The great depression
The great depression was a period between 1929 and the late 1930s that was characterized by economic decline in the world. In the United States, the depression began on Sept 4, 1929, after the fall in stock prices. It is one of the deepest depressions in history. The depression was marked with a low economy, high unemployment levels and reduction in production. The gross domestic product decreased by 15% globally.
Both rich and poor countries felt the effects of the great depression. In some nations, it lasted up to the late 1930s while in others the effects were felt till the end of World War 11. In the United States, unemployment levels rose by 25% while in some other countries it increased by 33%. Farmers were badly affected as crop prices lowered by 60%. Mining and construction decreased. Tax revenue, income, and profits also dropped.
After the crash of the stock market, Wall Street panicked. A large number of investors that had invested in the stock market were wiped out. Industrial output, consumer spending, and investments dropped. The crash in the stock market was caused by a huge number of investments in the stock market in the 1920s. The economy doubled during that time. Tycoons and cleaners all invested in stocks. The stock market got to the pick in August 1929. By that time unemployment has increased and production had dropped leaving stock prices at a higher price than the actual.
In 1933, the great depression reached its lowest. By that time more than 15 million people were unemployed and close to half of the banks had failed. Lower consumer spending and investments caused a steep decline in industrial output. This led to the layoff of most employees. The spread of the great depression to other countries was largely caused by the gold standard. The gold standard linked countries in a network of fixed currency exchange rates.
The great depression caused massive human suffering and a change in economic policies. The abandonment of the gold standard greatly contributed to the recovery from the great depression. The depression was severe in the United States and Europe. It was milder in Japan and Latin America. The great depression was one of the longest and most severe depressions in the world. It caused a deflation in most parts of the world. The depression was caused by a reduction in consumer demands and financial panics. It was also caused by misguided government policies in the United States that led to the decline of economic output.
References
Watkins, T.H., 1993. The great depression: America in the 1930s. Boston, MA: Little, Brown.
Romer, C.D., 1990. The great crash and the onset of the great depression. The Quarterly Journal of Economics, 105(3), pp.597-624.
Romer, C.D., 1992. What ended the great depression?. The Journal of Economic History, 52(4), pp.757-784.
