The Great Depression was the great economic crisis that started after the U.S. stock market crash in 1929. The prices on the Wall Street stock market fell a lot from October 24 to October 29, 1929. Many people lost their jobs. By 1932, 25–30% of people lost their jobs. They became homeless and poor. This ended the wealth of the Roaring Twenties. Many people think that the Great Depression started on Tuesday, October 29, but economists think Black Tuesday was just one of the causes.
From 1929-1932, the depression worsened. Many suspect that increased taxes on American citizens and the increased tariffs (taxes on countries which trade with the United States) worsened it. Economist Milton Friedman said that the Great Depression was worsened because the Federal Reserve printed out less money than usual.
When the Great Depression started, Herbert Hoover was the president of the United States, and as a result, he was blamed for it. People voted for a new president in 1932. His name was Franklin D. Roosevelt. Roosevelt got the government to pass many new laws and programs to help people who were hurt by the Great Depression. These programs were called the New Deal.
One of these programs was the Civilian Conservation Corps, or CCC. The CCC put many young men to work in the outdoors. The men were paid thirty dollars a month, of which twenty five dollars was sent home to support their families, to work, and they got free food and shelter. Another program was called Social Security. Social Security gave old people a small income so they had money for things they needed. The Great Depression was really bad, but with everyone's help, it would get better. Between 1939 and 1944, more people had jobs again because of World War II, and the Great Depression came to an end.
An important reason for the Great Depression was the Treaty of Versailles. The Treaty of Versailles made the United States very rich. Britain and France both gave large amounts of money to the U.S., and Germany had to pay a great amount of money for the damage they had done in World War I. However, it was this wealth that began the stock market crash.
Even after the Wall Street Crash of 1929, people still had hope. John D. Rockefeller said that "These are days when many are discouraged. In the 93 years of my life, depressions have come and gone. Prosperity (wealth) has always returned (come back) and will again." But soon the bad effects of the depression grew worse and worse. People lost jobs, money, and homes. There were reports that in Germany and the United States, there was great hunger, disease, and even starvation. Nations used protectionism more than in recent decades. This diminished international trade.
The Dust Bowl
Farmers were usually safe from the severe effects of previous depressions because they could at least feed themselves. During the Great Depression, the Great Plains were also hit hard with a drought and dust storms, this was called the Dust Bowl.
Years of overgrazing combined with drought caused the grass to disappear. With topsoil exposed, high winds picked up the loose dirt and carried it over long distances. The dust storms destroyed crops, leaving farmers without food or something to sell.
Small farmers were hit especially hard. Even before the dust storms hit, the invention of the tractor drastically cut the need for manpower on farms. These small farmers were usually already in debt, borrowing money for seed and paying it back when their crops came in. When the dust storms damaged the crops, not only could the small farmer not feed himself and his family, he could not pay back his debt. Banks would then foreclose on the mortgage and the farmer's family would be homeless, unemployed and poor.
The majority of countries set up relief programs and most underwent some sort of political upheaval, pushing them to the right. Many of the countries in Europe and Latin America that were democracies saw them overthrown by some form of dictatorship or authoritarian rule, most famously in Germany in 1933. The Dominion of Newfoundland gave up democracy voluntarily.
Australia's dependence on agricultural and industrial exports meant it was one of the hardest-hit developed countries. Falling export demand and commodity prices placed massive downward pressures on wages. Unemployment reached a record high of 29% in 1932, with incidents of civil unrest becoming common. After 1932, an increase in wool and meat prices led to a gradual recovery.
Harshly affected by both the global economic downturn and the Dust Bowl, Canadian industrial production had fallen to only 58% of the 1929 level by 1932, the second lowest level in the world after the United States, and well behind nations such as Britain, which fell to only 83% of the 1929 level. Total national income fell to 56% of the 1929 level, again worse than any nation apart from the United States. Unemployment reached 27% at the depth of the Depression in 1933.
The League of Nations labeled Chile the country hardest hit by the Great Depression because 80% of government revenue came from exports of copper and nitrates, which were in low demand. Chile initially felt the impact of the Great Depression in 1930, when GDP dropped 14%, mining income declined 27%, and export earnings fell 28%. By 1932, GDP had shrunk to less than half of what it had been in 1929, exacting a terrible toll in unemployment and business failures.
China was largely unaffected by the Depression, mainly by having stuck to the Silver standard. However, the U.S. silver purchase act of 1934 created an intolerable demand on China's silver coins, and so in the end the silver standard was officially abandoned in 1935 in favor of the four Chinese national banks' "legal note" issues.
The crisis affected France a bit later than other countries, hitting around 1931. While the 1920s grew at the very strong rate of 4.43% per year, the 1930s rate fell to only 0.63%.
The depression was relatively mild: unemployment peaked under 5%, the fall in production was at most 20% below the 1929 output; there was no banking crisis.
However, the depression had drastic effects on the local economy.
France's relatively high degree of self-sufficiency meant the damage was considerably less than in nations like Germany.
The Great Depression hit Germany hard. The impact of the Wall Street Crash forced American banks to end the new loans that had been funding the repayments under the Dawes Plan and the Young Plan. The financial crisis escalated out of control and mid-1931, starting with the collapse of the Credit Anstalt in Vienna in May. This put heavy pressure on Germany, which was already in political turmoil.
The reverberations of the Great Depression hit Greece in 1932. The Bank of Greece tried to adopt deflationary policies to stave off the crises that were going on in other countries, but these largely failed. For a brief period the drachma was pegged to the U.S. dollar, but this was unsustainable given the country's large trade deficit and the only long-term effects of this were Greece's foreign exchange reserves being almost totally wiped out in 1932.
Icelandic post-World War I prosperity came to an end with the outbreak of the Great Depression. The Depression hit Iceland hard as the value of exports plummeted. The total value of Icelandic exports fell from 74 million kronur in 1929 to 48 million in 1932, and was not to rise again to the pre-1930 level until after 1939. Government interference in the economy increased: "Imports were regulated, trade with foreign currency was monopolized by state-owned banks, and loan capital was largely distributed by state-regulated funds". Due to the outbreak of the Spanish Civil War, which cut Iceland's exports of saltfish by half, the Depression lasted in Iceland until the outbreak of World War II (when prices for fish exports soared).
Frank Barry and Mary E. Daly have argued that :
- Ireland was a largely agrarian economy, trading almost exclusively with the UK, at the time of the Great Depression. Beef and dairy products comprised the bulk of exports, and Ireland fared well relative to many other commodity producers, particularly in the early years of the depression.
The Great Depression hit Italy very hard. As industries came close to failure they were bought out by the banks. This led to a financial crisis peaking in 1932 and major government intervention.
The Great Depression did not strongly affect Japan. The Japanese economy shrank by 8% during 1929–31.
Japan's industrial production doubled during the 1930s. Further, in 1929 the list of the largest firms in Japan was dominated by light industries, especially textile companies (many of Japan's automakers, such as Toyota, have their roots in the textile industry). By 1940 light industry had been displaced by heavy industry as the largest firms inside the Japanese economy.
From roughly 1931 to 1937, the Netherlands suffered a deep and exceptionally long depression. This depression was partly caused by the after-effects of the Stock Market Crash of 1929 in the U.S., and partly by internal factors in the Netherlands. Government policy, especially the very late dropping of the Gold Standard, played a role in prolonging the depression. The Great Depression in the Netherlands led to some political instability and riots, and can be linked to the rise of the Dutch national-socialist party NSB. The depression in the Netherlands eased off somewhat at the end of 1936, when the government finally dropped the Gold Standard, but real economic stability did not return until after World War II.
New Zealand was especially vulnerable to worldwide depression, as it relied almost totally on agricultural exports to the United Kingdom for its economy. The drop in exports led to a lack of disposable income from the farmers, who were the mainstay of the local economy. Jobs disappeared and wages plummeted, leaving people desperate and charities unable to cope.
Already under the rule of a dictatorial junta, the Ditadura Nacional, Portugal suffered no turbulent political effects of the Depression.
The 1920s brought a dramatic drop in Puerto Rico’s two primary exports, raw sugar and coffee, due to a devastating hurricane in 1928 and the plummeting demand from global markets in the latter half of the decade. 1930 unemployment on the island was roughly 36% and by 1933 Puerto Rico’s per capita income dropped 30% (by comparison, unemployment in the United States in 1930 was approximately 8% reaching a height of 25% in 1933).
As world trade slumped, demand for South African agricultural and mineral exports fell drastically. The Carnegie Commission on Poor Whites had concluded in 1931 that nearly one third of Afrikaners lived as paupers. The social discomfort caused by the depression was a contributing factor in the 1933 split between the "gesuiwerde" (purified) and "smelter" (fusionist) factions within the National Party and the National Party's subsequent fusion with the South African Party.
The Soviet Union was the world's sole communist state with very little international trade. Its economy was not tied to the rest of the world and was only slightly affected by the Great Depression.
At the time of the Depression, the Soviet economy was growing steadily, fuelled by intensive investment in heavy industry.
The Great Depression caused mass immigration to the Soviet Union, mostly from Finland and Germany.
Spain had a relatively isolated economy, with high protective tariffs and was not one of the main countries affected by the Depression. The banking system held up well, as did agriculture.
By far the most serious negative impact came after 1936 from the heavy destruction of infrastructure and manpower by the civil war, 1936–39. Many talented workers were forced into permanent exile. By staying neutral in the Second World War, and selling to both sides, the economy avoided further disasters.
By the 1930s, Sweden had what America's Life magazine called in 1938 the "world's highest standard of living". Sweden was also the first country worldwide to recover completely from the Great Depression.
In Thailand, then known as the Kingdom of Siam, the Great Depression contributed to the end of the absolute monarchy of King Rama VII in the Siamese revolution of 1932.
The World Depression broke at a time when the United Kingdom was still far from having recovered from the effects of the First World War more than a decade earlier. The country was driven off the gold standard in 1931.
The effects on the northern industrial areas of Britain were immediate and devastating, as demand for traditional industrial products collapsed. By the end of 1930 unemployment had more than doubled from 1 million to 2.5 million (20% of the insured workforce), and exports had fallen in value by 50%. In 1933, 30% of Glaswegians were unemployed due to the severe decline in heavy industry. In some towns and cities in the north east, unemployment reached as high as 70% as shipbuilding fell by 90%. The National Hunger March of September–October 1932 was the largest of a series of hunger marches in Britain in the 1920s and 1930s. About 200,000 unemployed men were sent to the work camps, which continued in operation until 1939.
In the less industrial Midlands and Southern England, the effects were short-lived and the later 1930s were a prosperous time. Growth in modern manufacture of electrical goods and a boom in the motor car industry was helped by a growing southern population and an expanding middle class. Agriculture also saw a boom during this period.
Money supply decreased a lot between Black Tuesday and the Bank Holiday in March 1933 when there were massive bank runs across the United States.
Power farming displaces tenants from the land in the western dry cotton area. Childress County, Texas, 1938
A female factory worker in 1942, Fort Worth, Texas. Women entered the workforce as men were drafted into the armed forces
CCC workers constructing road, 1933. Over 3 million unemployed young men were taken out of the cities and placed into 2600+ work camps managed by the CCC
WPA employed 2–3 million at unskilled labor
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