World Economic Crisis 1931-1936


In 1929 stock market crash in USA crushed the whole economy in the country. The Financial and Banking crash, which spread to the other countries was the first symptom of the world economic crisis. This crisis which gripped the capitalist world during 1929-1933 was the most profound and destructive of all economic crises capitalist had ever known. It dealt a shattering blow to the economy, the political foundation and ideology of the bourgeoisie and in total effect it further aggravated the general crisis of capitalism. Industry, agriculture, the banking and financial system, internal as well as international trade in a word all aspects of the capitalist world which had risen to high level exhibited a downward trend. By 1932 capitalist economy reached an all time low. During 1930-33 the industrial output in the capitalist world shrank as much as by 38 percent.

This industrial crisis was accompanied with an equally serious agrarian crisis and the net effect was an intensification of the struggle for markets among the imperialist countries. The common masses of the capitalist countries happened to be the worst victims of this world economic crisis. The bourgeoisie tried to shift all burdens of the crisis on to the shoulders of the working class and thus they suffered doubly from the steady decline in wages and mass retrenchment. Unemployment assumed unheard of dimensions. This alarming deterioration in the conditions of the proletariat and the middle classes in the capitalist countries led to an intensification of the class struggle which was evident in the high rate of strike-actions taking place during the period. Nearly 19,000 strikes involving 8,500,000 workers occurred during 1929-1932 in 15 of the world’s largest countries.

Against the background of this crisis which was rocking the entire capitalist world, most impressive was the high rate of development of soviet economy. Soviet Union during the period successfully completed the First Five Year Plan. While industrial output of capitalism was on the downgrade, Soviet Union was making the tremendous progress along the road of industrialization. The contrast between the performance of capitalist and that of soviet economy during this period was sharply pointed out the superiority of socialism not merely in theory but in practical deeds. Later it was inspired by Nehru to incorporate democratic socialism in India.

Conditions of working classes:

The world economic depression had fatal repercussions on the colonial economy of India. India’s economy where eighty percent of the people were dependent on agriculture came to a breaking point due to sharp fall in agricultural prices. The plight of the peasantry was beyond imagination, their purchasing power came down at the lowest limit. Designing to shift the burden of the crisis on to the shoulders of the people, the British government introduced a variety of prejudicial economic measures. The discriminatory policy which they had adopted through imperial preference was extended to the Indian steel and textile industries also. Ignoring the strongest protest in central legislative assembly, the British government signed Ottawa Trade Agreement dragging the Indian economy to a still worse position.

The cotton-textile industry of India was faced with a severe recession. The Indian capitalist, in a bid to shift all burdens on to the workers, resorted to mass retrenchment. Through schemes of rationalization already before the onset of world depression, they had reduced ten thousand workers out of a total number of 140,000 workers in the textile industry of Bombay. Now again many mills reduced working hours and many closed down. In 1934 about fifty percent of the textile mills of Bombay closed down and 61,000 workers lost their jobs and wage cut was added to it. Onslaughts came down upon the jute mill workers of Bengal. While the Whitley commission estimated a number of 347,000 jute workers an existing in 1929, the statistics published by the government of India in 1934 indicated the number of jute workers as 263,739 only the difference between these two estimates being as large as 83,000.

Mass retrenchment began in the Indian railways too. During 1930-31 the total number of workers in the railways stood at 781,859 which during the next financial year came down to 730,290 this meant a reduction of 51,569 workers. Simultaneous with the retrenchment, the wages of the employees and workers in the railways and posts and telegraph department were compulsorily reduced under the Emergency Reduction Rule 1931. The wages of other categories of government employees too were reduced. The workers of all categories were hit. At the Tata Iron and Steel Works at Jamshedpur, the wages of the workers were reduced from monthly 35rs to 29rs between the years 1929 and 1932. The municipal workers too were faced with retrenchment and wage cut. At Kanpur the wages of the workers in 1935 were reduced by 40 percent in relation to that of 1921. The economic crisis of 1931-1936 severely hit the entire working class of India. The workers were faced with both the dangers of retrenchment and wage cut. This large scale retrenchment of workers and total absence of any new avenue of employment resulted in an unemployment problem.

Economic Struggle of the Working Class Against crisis:

The working class waged economic struggles against this crisis. But largely due to disunity, the struggle could not be as extensive and stormy as the situation really warranted. There was another important factor too, the anti-imperialistic movement which involved the working class of the country to such a dimension and political struggle got precedence over the economic struggle to such a extent that it was not possible for the working class to pay sufficient attention to their day to day economic problems. But in spite of deep involvement in political struggles, the economic struggles of the working class were on the whole steadily mounting. The number of labour disputes rising to 148 in the year 1930 and to 166 in the year 1931 from a number of 141 in the year 1929 indicates the increasing order of these struggles.

The most remarkable strike of the year 1931 was that which occurred in Hastings jute mill in Bengal. 5300 workers were participated in this strike. Another important industrial action of this year occurred in Sholapur cotton mills of Bombay Presidency where 15,000 workers struck work for three weeks on the demands of enhanced rate of dearness allowance and recognition of the union. Strikes occurred in the cotton mills of Madurai and in the Kurla Swadeshi Mill were remarkable. In 1932 the most serious strikes took place in the railway workshops and in the jute mills of Bengal. In October of the year strike began at Madras and at the workshops of Perambur, Arakonam and Hoobly of southern Mahratta Railway against retrenchment. 8,300 workers joined this strike. A citizens committee formed at the initiative of the initiative of the sheriff of Madras tried for a settlement of the strike and accordingly an agreement was signed on 7 January 1933. The strike was called off thereafter. But the agreement allowed retrenchment of 370 workers. Even the general secretary allowed retrenchment of 370 workers. Even the general secretary of the union was dismissed from service subsequently.

All Indian Railwaymen’s Federation in its meeting held at Ajmir on 15 march 1931 discussed the problem of large-scale retrenchment on the railways. That meeting urged the government to refrain from the contemplated retrenchment pending a thorough investigation into the problem. A prolonged correspondence with the All India Railwaymen’s Federation combined with a threat of general strike by the railway workers ultimately led the Government of India to appoint a court of Inquiry to go into the question of retrenchment. The federation however demanded the appointment of an Arbitration Board which was not conceded by the government.

The workers of four jute mills of Bengal namely kelvin, Standard, Kinison, and Howrah struck work against ten percent wage cut these strikes involved 19,000 workers. In 1932, 60percent of strikes occurred on the question of wages setting the highest of such disputes since 1921. Situation further worsened since 1933. The average daily number of workers employed in the industries of India recorded the fall about 16,500. Worst affected were the cotton textile mills of Bombay. In the same year the Ahmedabad mill owners association proposed a 25 percent cut in wages of the workers. The cumbersome machinery for compulsory arbitration introduced in Ahmedabad by Gandhi led to a prolonged negotiation between the Ahmedabad mill owners association and Majoor Mahajan on the issue of this wage cut.

In 1934 the number of strikes considerably increased and involvement of the workers almost doubled. The general strike of the textile workers was the textile workers was the principal working class action of this year. The strike of the Dock workers of Bombay and Calcutta were also of sufficient importance. The textile workers strike in Bombay was much more extensive. The strike involved 90,000 workers. This strike was conducted against direct wage cut and indirect wage cut through rationalization. This strike was led by a Council of Action consisting of both the militant communists and the moderate reformists. The above strikes were waged in accordance with the decision of All India Textile Workers conference held at Kanpur in 1933.       

Sharpening of Trade Union Struggles 1935-36:

The period 1935-36 witnessed reinvigoration of the trade union movement that got substantially weakened during the last few years. The efforts for restoration of unity in trade union movement was undoubtedly fruitful and conducive to this renewed strength, but as the same time certain developments in the political front also provided favourable circumstances for this growth. Signs of change in the condition of world depression were already noticed at the beginning of the year1934. In India the change was first reflected in the jute and cotton textile industries. The depression being on the way out the working force in the organized industries of India too started marking a steady increase.

In spite of a noticeable improvement in industrial production, the owners refused to restore the cut in the wages that was effected in the name of depression. During this period the working class had to engage itself in hard struggles for both restoration of the cut and increase in the wages as well as against the newly intensified exploitation. Among the strikes that occurred in this period, those in the keshoram cotton mill of Calcutta and in the Ahmedabad cotton mills claimed the largest share. The textile workers of Ahmedabad struck work virtually ignoring the agreement that was entered in to by the leaders of Majoor Mahajan admitting wage cut and which Gandhi advised the workers to cheerfully accept. The textile workers of Kanpur also struck work. A strike commenced in Artherton west mill on 10th September 1936 against the wage cut and retrenchment which ended in a settlement after lasting for eight days. 

Organizational Development:

During this period the number of unions registered under Trade Union Act also marked an increase. In 1935 the total number of registered unions in India stood at 213 with a membership of 248,918. Since the implementation of the provisions of the Trade Union Act in 1927 this was the highest number of membership enrolled by the registered trade unions. In 1936, the number of registered unions marked a further increase and rose to 241. Moreover, while the number of women members of the registered unions in 1927-28 stood only at 1,166 in 1935-36 that number rose to 7,309.

During this period the trade union movement spread almost all the industrial centres in different provinces. The rise in the number of trade union was however maximum in the industrially developed provinces of Bengal, Bombay and Madras. The second session held at Nagpur in 1935 the National Trade Union Federation claimed affiliation of 60 union with the membership of 147,546. That session elected Sibnath Banerjee as president and Moniben Kara as a general secretary for the next term. The sharpening and extension of the trade union movement during 1935-36 prepared the ground for the Indian working class to play a more remarkable role in the economic and political mass struggles of the subsequent years.


During the world economic crisis economy of the many countries fell in to the worst state. There were high rate of wage – cut, people were left jobless and many people were died due to hunger and poverty.  Labour union became voiceless during the crisis. After the world economic crisis end there were gradual development in industrial sector and many new labour unions were formed in the country.



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Sen, S. (n.d.). Working class of india: histort of emergence and movement 1830 – 1970.