Years of the Great Depression

​The worldwide economic crisis that began in 1929 reached Estonia a year later. Falling prices, import restrictions, prohibitive tariffs on the world market and the dwindling domestic market hit both agriculture and industry badly. During the years of the crisis, the total value of production diminished by 45% in agriculture and by 20% in industry. The sudden halt in exports had a negative impact on Estonian external trade, and the general financial shock dealt a heavy blow to the country’s finances. The devaluation of the British pound sterling and other foreign currencies was especially damaging. There were fierce debates about the exchange rate of the kroon in the Parliament, but it took a long time to realise the necessity to lower it in the interest of improving exports. The standard of living fell rapidly, as did incomes – unemployment rose drastically. The measures taken to overcome the crisis brought only partial relief.

​The declining economic situation brought dissatisfaction amongst the population. People blamed everything on politicians, parties, parliament and government. Politicians used the opportunity to undermine their political opponents. All this made the domestic policy situation unstable. Attempts were made to increase stability by reducing the number of parties, but the parties united under the strain of the crisis could not withstand the test of time, and the fragmentation in the parliament increased further. It became more difficult to form coalitions, government crises lasted longer, and the lifespan of a government shortened – in two years (1931–33) the Cabinet changed six times.

​In such a situation, people longed for a strong-minded statesman who would put an end to the politicians’ squabbling and put the house in order – restore the standard of living to that obtained before the economic crisis. This desire was further enhanced by examples abroad, where the authoritarian form of government was spreading, as well as by the behaviour of some domestic politicians who claimed that the root of all evil was the constitution which failed to create the position of the president. The State Elder Konstantin Päts was among the first to suggest changing the constitution, electing a president with extensive powers, reducing the influence of the parliament and extending the government’s options for action.

​These ideas were enthusiastically supported by the League of Veterans’ of the Estonian War of Independence (the Vaps’ movement). Opposing themselves to the so-called old political parties, and accusing their leaders of ignoring the needs of the state and pursuing their own interests, the Union won the support of the dissatisfied majority, thus becoming a remarkably numerous and influential popular movement. The draft constitution compiled by the Union members achieved an overwhelming victory at the referendum in October 1933. The new constitution replaced the previous parliamentarian method of government with the sole power of the head of state, thus offering an opportunity for establishing an authoritarian regime.

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