The
Great Depression means a period
in the industrial
nations characterized by
low production, and
sales, high rate
of business failure,
and unemployment. The
Great Economic Depression
was the worst
and longest economic
collapse in the
history of the
Modern Industrial World,
lasting from the
end of the
end of 1929
until the 1940’s.
Beginning in the
United States of
America (USA).The depression
spread to most
of the World
Industrial nations.
Between 1929-1933,
the United interested
whole world except
Russia, was stricken
by period of
economic depression. British,
France, Italy, USA
and other European
countries were badly
affected by the
Great Depression from
all the countries
which were attached
by that depression
U.S.A was the
first and most
affected one, this
is because the
depression started to
occur in USA
and later entire
Western European and
other part of
the world (colonies
of big nation).
Economic historians usually
attribute the state
of Great economic
depression to the
Sudden devastating collapse
US stock market
price on October
29, 1929 known
as Black Tuesday
dispute, this conclusive and
see the stock
crush as symptoms
rather than causes
of the Great Depression.
John D Rockeffer
said that“These are
days when may
are discouraged. In
the 93 years
of many life
depression have come
and gone. Prosperity
has always returned
and the stock
market turned upward
in early “1930”
returning to early 1929
levels by April.
This was still
almost 30% below
peak of September”[1]
The crush
of the U.S
stock market in
October 1929 led
American investor to
withdraw from their
funds from Germany
and other European
Market, the withdraw
of fund seriously
weakened the banks
of Germany and
other central European
states.
African was also
severely affected by
the Great depression
since, she was
a colonial appendage
to European power
The following are the
characteristics of Great Economic Depression:-
Firstly,
Existence of hyper inflation (high depression of money) that facilitated to the
collapse of the economic.
Secondly,
Mass unemployment to the European and American people. The official figures are
impressive, peaking at around 6 million. Unemployed in German, 14 million in
the United States and 2.7 million jobless in Britain due to low economic
activities.
Thirdly,
Social tensions increased considerably, with a rising intolerance towards
groups of individuals who were perceived to be “economic rivals” or “outside”.
Many people began to blame their neighbor for the economic collapse.
Fourthly,
Low purchasing power that is inability of people to buy their basics and this
was because of low economic activities.
Fifthly,
protectionism was by preventing commodities from other nations, was applied as
one of the method to prevents depression,
Sixthly,
Starvation famine and Malnutrition related deseases. The depression took a
heavy toll on the physical and mental health of society. In Hamburgies for
example, over 50 per cent of all Young men were unemployed for more than two
years and they were especially hard-hit by the social and psychological
Seventhly,
Low production of industrial goods and steady fall of price levels
Eighthly,
Closure of financial institution like banks because of low level of economic
activities.
Ninthly,
Wide spread of economic depression in the world except Russia.
Tenthly,
The failure of governments to combat the depression effectively caused domestic
policies to become increasingly turbulent. In much of central and Eastern
Europe, as in the Weinar Republic
The
Great economic Depression
has categorized into political, economic
and social reasons.
The following are
the political causes for
great economic depressions:-
The impacts
of the first
world war, lead
to the Great
economic depression. The
first world war
was which couped
the weakness of
international economy. USA
was assisting many
countries so many
loans were not
returned, German borrowed
much money from
USA to pay
for reparation hence
it was difficult to
return them as her economy.
World war I caused destruction of
industries and it
was difficult to
return the economy
to a sound
peacetime. “It was
depression which hit
not only America
alone but Britain,
Europe and the
world at large”[2]
The Great
crush of New
York stock exchange,
was another reasons
for the Great
depression. There was
great crush at
New York stock
exchange, a tendency
where by people used
much money to
buy stocks (share)
in order to
sell them for
further profits. Now it become
a time when
price of shares
dropped down. Hence Banks
became bankrupt, so
many industrial firms
had no money
to buy raw
materials to employ
workers, therefore people
had no money
to buy product
hence fall of
economy.
“The business,
houses and the
banks which controlled
transport, industries and insurance companies
issued shares or a large
scale. This lent
support to the
tendency to gamble
and speculation in
the prices of
shares the people
invested in share
in discriminately office
clerks, teacher doctors,
house wives and
businessmen of all
kinds borrowed money
at 10 percent
to by shares
which yielded”[3]
Also problem
of repayment of war
loans. During the
war against Germany. The
allied countries had
given loans, gold,
weapon and ammunitation.
At the time
the rich and
prosperous counties like
USA and Britain
had given loans
to France and
Italy. Even England
it self was
launded with heavy
dept. when the
war come to
an end, the
problems of repayment
of depts. In
a majority of
the Europe. The
USA demanded the
repayment of loans
from its debtor
countries England and
France, however made
a partial repayment.
But when Germany
failed to make
the payment of
the instatement to its
creditors it become
difficult for the allied
countries to make
payment to use
USA, so the problem of
repayment of the
depts. And the
economic depression.
Also unjust
financial terms of
Versailles peace treaty.
The financial terms
of the Versailles
peace treaty paved
the ways for
great economic depressions.
The treaties to
cripple German economically
“It
was on their instigation
that unjust and enomous
war ideminity of
6600 billion pound
was imposed on
German. But German
was incapable of
paying such as
huge the gold
standard of currency
had been abandoned.
International trade had
been redunced to
half”[4]
Such conditions
had payment of was indeminity.
The vangushed power
followed suit. All these
factors badly effects
the economic conditions of
remaining of European
power.
International situation
was political factors
for Great economic
depression, since international
problems weakened the
economy. After the
world was I,
the United states
became the world’s
chief creditor as
European countries struggled
to pay war
debt and reparation.
Many Americans bankers
were not ready
for this new
role. They lent
heavily and unwisely
to borrower in Europe
especially Germany who would
have difficult repaying
Economically, there
are some factors
for the Great economic
depression, these are
explained as follow:--
Increase in production and
decrease in demand. After
the war, inspired
by national feeling,
become economically self
sufficient by increasing
the industrial and
agricultural productions. As
a result there
was considerable rise
in production of
cotton and molten textiles
rubber, plastic and
electric goods and
manufacture of motor
cars. The production
of these goods.
There was fall
in the profit
of the industries
and it become difficult
for the employers
to pay wages
to their workers.
“It was
due to overproduction on
both agriculture and
industrial goods in
the America and
Canada. Such goods
were like food,
copper and zinc
on top of these goods.
There was else
over-production of wheat
and coffee found
outside this caused
depression”[5]
Also, protective
tariff duties. After
the war all
the European countries
were influenced by
the spent of
economic nationalism to
protect their selfish
economic interest, They
imposed international trade
restrictions. They heavy
input duties to
protect their industries. The
USA was the
first country to
follow the policy.
After words as
reaction to American
policy, the European
countries also imposed
excessive import duties
on the foreign
goods.
“Those protective
duties effected not
only American trade
with the European
countries but also
gave a set
back to international
trade. The European
countries now attempted
to monopolize markets.
For instance France and
some other Europeans
countries established Pan-European
customs Union”[6]
Then, unequal
district ion of wealth
and income was
another cause for
the Great Economic Depression.
The European power
had raised heavy
loans from USA
to purchases arm
and ammunition during
the war and
had became the debtors
of USA. Besides,
the defeat European
countries had to pay debts.
As the USA,
refused to receive
this amount in the
form of
gold France also
received indeminity from
Germany in the
form of bullion.
As a result
America and France
had built huge
stock of gold.
“Workers in
the coal railways,
road and other
American industries, failed
to share in
the properties of the
1920’s industrial production
increased by about 50%
but the wages
of industries workers
legged behind as
result these workers could
not failed their
stock had to reduce
production so as
to keep with
the demand of
such goods”[7]
Also introduction
of modern machinery
in the industries,
was another factors
for the Great
economic depression. In order
to fight the
first world war,
most of the European
nation had recruited
large number of
the citizens in
their armies. This
resulted in the
shortage of the
labour force in
their factories. “To increase
production, the factories
owners introduced automatic
machines in their
industries, As result
the industries required
lesser number of
worker’s to run
the machines”[8]. After
the war, unemployment increased
which depend the
economic depression.
Post war
economic recoveries in
Europe was another
economic reason for
the great economic
depression. Many industries
were destroyed and
stopped production. Hence
America products supplied
to Europe and
for domestic purpose,
but after war the European
countries adopted economic recovery
programmers’.
“Soon the
industries in Europe
were producing as
many goods as
usually so the American
goods
collide with European
made goods in
Europe and consequently
the Market was
flood and depression
occurred”[9]
Not only
political and economic
reasons for the Great
economic depression but
also, social causes.
The following are
the social causes
for the Great
economic depression.
Un even
distribution of income.
Workers in the
coals, railways roads
and other Americans
industries failed to
share in the
properties of the
1920’s industrial production
increased by about
50% but the
wages of industries
worker legged behind
as result these
worker could not
buy industrial goods,
which mas produced many
workers had less
money to buy
these goods since
industrialist failed to
sell their stock
had to reduce production
so as to keep
with the demand
of such goods
“The European
powers had raised heavy
loans from USA
to purchases arms
and ammunitions during
the war and
had became the
debtors of USA.
Beside the defeated
European countries had
to pay large
amount of money as
war I deminity
and repay depts.
As the USA
refused to receive
the amount in
the form of
gold”[10]
Also domestic
overproductions. The European
countries made effects
to become economically
self sufficient by increasing the
industrial and agricultural
productions. As result
there was considerable rise
in production of
cotton and molten
textiles, rubber, plastic
and electic goods
and manufacture goods.
“America industrialist
encouraged by the
high profit and
helped by increased
mechanization were producing
too many goods
for the home
markets to absorbs.
This was not
apparent in the
early 1920’s but as
te 1930’s approached
unsold stocks of goods began
to build up
and manufactured produced
less”[11]
The great
economic depression brought
political economic and
social impacts world
wide
To
start with political
impacts, the following
points axplains the
political impacts for
the Great economic depression
Highelitened nationalistic
self interest the
economic depression aroused
the feeling of
intensive selfish national
interest among all
nationals of the
world. Every national
thought,
“We
or they” meaning
national self interest
fought and fore most
Dictate or semi-democratic government
in Germany Italy
and Japan formed
to fight for
great depression”[12]
Also rise
of dictatorship, various
dictators raised and
formed different political
parties. These include,
Adolf Hitler who
formed “Nazism” in
Germany also Benito
Musolin of Italy
formed “Fascism” . the
Great depression affected
Germany badly as
it caused a
period of chaos.
The Weimar republic
come under criticism
for falling to
improve the situation.
This drove up
people into desperation
and mods many
willing to support
extremist parties like
Nazi part, Which
promised jobs for
everyone, may belied
the NAZI part
to the opportunity
to influence the
German into supporting
it.
Also Growing
importance of USA as super power
in the world.
The USA after
it victory in the
first world war
had consolidated her
power considerably. Because
of its strong economic
policy. “It had
gain much strength
and importance, the
following are some
causes which helped
to become the
most powerful nations
in the world,
domestic policies periods
(1920-1929)” coming of
republic power, economic
problem and suppression
of individual liberty.
“Franklin D
Rooservelt chisen to be a
new president of
USA he come
to power and
began with a
new programmes namely
“The New Deal
Plan” which intended
at restoring the
USA economy from
the Great Economic Depression”[13]
Growth of
labour party was
another impacts for
Great economic depression.
By the 1929,
various labour party
was formed in
Britain. The labour
party became the
largest party in
Britain failed from
power in 1930.
A national government
(liberal and conservation)
claimed that
“Bringing Britain
out of the
worst stages of
the depression, primary
by using the
traditional policies of led
armed budget and
protective tariffs the
British political had
largely the new
ideas of Cambridge”[14]
Also reduction
of government spending
it was another
political impacts of
Great economic depression
since government all
around the world
reduced their spending
which lead to
decrease consumer demand.
Construction came to
a stand still
in many nations.
As a consequences
of government activities
he real Gross
National Production of
nations like United
States and Britain
sell by 30.5%
whole prices sell
by 30.8% consumer
prices sell by
24.4%
Economic impacts
for the Great
economic depression as
exploired as follows:-
Set back
of international trade.
The great depression
gave a setback
to international trade.
Firat all USA
and European countries
imposed severe restriction
on the transport
of foreign goods
to protect their main
industries. They imposed
unjust and every
high tariff duties
to check imports some
countries introduced the
system of import
quotas to reduce
inputs. As a
result there was tremendous sell
in the international
trade during 1929-1935
and it was
reduced to 113rd of
the pre depression
level
Also decline
in agricultural production.
Due to lack
of subsides and
loans were unable
to support mass
produced leading to
under capacity output
textile farming formed
the major problems.
The period sewed
as precursor to
one of the
worst drought in
modern American history. Although a
few segment under
agriculture example cotton
a benefited from
the crisis in
general the whole
agriculture sectors experienced
a set back.
Another impat
was decline of
Banks. Although same
banks were very
successfully, there were
many banks failures.
These failures occurred
when a bank
coulds not pay
bank he money
that customs had
not deposit more
han 550 banks
closed. Mostly in
agricultural areas because
the loss of
farmers jobs and
lower prices made
the economic of
these communities very
shaky people who had
saving in these
failed banks usually
lost every things
“The nations
banks now began
to go under
in alarming numbers
1,326 closed their
doors in 1932. Frightened
depositors began to
withdraw and heard
their money adding
to the banking
difficulties”[15]
Also fall
of price of
raw materials which
caused the farmer
to reduce the
quantities of crops
produced especially wheat and
Bakery so as
to create the
scarcity. Manufacturers found
it increasingly difficult
to sell their products
and by 1932. Industrial
production had fallen
to one half
it 1929 level.
Actual take home
pay however fall
sharply as factories
want on part
time closed down
completely or reduced
personnel
“European
agriculture increased in
efficiency and as
European car renues
returning to the
gold standard became
more valuable. Food
products the same
became true of
means coffee trusts
and other food
stuffs produced outside western Europe
was out distancing
the ability of the industrial
world to absorb
it all”[16]
Apart from
political and economic
impacts also there
are social impacts
of the Great
economic depression These
are explained as
follow:-
Unemployment. From
many families during
the depression years
the loss of
the father’s job
was the start
of a long
descent it poverty,
homeless, starvation and
hopelessness. In 1925
unemployment rate had
been a low
percent. After the
stock market crush
of 1929 the
unemployment rate jumped
to 9000 of men
and children tried
to make a
living shining shoes
or selling apples
or city streets. A few
people of who
in order to feed their
families. Some teenage
boys and girls
want to live
in the homes
worker or teaching
young children.
“In 1932,
Germany had six
million unemployed workers,
many of them
working aim lessely about
the country, begging
for food and
seeker shelter in
city lodging houses
for the lone less.
The great depression
was an impact
factor in the
size of the
power of Adolf
Hilter and Nazism”[17]
Also lost
savings, people who
had saving in
the banks were forced
to withdraw their
money in order
to pay off
their debts, make the
payments on their
houses and cars
or simply to
buy food. Many
banks lost huge
sum of the
money in their
demands of the
customers who wanted
to withdraw them
money from their
accents. About 9000
bants failed in
the three years
after the stocks market
crush having millions
of the customers
without saving.
“The crush of
the US stock
market in October
1929 led parnicky
American investors to
withdraw man of
their funds from
Germany and other
European markets. The
withdraw of fund
seriously weakened the
bants of Germany
and other central
European states”[18]
In conclusion,
the Great Economic
Depression of 1929
had caused by
the various factors,
which categorized into
economic, political and
social reasons as
explained such as
overproduction. The impacts
of the first
world war, protective
tariff duties,
uneven distribution of
income and others.
Also it brought
an impact world
wide, in European
and in Africa,
such as rise
of dictatorship growth
of labour party,
reduction of government
spending and so on
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Ting (2009) Longman, Developing Skills
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Denis, Richard.
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Herman J.
Viola (1998) Why We
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Jackson, J
William, J. Duker
(2007) Essential of World
History since 1500 6th ed, Clark Baxter
and Suzan Jeans
publisher
K.A. Manikumar
(2003) Colonial Economy in
Great Depression Published
by Orient Longman
Limited
R, Raghunath
(1988) History Class XII
Rahul Jain V.K
India Enterprises
Tipton F,
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An Economic
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Lond Oxford University
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