The Great World Economic Depression, 1929-1935, causes, consequences and solutions

Questions to ponder

1. Examine the causes and consequences of the 1929 Great economic depression

(Give a brief introduction of the 1929 Great economic depression. Identify and explain the causes and consequences of the 1929 Great economic depression. Make a conclusion).

2. Account for the end of the world Economic Depression of 1929-1935. / How did the European powers try to solve the problems caused by the World Economic Blizzard? / How did the World Economic Depression/Slump come to an end by 1936

(Give a brief introduction of the 1929 Great economic depression. Identify and explain the solutions to the 1929 Great economic depression. Make a conclusion).

Summary of the Great World Economic Depression, 1929-1935.

The Great Depression was a severe worldwide economic downturn that began in 1929 and lasted until about 1939. Here are some key points about this period:

1. Stock Market Crash: The Depression started with the stock market crash in October 1929, often referred to as Black Tuesday. This event shattered confidence in the American economy and led to sharp reductions in spending and investment.
2. Bank Failures: The early 1930s saw numerous bank failures, which decreased the pool of money available for loans and further deepened the economic crisis.
3. High Unemployment: Unemployment rates soared, reaching about 25% in the United States by 1933. Many people lost their jobs, homes, and savings.
4. Global Impact: The economic downturn spread worldwide, affecting industrial production, trade, and employment in many countries.
5. Government Responses: Different governments responded in various ways. In the United States, President Franklin D. Roosevelt implemented the New Deal programs to provide relief, recovery, and reform.
6. Social Impact: The Depression led to widespread poverty, homelessness, and a significant increase in soup kitchens and breadlines.

Causes of the Great World Economic Depression, 1929-1935.

1. Stock Market Crash of 1929: The sudden and dramatic crash of the stock market in October 1929 led to a severe loss of confidence in the American economy, resulting in reduced spending and investment.
2. Bank Failures: The early 1930s saw numerous bank failures, which decreased the pool of money available for loans and further deepened the economic crisis.
3. Reduction in Consumer Spending: As people lost their jobs and savings, consumer spending plummeted, leading to reduced industrial output and further job losses.
4. Overproduction: Industries produced more goods than could be sold, leading to a surplus and falling prices, which hurt businesses and workers.
5. High Tariffs: The Smoot-Hawley Tariff Act of 1930 imposed steep tariffs on imported goods, leading to retaliatory measures from other countries and a contraction in global trade.
6. Global Economic Weakness: The economic downturn was not limited to the United States; it spread to other countries, exacerbating the global economic crisis.
7. World War 1: caused widespread economic losses and losses of human resource.
8. High war indemnity imposed on Germany crashed Germany economy.
9. Weakness and failure of Gold Standards which limited money supply in countries with limited gold.
10. The weakness of League of Nations to establish proper and meaningful economic cooperation among the World Economies.
11. Shortage of experienced and skilled labor force.
12. Destruction transport and communication infrastructure during World War I that would ease movement of goods and service.
13. Use of technology in production that led massive unemployment.
14.  Ban on immigration adopted by various countries leading shortage of labor force.
15. Widespread income inequalities in many countries
16. Risk of another world war led to low investments.

Consequences of the Great World Economic Depression, 1929-1935.

The Great Depression had profound consequences on economies and societies worldwide:

1. Mass Unemployment: Unemployment rates soared, reaching about 25% in the United States by 1933. Many people lost their jobs, homes, and savings1.
2. Poverty and Homelessness: Widespread poverty and homelessness became common as people struggled to make ends meet.
3. Bank Failures: Numerous banks failed, leading to a decrease in available credit and further deepening the economic crisis.
4. Reduction in Industrial Production: Industrial production declined sharply, with the United States experiencing a nearly 47% drop between 1929 and 1933.
5. Global Trade Decline: The Smoot-Hawley Tariff Act of 1930 led to a contraction in global trade as countries imposed retaliatory tariffs.
6. Social and Political Changes: The Depression led to significant social and political changes, including the expansion of labor unions and the welfare state.
7. Changes in Economic Policy: Governments around the world implemented new economic policies to address the crisis, such as the New Deal in the United States.
8. League of Nations was weakened due to lack of finances to fund its operation.
9. World Economic Depression led to fall of government. For example in Germany Hitler overthrew Weimar republic in 1934, in Spain General Franco rose to power in 1939 and in USA Franklin Roosevelt defeated Hoover in 1932 elections.
10. Led to formation of various economic cooperation/blocks/integrations. For instance, Scandinavian countries in 933 form OSLO economic Block.
11. Lead to abandonment of the gold Standard in USA and other countries
12. Led to outbreak of the World War II.

Solutions of the Great World Economic Depression, 1929-1935.

1. New Deal Programs: In the United States, President Franklin D. Roosevelt’s New Deal introduced a series of programs aimed at providing relief, recovery, and reform. These included public works projects, financial reforms, and social welfare programs.
2. Monetary Policy Changes: Central banks around the world adjusted monetary policies to increase liquidity and stimulate economic activity.
3. Fiscal Stimulus: Governments increased public spending to boost demand and create jobs. This included infrastructure projects and other public investments.
4. Trade Policies: Efforts were made to reduce trade barriers and promote international trade, such as the Reciprocal Trade Agreements Act in the United States.
5. Banking Reforms: Reforms were introduced to stabilize the banking sector, including the establishment of deposit insurance and the separation of commercial and investment banking.
6. Social Safety Nets: Programs were implemented to provide support to the unemployed and those in need, such as unemployment benefits and social security.
7. Gold standards were stopped.
8. Some countries restricted borrowing to reduce their debt burdens.
9. Unemployment relief schemes were adopted in various countries such as USA, Britain and France.
10. Hitler stopped the payment of war indemnity and decided to reoccupy Rhine lands and Saar Coalfields to solve the depression.
11. There was promotion of agriculture and industrial sectors to solve unemployment and inflations.

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Thanks

Dr. Bbosa Science.