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Great Depression (Crisis of 1929)

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One of the world events that brought negative consequences to the industrialized Western world was the Great Depression  or crisis of 1929 . An event that took place in 1929 and lasted approximately until 1939. It is considered one of the longest-lasting events that caused great damage to macroeconomic policy and the theory that existed about the economy . Despite having originated specifically in the United States, it managed to reach practically all the countries of the world with unemployment , reduced production and deflation.

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  • When was it: From October 29, 1929 to 1939
  • Where did it go: Virtually everyone, especially the United States , Japan , France , Italy, the United Kingdom, the Netherlands, and Austria

What was the 1929 Crisis?

The Great Depression was a period that occurred worldwide which caused great damage to the economy and society, causing a crisis that lasted approximately 10 years.

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Characteristics of the Great Depression

This event was characterized by bringing a series of serious problems in the economy that caused one of the worst crises in the industrialized world . It began in 1929 and reached its lowest point in 1933 causing about 15 million US citizens to lose their jobs , banks went bankrupt and the country was practically bankrupt . Not only did it affect the United States but it managed to spread globally . It was a movement that brought with it important political changes in the countries and in the financial systems as these are the most affected.

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Background

The Great Depression has its antecedents after the stock market suffered a tremendous crash in October 1929 . This situation caused Wall Street to go into a state of panic that caused thousands of investors worldwide to withdraw. This scenario caused that little by little investments were reduced causing at the same time that industrial production was greatly affected and the amount of employment narrowed considerably, as there were many companies that had declared bankruptcy and had no way to pay their employees .

Resume

The Great Depression began on October 24, 1929 when Wall Street did not open the doors, despite this, a large number of people were already in place to listen to the news in the midst of panic. The stock market had begun to fall on a Monday when it had fallen by 12.8%, and the following day, it fell another 12%, a day known as Black Tuesday .

After the end of the First World War , all countries suffered severe damage to their economies, however, the United States managed to stand, which caused it to transform economically and culturally . There was a lot of employment and the soils were good, everyone thought it was a prosperous stage for the country. Many famous people began to invest in the stock market and when they saw the fruits, the general public wanted to follow in their footsteps; This is how the investment concept was born . Many of the shares that people acquired did so through loans to brokersof stock which charged a margin. A month before the fall, a downward trend was shown, however, it was not given importance and investors decided to buy more.

It was in this way that the stock market crash began causing an economic depression that affected thousands of Americans who had invested all their capital in stocks. When it fell, the investors who owned companies had no money to pay their workers and unemployment took over. It was a situation that even affected many countries worldwide because it was not only the United States that invested in the place.

Causes of the Great Depression

In the 1920s , the United States had managed to make its economy grow and become very stable , the country’s wealth had doubled in a period they called “the roaring twenties . ” At that time there was the Stock Exchange in New York, better known as Wall Street , which was a stock market in which thousands of millionaires, common workers and people from all over the world had decided to invest, which is why the securities of the country had increased considerably.

As time passed, production in the country began to decline and unemployment gradually took over. This situation caused the shares to increase in price exceeding the real value. Wages were lower and there was also more debt in all sectors.

The United States entered a small recession in the summer of 1929 causing consumer spending to decline and goods that had not been able to sell to accumulate causing factories to work less. Despite this, the shares continued to rise and the time came when they could neither be paid nor generated a profit .

Consequences

On the part of the economy , the consequences were serious and important. Many of the banks that existed went bankrupt because people could not continue to pay their debts, the consumption of products was considerably reduced, which caused a drop in prices and in the currency . A large number of companies closed their doors leaving workers unemployed and those who managed to keep working faced drastic pay cuts . The middle class became impoverished, generating a social polarization.

Then began to doubt liberal democracy , political currents and even religion. The socialist Soviet and fascist regime began to try to win more adherents, in fact, the Second World War is seen as a side effect of the Great Depression. An attempt was also made to start to intervene in the economy with a liberal capitalist model to try to support the poorest population, reform the markets and re-increase the US economy.

Countries affected

In addition to the United States, countries such as Austria , the United Kingdom , Japan , the Netherlands , Italy , France and Spain were the most affected, however, it should be noted that practically all places in the world had some effect of the Great Depression.

Political effects

The political effects that arose with the Great Depression include, among its most relevant aspects, the creation and birth of three ideals of society: Marxist communism , capitalism and fascism or nationalism , a movement that unleashed the Second World War . Perhaps the most relevant, worrying and sinister consequence was the triumph of nationalist , aggressive and warlike regimes in Japan and Germany . With the crisis of 1929, the idea of economic liberalism was buried and governments struggled to move their countries forward.

Movies about the Great Depression

Some films that have been made to narrate the events that took place during the Great Depression include the following:

  • The Grapes of Wrath, by John Ford (1940
  • Sullivan’s Travels by Preston Sturges (1941)
  • Paper Moon, by Peter Bogdanovich (1973)
  • Oh, Brother! By Joel and Ethan Coen (2000)
  • Dogville, by Lars von Trier (2003)

Books about the Great Depression

Many books narrate the Great Depression, some of the most interesting titles are the following:

  • Lessons from the Great Depression by Peter Temin
  • Back to the economics of the Great Depression by Krugman, Paul
  • The Grapes of Wrath by Henry Fonda

What other names is it known by?

The Crisis of 1929 is also known as the Great Depression or as the Crisis of 29.

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