The great depression
What was the great depression?
The great depression was a worldwide economic crisis in the 1930’s. It was the longest, most widespread, and deepest depression of the 20th century. In the 21st century, the Great Depression is commonly used as an example of how far the world's economy can decline. The depression originated in the U.S., starting with the fall in stock prices that began around September 4, 1929 and became worldwide news with the stock market crash of October 29, 1929 known as Black Tuesday. From there, it quickly spread to almost every country in the world. Some economies started to recover by the mid-1930s. However, in many countries the negative effects of the Great Depression lasted until the start of World War II.
What were the causes of the depression?
1. As early as 1926, there were signs that the boom was under threat – this was seen in the collapse of land prices in Florida.
2. Eventually, there were too many goods being made and not enough people to buy them.
3. Farmers had produced too much food in the 1920’s, so the prices for their produce became lower.
4. There were too many small banks – these banks did not have enough funds to cope with the sudden rush to take out savings, which happened in the autumn of 1929.
5. Too much speculation on the stock market – the middle class had a lot to lose and they had spent a lot on what amounted to pieces of paper.
6. The Wall Street Crash of October 1929 was a massive psychological blow.
7. America had lent huge sums of money to European countries. When the stock market collapsed, they suddenly recalled those loans. This had a devastating impact on the European economy.
8. The collapse of European banks caused a general world financial crisis.
What were the consequences of the depression?
1. Unemployment - 13 million people were out of work.
2. Industrial production dropped by 45 per cent between 1929 and 1932.