1919-1939 Causes and Effects of The Great Depression
https://www.britannica.com/event/Great-Depression
The Great Depression was a severe economic downturn that lasted from 1929 to the late 1930s. It had significant causes and had lasting effects on the global economy. Let's break down the causes and effects of The Great Depression:
Causes:
1. Stock Market Crash of 1929: The most immediate trigger was the collapse of the U.S. stock market in October 1929. Known as Black Tuesday, it caused panic selling and wiped out billions of dollars in stock value.
2. Overproduction and Underconsumption: Throughout the 1920s, industries were producing goods at a rapid pace, but wages did not keep up with the rising capital income. This imbalanced supply and demand led to a surplus of goods that people were unable to afford.
3. Bank Failures: The stock market crash led to the failure of numerous banks. Unregulated speculation and risky loans left many banks with depleted assets and unable to cover depositors' withdrawals.
4. Global Economic Factors: The worldwide interconnectedness of economies contributed to the Great Depression. The economic downturn in the U.S. affected other countries, particularly those heavily reliant on U.S. markets or those affected by war reparations and high debts from World War I.
Effects:
1. Unemployment: The Great Depression resulted in soaring unemployment rates worldwide. Millions of people lost their jobs, leading to widespread poverty and economic hardship.
2. Decline in Industrial Production: Industries faced a severe decline in demand and had to cut back on production. This led to factory closures, reduced wages, and further exacerbated unemployment levels.
3. Poverty and Homelessness: Many individuals and families fell into poverty and homelessness during the Great Depression. Soup kitchens and breadlines became common, as people struggled to obtain basic necessities.
4. Banking Reforms: The Great Depression led to banking reforms to prevent future crises. The U.S. implemented the Glass-Steagall Act in 1933, which separated commercial and investment banking, created the Federal Deposit Insurance Corporation (FDIC) to insure deposits, and established regulatory oversight.
5. Social and Political Changes: The Great Depression had significant social and political impacts. It led to increased support for political movements, such as the rise of fascism in Europe and increased government intervention in economies, as seen in the New Deal policies implemented by President Franklin D. Roosevelt.
To fully understand the intricacies and complexities of the causes and effects of The Great Depression, you can delve into historical books, articles, and resources that provide comprehensive analysis and perspectives from various experts.