THE GREAT DEPRESSION OF 1930s

THE GLOBAL DEPRESSION OF 1930s:

The most common association that the general public has with the Great Depression is the crash of the stock market that occurred in October of 1 9 2 9. However, the Great Depression was much more than a crash in financial markets. The Great Depression was the longest and most severe economic downturn in modern history, which lasted for almost 10 years (from year 1929 to 1939) and affected nearly every country in the entire world.

CAUSES OF THE GREAT DEPRESSION:

1. STOCK MARKET CRASH OF 1929:

The stock market crash of October 29, 1929, remembered today as 'Black Tuesday', is typically remembered as the most obvious marker of the Depression beginning. The market, which had reached record highs that very summer, had begun to decline in September. On Thursday, October 24, the market plunged at the opening bell, causing a panic. The market crashed five days later on “Black Tuesday”, losing 12% of its value and wiping out $14 billion.

2. BANK FAILURES:

The effects of the stock market crash rippled throughout the economy. Nearly 700 banks failed in waning months of 1929 and more than 3000 collapsed in 1930. Federal deposit insurance was as- yet unheard of, so when the banks failed, people lost all their money.

3. DROUGHT CONDITIONS:

The economic devastation of the Great Depression was made worse by environmental destruction. A year-long drought coupled with farming practices which did not use soil-preservation techniques created a vast region from southeast Colorado to the Texas panhandle that came to be called Dust Bowl. Massive dust storms chocked towns, killing crops and livestock, sickening people and causing untold millions in damage.

4. AMERICAN ECONOMIC POLICY WITH EUROPE:

As the Great Depression tightened its grip on the nation, the government was forced to act. Vowing to protect U.S. industry from overseas competitors, Congress passed the Tariff Act of 1930, better known as the Smoot-Hawley Tariff. The measure imposed near-record tax rates on a wide range of imported goods. A number of American trading partners retaliated by imposing tariffs on U.S.-made goods. As a result, world trade fell by two-thirds between 1929 and 1934.

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EFFECTS:

• In US, industrial production fell nearly 47%. Gross Domestic Product (GDP) declined by 30%. Unemployment rate reached more than 20 per cent

• The Depression caused many farmers to lose their farms. Years of overcultivation and drought created the 'Dust Bowl' in the MidWest.

• Deaths from suicide increased by 22.8% between 1929 and 1932-an all time high. Economic instability led to political instability in many parts of the world.

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Economic instability led to political instability in many parts of the world. Political chaos, in turn, gave rise to dictatorial regimes such as Adolf Hitler's in Germany and the military's in Japan. These regimes pushed the world even closer to war in 1030s. When world war broke out in both Europe and Asia, the United States tried to avoid being drawn into the conflict.

When Japan attacked the U.S. Naval base at Pearl Harbor on December 7, 1941, the United States found itself in the war it had sought to avoid for more than two years. Mobilizing the economy for world war finally cured the depression. Millions of men and women joined the armed forces, and even larger numbers went to work in well-paying defense jobs.