the influenza A virus. The earliest docum ...
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 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.
See also
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Hyperinflation in the Weimar Republic
Hyperinflation affected the Papiermark, German Papiermark, the currency of the Weimar Republic, between 1921 and 1923, primarily in 1923. The German currency had seen significant inflation during the First World War due to the way in which the G ...
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Aftermath of World War I
The aftermath of World War I saw far-reaching and wide-ranging cultural, economic, and social change across Europe, Asia, Africa, and in areas outside those that were directly involved. Four empires collapsed due to the war, old countries were a ...
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Dawes Plan
The Dawes Plan temporarily resolved the issue of the reparations that Germany owed to the Allies of World War I. Enacted in 1924, it ended the crisis in European diplomacy that occurred after French and Belgian troops occupied the Ruhr in re ...
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Great Depression
The Great Depression was a severe global economic downturn from 1929 to 1939. The period was characterized by high rates of unemployment and poverty, drastic reductions in industrial production and international trade, and widespread bank and ...
References
Further reading
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{{DEFAULTSORT:Post-World War I recession
Recessions
Aftermath of World War I
1910s in economic history
1920s in economic history