A forgotten stock market crash and the dawn of Islamism


Helped in part by President Roosevelt’s “New Deal” the US economy and its stock market had rebounded strongly from the 1929 crash and the ensuing Great Depression and by early 1937 on many measures had returned to pre-Crash levels.  From the summer, though, a sharp correction had set in with demand was softening and unemployment headed back towards 19% from a low of 14%. With hindsight this all looks like a mere cyclical effect (none of the structural weaknesses which destroyed the financial system in the early 1930s had returned), but the attendant slump in share prices brought back evil memories. Even today economists squabble about the precise causes. After reaching a peak at around 190 in February the Dow Jones Index had been falling steadily and on Tuesday 19th October share prices suffered sharp falls in very heavy volume triggered by a report of falling steel production. The market ticker was running 22 minutes behind events at one point; in reality simply a register of the level of activity but widely seen as emblematic of panic. Democrat politicians began to mutter of a Wall Street conspiracy designed to discredit President Roosevelt. The Dow Jones Index fell by half from its peak and the economy did not recover properly until the Second World War.

The Grand Mufti of Jerusalem, a Sunni cleric and the most important Arab leader in Palestine had not been arrested by the British authorities in their initial crack-down on violent protest but when an arrest warrant was issued he fled northwards to French controlled Syria and Lebanon. It was the beginning of a long life of wandering and implacable hostility towards Britain (and friendship with her enemies notably Adolf Hitler) and implacable hatred of the Jewish population in Palestine.


An argument broke out over the scale of Italian involvement in the Spanish Civil War. The Italian government claimed that only 50,000 “volunteers” (in reality military units) were present whilst the Republican government claimed 110,000. The truth was probably around 70,000 but irrespective of the actual level was the fact that this kind of military presence made a nonsense of the policy of “non intervention” to which Britain and France formally subscribed. Every now and again Rome would claim that it would withdraw or reduce the commitment without the slightest intention of doing so. This cavalier dishonesty was one of the main reasons why the British Foreign Secretary Antony Eden lost any confidence in Mussolini he might ever have had. This helped open the rift with his Prime Minister Neville Chamberlain, who had a touching faith in the willingness of Fascist dictators to behave honourably or rationally, which was to culminate in his resignation.

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