Lingering Problems of Recovery

Abstract

To outward appearance recovery seemed well under way by 1925. Stability had returned to Germany, which was making an effort to meet her reparation obligations under the Dawes Plan; with the assistance of lavish foreign credit—largely from private American sources— industrial expansion and numerous public-works projects were being carried out. In France the reconstruction of the devastated regions provided a powerful stimulus to economic activity; new plants and equipment made the north of France one of the most thoroughly modern industrial areas of Europe. Elsewhere, too, by 1925, many of the prewar indexes of production had been matched or surpassed. Yet, nagging problems remained. These were not merely below the surface to be unearthed by historians in the light of the Depression of the 1930’s, but were apparent to contemporaries as well. The convening of a World Economic Conference in 1927 under the auspices of the League of Nations provides clear evidence of concern. Its voluminous publications provide much information on the European economy in the 1920’s and indicate, as does the selection from the Conference’s final report given below, the special concern with international exchange. In his closing speech the president of the Conference stressed the general conclusion of the discussions:

The eight years of post-war experience have demonstrated the outstanding fact that, except in the actual fields of conflict, the dislocation caused by the war was immensely more serious than the actual destruction. … It is all in one form or another a maladjustment— not an insufficient productive capacity but a series of impediments to the full utilisation of that capacity. The main obstacles to economic revival have been the hindrances opposed to the free flow of labour, capital and goods.¹