Truth was the first casualty of the Great Depression. Reflecting the anguish of the time, propaganda was manufactured on an unprecedented scale. As economic disaster threatened to trigger shooting wars so, as George Orwell said, useful lies were preferred to harmful truths. He went further, declaring that history stopped in 1936; after that there was only propaganda.

This was a characteristic exaggeration but it points to the universality of state deception. The very term Depression aimed to mislead: President Hoover employed it as a euphemism for the standard American word for financial crisis, “Panic”. Hence the poet WH Auden’s verdict that this was a “low dishonest decade”, a conclusion he reached in a New York dive on 1 September 1939 while attempting to “undo the folded lie … the lie of Authority.” It was the end of a decade in which, as Auden wrote elsewhere: “We have seen a myriad faces / ecstatic from one lie.”

Of course, to lie is human, and official mendacity had been practised throughout the ages. But it was developed intensively during the first world war, notably under the direction of Lord Northcliffe, founder of the popular press in Britain and portrayed in Germany as “the father of lies”. Particularly effective were his attacks on the Kaiser, who was portrayed (in a leaflet dropped behind German lines) as marching with his six sons, all in full military regalia, past a host of outstretched skeletal arms, the caption reading: “One family which has not lost a single member.”

A British cartoon lampooning Kaiser Wilhelm in 1914. Illustration: Rex/Shutterstock

Northcliffe’s efforts had dire consequences for Europe. Ultra-nationalists claimed that Germany had not been defeated by force of arms in 1918, but stabbed in the back by political criminals after being fatally weakened by fiendish British propaganda. This Hitler compared to poison gas, which corroded civilian morale and induced German soldiers to “think the way the enemy wanted them to think”. The myth that the Fatherland had fallen victim to a Jewish-Bolshevik conspiracy became a key element in the Nazi creed. Hitler determined to manufacture his own poison gas. To be effective, he wrote in Mein Kampf, propaganda must harp on a few simple slogans appealing to “the primitive sentiments of the broad masses”.

But propaganda, like advertising, only strikes chords when the conditions are right. For all his ranting, Hitler could never have won widespread support if he had not been able to exploit the multiple miseries of the Depression. After 1929, Germans were receptive to his assertion that their sufferings were the evil fruits of the rotten Weimar system. The problem was not economic but political, he insisted, and it could only be solved by the restoration, under his leadership, of German might: “The key to the world market has the shape of the sword.” His means of grasping that sword was the Nazi party, which he organised entirely “to serve the propaganda of ideas”.

Once in power, Hitler deployed all the resources of the state and of modern technology to control German minds. He used terror and theatre, Dachau and Nuremberg. He communicated with hypnotic directness through the new media of radio and cinema – Leni Riefenstahl’s repellent film Triumph of the Will transformed propaganda into art. And Hitler engaged Josef Goebbels to impose ideological uniformity on Germany.

Leni Riefenstahl’s repellent film Triumph of the Will transformed propaganda into art

He earned his nickname, “Mahatma Propagandhi”. Nazism, Goebbels declared, was an all-embracing creed and “the propagandist must be the man with the greatest knowledge of souls”. Every field of German life was to be ploughed and harrowed. Goebbels attacked “decadent” art and supervised the burning of books purloined from public libraries, “intellectual brothels”. The press was regulated. The church was intimidated. Academe succumbed to discipline. The rector of Göttingen University said that he was “proud of the new appellation – barbarians”. According to the rector of Freiberg University, Martin Heidegger, “The Führer himself, and he alone, is Germany’s reality.”

Sharing this view, Goebbels presided over the immolation of national culture. Students were instructed in “Aryan biology”, “German mathematics” and “Nordic physics”. Einstein and Freud were reviled. So was Emanuel Lasker, who had become the world chess champion by employing, in Goebbels’ eyes, low semitic cunning to deprive Nordic players of “their legitimate rights”.

German filmmaker Leni Riefenstahl at the 1936 Berlin Olympics. Photograph: Keystone/Getty Images

Stalin’s assault on reality was equally grotesque, though it scarcely seemed more so than his policy of exporting grain when millions of Russian peasants were starving. He, too, insisted that the truth was what he said it was, endorsing the bogus science of the agronomist Trofim Lysenko, denouncing the mathematician Nikolai Luzin as a wrecker, and killing astronomers for taking a non-Marxist line on sunspots. Conjuring with the dialectic, Stalin maintained that the greatest saboteurs were those who committed no sabotage and that the monstrous apparatus of Soviet repression assisted the withering away of the state.

This driver of the locomotive of history shunted backwards as well as forwards: he created unpersons, expunging former acolytes such as secret police chief Genrikh Yagoda from photographs, and warned the revolutionary, politician and the late Lenin’s wife, Nadezhda Krupskaya, that if she misbehaved he would make someone else Lenin’s widow. He put on elaborate charades to fool foreign travellers and fellow travellers: useful idiots who inferred the success of communism from the failure of capitalism.

Soviet propaganda poster. Illustration: Universal History Archive/UIG via Getty Images

Moreover, Stalin suborned western journalists such as Walter Duranty, who famously wrote of the Ukraine famine in the New York Times: “There is no actual starvation, but there is widespread mortality from diseases due to malnutrition.” Some journalists did report it accurately, though; among them Malcolm Muggeridge, who also recorded – the axiom of the age – a Russian censor’s exclamation: “You can’t say that because it’s true.”

Truth was further occluded by faith and fear. In the Ukrainian city of Kharkov, Arthur Koestler observed some of the worst horrors of the famine but affirmed they were products of the capitalist past, whereas the few hopeful signs pointed to a communist utopia. Even in the gulag, Eugenia Ginzburg wrote, people refused to believe the evidence of their senses: “Anything that appeared in a newspaper carried more conviction with them than what they saw in the street.”

In the shadow of the Lubyanka, the headquarters of the KGB, the most hardened sceptic paid lip service to the veracity of the newspaper Pravda (Truth) – lying, Russians joked, like an eyewitness. Universal mendacity, said Aleksandr Solzhenitsyn, was the only safe form of existence.

Against a background of turmoil and stress, propaganda dissolved certainties and warped perceptions. “I believe everything but the facts,” said the Moscow-based British journalist Alfred Cholerton. Reality became plastic, like Salvador Dalí’s clocks. Power created hallucinations, dreams of golden mountains. Dual consciousness flourished, which Orwell dubbed doublethink. To quote that penetrating student of Marxism, the Polish philosopher Leszek Kołakowski:

At public meetings, and even in private conversations, citizens were obliged to repeat in ritual fashion grotesque falsehoods about themselves, the world, and the Soviet Union, and at the same time to keep silent about things they knew very well, not only because they were terrorised but because the incessant repetition of falsehoods which they knew to be such made them accomplices in the campaign of lies inculcated by the party and the state.”

Even those who recognised Stalin’s tyranny for what it was did not necessarily want to tell the party faithful. “If you deprive them of their illusions,” said Roberta Gropper, a communist member of the Reichstag who fled to Russia and was imprisoned before being handed back to Hitler, “you rob them of their last hope.”

Soviet leader Stalin insisted the truth was what he said it was. Photograph: Hulton Getty

The world was especially confused by the show trials choreographed by Stalin during the Great Purge. The crimes to which the defendants confessed were so fantastic that their guilt seemed inconceivable. Yet, as the economist John Maynard Keynes said: “The speeches of the prisoners made me feel they somehow believe their confessions to be true”. He was baffled, as was Thomas Mann, who called the trials “ugly riddles”.

A number of well-informed observers took the charges at face value, while others dismissed the entire proceedings as a cruel piece of agitprop. In a typically revolting image, the French novelist Céline said the Soviets had dressed up a turd and tried to present it as a caramel. Many foreigners, lacerated by more immediate troubles, took the clash of opinion as a licence to withhold judgment. They found it impossible to determine the truth in a world dominated by what Pasternak called “the inhuman power of the lie”.

Britons discovered that there was no substance to lurid atrocity stories about raped nuns and dismembered babies

Seeing things straight was made even more difficult in the west by revelations about the activities of British propagandists during the first world war. Americans found evidence that they had been inveigled into the conflict by a transatlantic campaign of deception, which strengthened the isolationist case during the 1930s. Britons discovered that there was no substance to most of the more lurid atrocity stories – about crucified soldiers, raped nuns, dismembered babies and, notoriously, about the German factory for rendering corpses into fat.

The Labour politician Arthur Ponsonby gave voice to the widespread outrage: “The injection of the poison of hatred into men’s minds by means of falsehood is a greater evil in wartime than the actual loss of life.” In consequence, people were reluctant to credit stories of genuine atrocities emanating from Hitler’s Germany. When the News Chronicle printed a circumstantial account of the horrifying brutality of guards at Sachsenhausen in 1938, Hilaire Belloc wrote that this “example of lying on the anti-Nazi side” made it impossible “to believe anything from that quarter without corroborating testimony”.

As a result of the exposure of its crude fabrications, British propaganda was relatively genteel during the 1930s – typified by the British Council, the BBC, cinema newsreels and the Times. These organs of the establishment manipulated opinion discreetly, but effectively. Rex Leeper, head of the Foreign Office press department, who wanted to transform all Fleet Street into “a gramophone repeating the FO dope”, even boasted that he could turn the public mind around in three weeks. This was optimistic, but the government got its message across, playing down the Depression, talking up the monarchy (while orchestrating a conspiracy of silence about Edward VIII’s relationship with Mrs Simpson) and supporting the appeasement policy. In late August 1939, the BBC’s director general suggested relaying “to Germany ‘the famous song of the nightingale’ in Bagley Woods as a token of Britain’s peace-loving intentions”.

Such insidious tactics were often complemented by delicate economies with the actuality, such as the then foreign secretary Anthony Eden’s claim that he did not know who had bombed Guernica. Sometimes these subterfuges rang hollow: when “unknown submarines” were blamed for sinking ships trading with republican Spain, Mussolini was dubbed the “unknown statesman”.

Still, British propaganda was different from that employed in countries where, as Winston Churchill put it, “everything is cooked and doctored and pervaded by rule and decision, and you can only tell by getting hold of foreign newspapers what is happening in the great world outside”. As a British diplomat in Italy complained, the propaganda broadcast from Mussolini’s radio station in Bari bore no relation whatever to the truth, unlike that disseminated from London, which presented news and views “objectively and factually, though favourably by a process of selection and omission”.

The US government also acted with some finesse. In an unparalleled “publicity splurge”, many new agencies were established to promote the New Deal, but none was as effective as President Roosevelt’s intimate broadcast “fireside chats”.

Elsewhere, reflecting local circumstances, propaganda was more strident. New depths of falsification were plumbed during the Spanish civil war. As the Depression took its seismic toll in Japan, the police arrested 60,000 “thought criminals”, airmen threatened to bomb the plants of errant newspapers, and official censors took their craft to its ultimate absurdity by refusing to identify what it was they wished to suppress.

Italian journalists not only glorified the DUCE in upper case but capitalised His personal pronoun, like God’s. The Popular Front in France was influenced by a student of totalitarian propaganda techniques named Sergei Chakhotin, who wanted to save humanity from fascism by subjecting the democratic masses to “psychical rape”. But Gallic festivals of fraternity, despite dramatic special effects such as skywriting, were tame beside the brutal pageants staged beneath the red flag and the swastika.

During this period, the artist and writer Percy Wyndham Lewis claimed, the masses were “hypnotised into a sort of hysterical imbecility by the mesmeric methods of Advertisement”. In fact, propaganda, however ubiquitous and ingenious, cannot brainwash an entire people. Most individuals remained free in their heads. But there is no doubt that propaganda was highly influential, particularly when projected on to a screen or over the airwaves, at a time when minds as well as bodies were being battered by the economic blizzard.

Where it did not convince, it confused. It muddied the wells of knowledge and polluted the sources of understanding. It sanctioned the suspension of belief and disbelief. Propaganda helped to make the 1930s an age of obfuscation, of darkness at noon.

Piers Brendon is the author of The Dark Valley: A Panorama of the 1930s (Vintage, £25). To order for £21.25, go to bookshop.theguardian.com or call 0330 333 6846