The Great Depression
Concept Map
The Great Depression, starting in 1929, was a severe worldwide economic downturn marked by the stock market crash, high unemployment, and poverty. It led to a significant drop in global GDP, widespread hardship in urban and rural areas, and a decline in international trade. Recovery varied by country, with some nations only rebounding with the onset of World War II. The period was characterized by deflation, reduced tax revenues, and protectionist policies that further hindered economic growth.
Summary
Outline
The Onset of the Great Depression
The Great Depression, which began in 1929 and lasted until the late 1930s, was an unprecedented global economic crisis. It was triggered by a catastrophic collapse in stock prices in the United States, starting with a significant market downturn in September 1929 and culminating in the stock market crash on October 29, 1929, known as Black Tuesday. This event heralded a decade of high unemployment, poverty, low profits, deflation, plunging farm incomes, and lost opportunities for economic growth and personal advancement.Global Economic Impact
The Great Depression's impact was profound and widespread, with global GDP estimated to have fallen by as much as 15% from 1929 to 1932, far surpassing the economic downturn of the 2008-2009 Great Recession. Although some nations began to recover in the mid-1930s, the full recovery for many did not arrive until the advent of World War II. The Depression saw a dramatic decline in output, falling prices, reduced tax revenues, and plummeting international trade, which decreased by more than 50%. Unemployment soared, reaching 25% in the United States and higher levels in some other countries.Widespread Hardship in Urban and Rural Areas
The Great Depression affected both urban and rural communities. Industrial cities faced massive unemployment as factories closed or cut back operations. The agricultural sector suffered from falling commodity prices, with crop prices dropping by about 60%, exacerbating the plight of farmers. The situation was made worse by environmental disasters such as the Dust Bowl in the United States, which devastated agricultural regions and displaced hundreds of thousands of people.The Wall Street Crash and Economic Policies
The Wall Street Crash is often considered the spark that ignited the Great Depression, though it was also a symptom of underlying economic imbalances, including overproduction, declining exports, and vast income disparities. After the initial crash, a brief period of optimism led to a short-lived market recovery in 1930. However, the downturn persisted, and the economy continued to deteriorate. In response, governments and businesses initially increased spending, but consumer confidence had been shattered, leading to a sharp decline in spending and investment. Despite low-interest rates, deflationary pressures and a general reluctance to borrow stifled economic recovery efforts.The Spiral of Economic Decline
The economic decline worsened in 1931, as deflation set in, prices and wages fell, and unemployment rose. The agricultural sector was particularly affected, with crop prices collapsing and severe drought conditions in the Great Plains leading to widespread farm foreclosures despite federal relief efforts. The economic troubles in the United States had a ripple effect, dragging down other economies and leading to a global downturn. Protectionist policies, such as the Smoot-Hawley Tariff Act in the U.S., intended to protect domestic industries, instead further reduced international trade and exacerbated the Depression.International Consequences and Recovery Efforts
The economic downturn in the United States had far-reaching international effects, influencing the economic stability of countries around the world. The response of individual nations varied, with some able to mitigate the impact more effectively than others. Protectionist trade policies, while aimed at preserving domestic jobs, ultimately intensified the global economic crisis by severely curtailing international trade. By 1933, global trade had contracted to just a fraction of its pre-Depression volume. The period's economic indicators, including industrial production, wholesale prices, foreign trade, and unemployment rates, reflect the extensive and profound nature of the Great Depression's impact on the world economy.
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Causes of the Great Depression
Stock Market Crash
The catastrophic collapse in stock prices in the United States in 1929 triggered the Great Depression
Economic Imbalances
Overproduction
The overproduction of goods and declining exports were underlying economic imbalances that contributed to the Great Depression
Income Disparities
Vast income disparities also played a role in the onset of the Great Depression
Environmental Disasters
The Dust Bowl in the United States and severe drought conditions in the Great Plains worsened the economic situation for farmers
Global Impact of the Great Depression
Economic Consequences
The Great Depression had a profound and widespread impact on the global economy, with GDP falling by as much as 15% and international trade decreasing by more than 50%
Unemployment
Unemployment rates soared, reaching 25% in the United States and higher levels in other countries
Recovery Efforts
Governments and businesses attempted to stimulate the economy through increased spending, but consumer confidence and deflationary pressures hindered these efforts
Effects of the Great Depression
Urban and Rural Hardship
Both industrial cities and agricultural communities faced significant challenges, with massive unemployment and falling commodity prices
Protectionist Policies
Protectionist trade policies, such as the Smoot-Hawley Tariff Act, further reduced international trade and worsened the global economic crisis
International Consequences
The economic downturn in the United States had far-reaching effects, influencing the economic stability of countries around the world
The Great Depression
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Duration of the Great Depression
Began in 1929, lasted until late 1930s.
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Economic impacts during the Great Depression
High unemployment, poverty, low profits, deflation, falling farm incomes.
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Social consequences of the Great Depression
Lost opportunities for growth and personal advancement.
