What if: Much shorter Depression in US

Let’s say that things play out fairly similarly compared to the OTL until late 1931, by which point most of the damage has been done in the US and things have collapsed globally. Then in late 1931 things diverge with the US deciding to leave the Gold Standard sooner, and then avoiding the Federal Budget of 32-33 which involved both spending cuts and tax increases.

If America does this, I don’t think it is unreasonable to think that the economy begins to stabilize sooner and recovery to begin a year sooner from a slightly better point. Unemployment perhaps peaking in early 1932 at around 23% instead of peaking around late 1932 at 25%, and unemployment down to around 18% by the end of 1932. The next president (probably Roosevelt) doesn’t screw things up too badly and continues expansionary fiscal and monetary policy, enabling a full recovery by 35/36 with unemployment back below 5% by then. To add to this, the contractionary policies from 1937 are avoided and there only ends up being a minor recession at that point rather than a return to insane unemployment.

Perhaps this vague outline is unrealistic. Feel free to come up with a better way or criticize it. However, I would like the US to go through the latest quick turn around possible and keep the Smoot-Hawley Tariffs because I am looking the minimize the impact of a stronger American economy globally, to try and hold political events in the rest of the world similar to the OTL.


With an earlier recovery to the Depression and end of the Depression by the mid 30s, what kind of agenda is Roosevelt (or whoever you think will end up president) to follow? How much does American culture change? Are TVs likely to start making it in people’s homes by the late 30s/early 40? Is Four Terms a possibility for the POTUS? And how will an earlier American recovery effect the rest of the world? Will America be more or less eager to fight wars overseas?
 
It's really unlikely to recover that quickly after a banking crisis. It takes time for those things work themselves out. New capital has to be formed and old debts worked through the system. If you want a quicker rebound you probably need the Fed to intervene more quickly, save more banks, and lower interest rates sooner. But that all has to happen in 1930.
 
Let’s say that things play out fairly similarly compared to the OTL until late 1931, by which point most of the damage has been done in the US and things have collapsed globally. Then in late 1931 things diverge with the US deciding to leave the Gold Standard sooner, and then avoiding the Federal Budget of 32-33 which involved both spending cuts and tax increases.

If America does this, I don’t think it is unreasonable to think that the economy begins to stabilize sooner and recovery to begin a year sooner from a slightly better point. Unemployment perhaps peaking in early 1932 at around 23% instead of peaking around late 1932 at 25%, and unemployment down to around 18% by the end of 1932. The next president (probably Roosevelt) doesn’t screw things up too badly and continues expansionary fiscal and monetary policy, enabling a full recovery by 35/36 with unemployment back below 5% by then.

5%? I think that's way optimistic. Although I have figures from the Statistical Abstract which indicate 1% unemployment in 1929. (!!!) (In Historical Statistics of the United States:1789-1945, Series D 62-76, LABOR FORCE-INDUSTRIAL DISPOSITION OF EMPLOYED (NICB): 1900-1945; the line for 1929 gives Employed 47,925,000, Unemployed 429,000. Really.)

One thing to consider is that this massive change in the US economy will have considerable effects in other countries. For instance, the Depression hit hard in Germany, and was IMO the main cause of the great rise of the Nazis from 1930 to 1932. But in 1932, the German economy began to recover, and the Nazis lost ground electorally (from 37.4% in July to 33.1% in November).

If the US bottomed sooner and was already recovering by November, it is likely that Germany would also recover faster. This could further diminish the Nazi vote. OTL, the Nazis and Communists between them won 296 of 584 seats in the Reichstag, making it impossible to "form a government" without one of them; this led to Hitler's appointment as Chancellor. If the Nazis won 20 fewer seats, it would be barely possible to form a government without either the Nazis or the Reds, and the German political leaders really wanted to keep Hitler out. (They had a not-really-legal rule-by-decree government for six months instead.) And the NSDAP was in deep trouble in late 1932; the Brownshirts were literally begging on street corners to raise operating money. If Hitler was excluded from power for another six months or a year, the NSDAP could easily collapse.

I'm not sure what knock-ons would happen in Britain, but the economy was a big deal.
 
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