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Economic policies in the years 1918 to 1938 varied widely. Much of the world was thrown into a recession following the end of World War I and, while the United States and parts of Europe saw periods of economic growth during the 1920s, the Great Depression of 1929 would see serious problems in all the major industrialized or industrializing countries. Germany witnessed economic expansion during the 1930s as a result of war preparations and the total control of industrial production maintained by the government, ruled after 1933 by Adoph Hitler.
In the United States, "laissez faire" economic policies that spurred economic growth during "the Roaring Twenties" were dealt a serious blow by the collapse of the stock market on October 25, 1929, which marked the onset of the Great Depression. The "New Deal" ushered in by President Roosevelt to put Americans back to work resulted in a far greater level of direct govenment involvement in the economy than had heretofore been the case.
One of the causes given for prolonging the depression was the protectionist policies practiced by the major economic powers. These policies saw countries closing their borders to international trade. In the United States, Congress passed the Smoot Hawley Tariff Act, which raised tariffs, or taxes, on foreign imports so high that imported goods became too expensive for American companies and individuals to purchase. The intent was to protect American industry from foreign competition.
By shutting out foreign imports, countries were able to establish domestic industries to provide goods no longer coming from abroad. Carried to an exteme, protectionism actually hurt these countries by institutionalizing inefficiencies into domestic production -- in other words, rather than adopt the most economically efficient business practices, which might include importing goods from other countries at a lower price, countries were spending money to build those same components at a higher price -- and by closing off export markets to each other that could have facilitated economic growth. Consequently, each country's intended acts of economic self-preservation ended up hurting everybody.
In Russia, the October 1917, lead by Vladimir Lenin and the Bolsheviks, saw the beginning of a level of political and economic turmoil that would not end for many years. From the early days of the Bolshevik Revolution until the consolidation of power by Joseph Stalin, Russian economic policies vacilated between greater and lesser levels of dictatorial control.
Because of the economic devastation resulting from World War I, the revolution, and the ensuing civil war that followed, Lenin determined that the key to Russian economic growth, and to the survival of the Bolshevik regime, was to allow for greater economic freedom than had been the case. From 1921 until 1928, therefore, Russian economic policy was known as "the New Economic Policy." Lenin and his allies in the government believed that capitalist economic practices would be useful in the short term in building up the country's economy.
Stalin's consolidation of power in 1928 resulted in one of the most drastic and deadly economic developments in history: the forced collectivization of Soviet agriculture. Millions died as a result. Stalin would henceforth rule with an iron fist and would dictate economic policy.
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