Introduction
When, Where, and Why Did The Great Depression Come in World History?
Before the Great Depression started in the year 1929, the perception of industrialists of the world was that “supply creates its demand.” Due to this ideology, industrialists focused on increasing production and not on selling it. There was a time when the supply of goods and services in the market became more, and demand was less. That is why the Great Depression hit the whole world.
What ended the Great Depression in the United States?
How did the Great Depression end?
The Economic Depression of the year 1930 is considered to be one of the most significant events in this world. It is also called the recession of Tisa. This incident destroyed the economic beliefs of classical economists all over the world.
Before the arrival of this recession, the perception of industrialists of the world was that “supply meets its own demand”. Therefore, all the people used to focus only on production; these people were not worried about the demand for this production.
Due to this ideology, industrialists concentrate on increasing production and not on selling it. That is why the Great Depression hit the whole world.
Starting from America in the year 1929, this economic event had engulfed the whole world. Due to this, the banks were bankrupt, the stock market was busted due to which millions of dollars of shareholders were drowned, companies stopped production, people were becoming unemployed, and people in debt were committing suicide.
But what were the reasons for all this and what were its effects on the whole world, this article is being discussed further in this article.
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When did the Great Depression begin?
In the year 1923, the stock market of America started climbing and went up. But by 1929, there were signs of instability in it. Finally, on 24th October 1929, nearly five billion dollars were wiped out in one day.
The market continued to fall the next day, and on October 29th, 1929, the New York Stock Exchange fell further and lost $ 14 billion. In this way, on Tuesday, 29th October 1929, ‘Black Tuesday’ was called. This recession lasted until the start of the Second World War, that is, 1939.
The Great Depression spread like this in the world.
It is said that when America sneezes, the whole world suffers from a cold. Many countries, mainly Western European countries, Japan export a large part of their production to the US.
The recession in 1929 led to a decrease in demand in the US, which led to a decrease in exports to these countries. The US also increased import duties to protect its domestic industries. On this, other countries of the world also increased taxes on imports.
This led to a decrease in exports from all countries. Due to declining exports, the recession started spreading in almost all the developed countries of the world.
To increase exports and reduce imports, these countries started reducing the value of their currency, which is called devaluation or devaluation. If you want to import a mobile phone from Japan, you must first buy Japan’s currency ‘Yen.’
If the price of the yen decreases, Japanese mobile also becomes cheaper, and Japan’s exports increase. As Japan devalues ??its currency, the rest of the world starts devaluing its currency to increase its exports and reduce imports.
This is called ‘Competitive Devaluation.’ That is, every country wants to reduce imports from its neighboring countries and more exports. It is also called ‘Beggar Day Neighbor Policy’. This happened during the Great Depression and all the countries were harmed by this problem.
What Were the Causes of the Great Depression?
Truly there was no single reason for the Great Depression of the 1930s, but the lack of demand in the market, failure of banks and heavy downfall of the stock market is considered as the main reason in which 40 billion dollars of shareholders were wiped out.
From my point of view, the causes of this Great Depression was hidden in the mass production of America after World War I, i.e., in 1920s America.
Actually, after the First World War, there was the hope of development in the people, which led to the Industrial Revolution in America, rural people displaced to cities for good jobs, agriculture and industrial products were produced on a large scale but demand for all these things than production.
Did not increase, which reduced the sales of companies, increased the stock of things, closed the loan of banks, banked the bank, and share market Dropped, and then the situation continued to worsen.
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Why did the great depression last so long?
How was the Economic Depression – Great Depression Years
- It started with America and had engulfed the whole world.
- In the year 1923, the US stock market started climbing and went up. But by 1929, signs of instability started coming. He finally burst the bubble on 24th October 1929.
- Nearly five billion dollars were wiped out in one day. The market continued to fall the next day as well.
- On October 29th, 1929, the US stock market re-rolled and recorded a loss of $ 14 billion. By the time the market closed, it had lost 12 percent.
- The savings of millions of people evaporated. It is also known as Black Tuesday.
- There was a massive reduction in demand, and the wheels of industrial development were blocked. Millions of people lost their jobs. Agricultural production also decreased by up to 60 percent.
- The same trend continued until July 1932, when the stock market had fallen 89 percent from the peak of 1929. It took years to recover the stock.
- The process of recession is as follows;
First, the demand in the market decreased, which increased the stock of companies, reduced production, added jobs, people stopped repaying the loans of banks, due to which the banks had less power to lend, stopped getting loans and people whose money.
They also had deposits in the banks and started to withdraw them, due to which the banking structure collapsed due to the combined effect. The bankruptcy of about 9000 banks went out.
Due to lack of insurance of deposits in the bank, people lost their capital. The banks which remained stopped the transaction of money. People reduced their expenses, then the demand for goods and services started decreasing in the market, as a result, companies reduced production, which led to the? and when there would be no production, why would a company hire people, consequently jobs started to go away. Due to which there was a great depression in the whole world including America.
Effects of the Great Depression:
Unemployment in America increased from 1.5 million to 12 million. Due to the economic downturn in Europe, the European debt of America was in a state of drowning.
The most significant result of this Great Depression was that countries like America got a significant fund to strengthen their economy.
Military expansion and promotion in various countries, including America, not only opened the doors of jobs, but also the production of weapons brought life into the economies.
Even today, the axis of the American economy is its arms sales. During World War II, America sold weapons fiercely and emerged as a superpower in the world.
The Great Depression of 1930 affected the whole world. Australia’s economy was dependent on exports of agricultural and industrial products, so it was changed the most. Industrial production in Canada fell by 58%, and national income fell by 55%.
In 1931, due to the economic downturn, Britain had to abandon the gold standard. The government stopped exporting gold. The British government adopted the cheaper currency rate, which led to a reduction in the interest rate. This gave loans to various industries at a more reasonable price, which encouraged industrial development.
During 1929 to 1932, the rate of global industrial production had fallen by 45 percent.
Due to this recession, more than 5 thousand banks were closed.
In this way, the economic recession started in America affected the whole world. Hopefully, after reading this article, you must have understood what reasons the Great Depression came and in which countries it affected.
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The impact of the economic crisis on the major countries of the world:
Effects of the Great Depression on Germany
Unemployment in Germany increased enormously as a result of the financial crisis. By 1932, 60 lakh people became unemployed. This weakened the situation of the external republic in Germany; Hitler took advantage of this and came to power. Thus in the economic downturn, Germany established the rule of Nazism.
Impact of the Great Depression on Britain
Due to the economic downturn in 1931, Britain had to abandon the gold standard. The government stopped exporting gold. The government adopted a policy of economic stabilization.
This helped Britain recover from the economic recession. By selecting the policy of protection in trade, the balance of trade became in favor of Britain.
The British government adopted the cheaper currency rate, which led to a decrease in the bank rate. This gave a boost to various industries.
Impact of the Great Depression on France
France’s economic situation was stable due to excessive compensation from Germany, so the economic recession did not have much impact on it. The French currency was successful in preserving its credibility.
Impact on Russia – Stalin’s economic policies and five-year plans in Russia strengthened the financial situation. Hence, that too, was not affected by the economic downturn. This exposed the strength of the communist system to the world and the hollowness of the capitalist system.
Impact of the Great Depression on America
Unemployment in America increased from 1.5 million to 12 million. Due to the economic slowdown in Europe, the European debt of the US was in a state of collapse.
Hoover of the Republican Party was defeated in the election of 1932 due to economic crisis. Democratic Party candidate Roosevelt won the election only based on the announcement of the economic reform program.
Impact on Australia The economy of Australia was dependent on exports of agricultural and industrial products, so it had the most impact.
Impact of the Great Depression on Canada
Industrial production in Canada decreased by 58 percent, and national income fell by 55 percent.
Impact of the Great Depression in France
France was mostly self-reliant, so the Great Depression had little effect on it, but still, rising unemployment led to riots and the rise of the Socialist Popular Front.
Latin American countries such as Chile, Bolivia, and Peru suffered heavily. One effect was that the fascist movements started there.
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Other Important Facts of Great Depression
The Great Depression of 1930 is also known as The Great Depression.
A lot of books were also written on it, which was also very successful, the most famous among them was “The Steppes” written by John Steinbeck, which was published in 1939. It also received the Nobel Prize for Literature.
Note: Depression Cure does not provide any type of medical advice, diagnosis, or treatment.
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