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Great Depression

The Great Depression (1929–1939) was a severe global economic downturn that affected many countries across the world. It became evident after a sharp decline in stock prices in the United States, leading to a period of economic depression.[1] The economic contagion began around September 1929 and led to the Wall Street stock market crash of 24 October (Black Thursday). This crisis marked the start of a prolonged period of economic hardship characterized by high unemployment rates and widespread business failures.[2]

This article is about the severe worldwide economic downturn in the 1930s. For other uses, see The Great Depression (disambiguation).

Between 1929 and 1932, worldwide gross domestic product (GDP) fell by an estimated 15%. By comparison, worldwide GDP fell by less than 1% from 2008 to 2009 during the Great Recession.[3] Some economies started to recover by the mid-1930s. However, in many countries, the negative effects of the Great Depression lasted until the beginning of World War II. Devastating effects were seen in both rich and poor countries with falling personal income, prices, tax revenues, and profits. International trade fell by more than 50%, unemployment in the U.S. rose to 23% and in some countries rose as high as 33%.[4]


Cities around the world were hit hard, especially those dependent on heavy industry. Construction was virtually halted in many countries. Farming communities and rural areas suffered as crop prices fell by about 60%.[5][6][7] Faced with plummeting demand and few job alternatives, areas dependent on primary sector industries suffered the most.[8]


Economic historians usually consider the catalyst of the Great Depression to be the devastating Wall Street Crash. However, some dispute this, seeing the crash less as a cause of the Depression and more a symptom of the rising nervousness of investors partly due to gradual price declines caused by falling sales of consumer goods (as a result of overproduction because of new production techniques, falling exports and income inequality, among other factors) that had already been underway as part of a gradual depression.[4][9]

"Countries that remained on the gold standard, keeping currencies fixed, were more likely to restrict foreign trade." These countries "resorted to protectionist policies to strengthen the and limit gold losses." They hoped that these restrictions and depletions would hold the economic decline.[31]

balance of payments

Countries that abandoned the gold standard allowed their currencies to which caused their balance of payments to strengthen. It also freed up monetary policy so that central banks could lower interest rates and act as lenders of last resort. They possessed the best policy instruments to fight the Depression and did not need protectionism.[31]

depreciate

"The length and depth of a country's economic downturn and the timing and vigor of its recovery are related to how long it remained on the . Countries abandoning the gold standard relatively early experienced relatively mild recessions and early recoveries. In contrast, countries remaining on the gold standard experienced prolonged slumps."[31]

gold standard

A money supply reduction () and therefore a banking crisis, reduction of credit, and bankruptcies.

Monetarists

Insufficient demand from the private sector and insufficient fiscal spending ().

Keynesians

Passage of the exacerbated what otherwise might have been a more "standard" recession (both Monetarists and Keynesians).[28]

Smoot–Hawley Tariff Act

Brendon, Piers. The Dark Valley: A Panorama of the 1930s (2000) comprehensive global economic and political history; 816pp

Davis, Joseph S. The World Between the Wars, 1919–39: An Economist's View (1974)

The Great Depression: An Inquiry into the causes, course, and Consequences of the Worldwide Depression of the Nineteen-Thirties, as Seen by Contemporaries and in Light of History (1986) online

Garraty, John A.

Garside, W.R. ed. Capitalism in crisis: International responses to the Great Depression (1993), essays by experts

Grossman, Mark. Encyclopedia of the Interwar Years: From 1919 to 1939 (2000). 400 pp. worldwide coverage

Hall Thomas E. and J. David Ferguson. The Great Depression: An International Disaster of Perverse Economic Policies (1998)

Hodson, H.V. Slump and Recovery, 1929–37: A Survey of World Economic Affairs (Oxford UP, 1938).

online

Kehoe, Timothy J. and Edward C. Prescott. Great Depressions of the Twentieth Century (2007)

League Of Nations. World Economic Survey 1935–1936 (1936)

online

The great slump: capitalism in crisis, 1929–33 (1970) online, Marxist.

Rees, Goronwy.

Rothermund, Dietmar. The Global Impact of the Great Depression (1996)

Woytinsky, Wladimir. The Social Consequences Of The Economic Depression (International Labour Office, 1936). Statistics of major economies; not online.