The worst economic downturn in the history of the industrialized world was the Great Depression of 1929. The appalling phase of the depression started in 1929 and lasted till 1939. One of the prominent reasons for the depression was the stock market collapse. The massive and dreadful crash led to the wipe of millions of investors' wealth within days and sent Wall Street into a chaotic situation.
The depression began in early 1929 in the US and spread all across the globe. Besides the industrial production experiencing a steep decline, many other sectors also witnessed massive employment, banking panics, deflation, and a sharp increase in homelessness.
Main Causes of Great Depression of 1929
There were 5 primary causes for this trembling phase, including:
- The stock market crash of 1929.
- Bank failures and panic
- A restricted money supply caused the financial collapse.
- Government policies.
- A big slump in global trade due to the Smooth-Hawley Tariff
Change of Presidents in the US
During the Great Depression phase began, the president of the United States was Hobert Hoover. The reason why many people blamed him for this unfortunate phase to start was that it happened during his reign. Even a town was named 'Hoovervilles' where most of the homeless people were residing during the depressed times. However, the new president came into power in 1933, Franklin D. Roosevelt who promised the 'New Deal' to the Americans to mitigate the adverse impacts of the Great Depression in the country.
How did the Great Depression of 1929 End?
The Great Depression lasted 10 years, from 1929 to 1939. During this decade, the GDP reduced to nearly half. In 1933, the banking system was stabilized, and President Franklin D. Roosevelt abandoned the gold standard. These actions facilitated the expansion of the money supply and allowed the Federal Reserve to take baby steps towards economic recovery.
All this slowed the downward spiral of price deflation, helping the United States get out of the depression by 1939. Another reason for the end of the Great Depression of 1929 was the combination of the New Deal and World War II, as the massive war spending doubled economic growth rates.
Many people took a lesson after the Great Depression of 1929 ended and realised the importance of securing their income, getting rid of debts, reducing their spending, keeping cash in hand, and diversifying their income.
After the great depression ended, no country has ever left the financial sector to its own devices, and soon after it, a major development was witnessed all around the world in terms of transportation, electronics, and other mass-market products.
FAQs on the Great Depression of 1929
Q.1. What Happened During the Great Depression of 1929?
Industrial production from 1929 to 1933 fell by approximately 47%, unemployment hiked to more than 20%, and GDP declined by nearly 30%. On the whole, the United States and many other countries in the world endured the toughest times.
Q.2. What Countries Were Affected by the Great Depression of 1929?
The Southeast Asian economies, Brazil and Germany, witnessed the depression phase by 1928. Subsequently, by early 1929, Argentina, Canada, Poland, and the Unites States' economies contracted and experienced a huge financial crisis.
Q.3. What was the Controversial New Deal During the Great Depression of 1929?
Both the presidents, Roosevelt and Hoover, consistently tried to recover the economy by putting the United States back to work through Federal activism. In addition, the new Federal Agencies helped restore the sense of security by creating a framework to protect the interests of all Americans, be it rich or poor.
These Federal Agencies aimed to stabilize prices & wages, control agricultural production, and organize public works programs to mitigate unemployment.
Q.4. What were the 5 causes of the Great Depression?
Among the suggested causes of the Great Depression of 1929 are the stock market crash of 1929; the collapse of world trade due to the Smoot-Hawley Tariff; government policies; bank failures and panics; and the collapse of the money supply.