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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”
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”
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”
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”
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”
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”
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”
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”. 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”
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”
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”
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”
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”
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”
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”
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”
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”
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”
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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