The Post-War Years: the Age of Insecurity

Some countries experienced a phase of growth in 1919. The United States, Great Britain, France and Japan experienced the biggest boom as demand started to grow again after the end of the war and the capital accumulated during the conflict began to circulate. However, the following year brought recession. Factories reduced their output and unemployment rose, aggravated by the numbers of demobbed troops returning onto the labour market. The decline was accentuated as inflation and the constant depreciation of the exchange rate led many countries to implement austerity policies. During the short-lived phase of expansion it was mistakenly thought that the conversion of the war economy to a peace economy would be relatively quick and straightforward. Political and financial circles concluded that the world economy could be restored to equilibrium by returning as quickly as possible to the gold standard.