The Great Depression was the worst economic downturn in the history of the developed world, which began from the collapse of the stock markets of 1929 to 1939.
The Great Depression was the worst economic downturn in the history of the developed world, which lasted from 1929 to 1939. It started after the stock market crash in October 1929, which sent shockwaves through Wall Street and devastated millions of investors. Over the next several years, consumer spending and investment declined, resulting in a sharp decline in industry output and employment as failing companies lay off workers. In 1933, when the Great Depression hit the horizon, some 15 million Americans were unemployed and almost half of the world’s banks failed.
What Caused The Great Depression?
Throughout the 1920’s, the U.S. economy expanded rapidly, and the nation’s total wealth doubled between 1920 and 1929, during what came to be called the “Twelve Twenty Years.”
The stock market, centered on the New York Stock Exchange on Wall Street in New York City, was the scene of irrational speculation, with everyone from billions to cooks and cleaners pouring out their savings into stocks. As a result, the stock market grew rapidly, reaching its peak in August 1929.
By then, production had declined and unemployment had risen, leaving prices much higher than their real value. In addition, wages at the time were low, consumer debt was increasing, the agricultural sector was heavily burdened by drought and falling food prices, and banks had large loans that could not be closed.
The American economy plunged into a slowdown during the summer of 1929, as consumer spending declined and unsold goods began to accumulate, which in turn slowed factory production. Nevertheless, prices continued to rise, and by the fall of that year it had reached stratospheric levels that could not be adjusted by future expectations.
Stock Market Crash of 1929
On October 24, 1929, as panic-stricken investors began selling more expensive stocks, the collapse of the stock market that some feared had finally come to an end. 12.9 million Shares were sold that day, known as “Black Thursday.” Five days later, on October 29 or “Black Tuesday,” about 16 million shares were sold after another wave of panic hit Wall Street. Millions of stocks eventually became worthless, and those investors who had purchased “foreign” shares (with loans) were completely canceled.
While consumer confidence disappeared after the stock market crash, falling spending and investment led factories and other businesses to reduce production and start shooting their workers. For those who were fortunate enough to remain employed, wages were reduced and purchasing power declined.
Many Americans are forced to buy on credit and fall into debt, and the amount of liquidation and repayment increased slightly. Global adherence to the level of gold, which has joined countries around the world in a planned currency exchange, has helped to spread the economic crisis from the United States around the world, especially Europe.
Bank Runs and the Hoover Administration
Despite the assurance of President Herbert Hoover and other leaders that the crisis will continue, things continue to get worse for the next three years. In 1930, four million Americans looking for work did not find it; that number had risen to six million by 1931.
The Great Depression Meanwhile, the country’s industrial output has halved. Bread lines, soup kitchens and a growing number of homeless people are becoming more common in major American cities. Farmers had no money to harvest their crops, and they were forced to leave them to rot in the fields while people elsewhere starved. In 1930, a severe drought on the South Plains brought strong winds and dust from Texas to Nebraska, killing people, livestock, and crops. The “Dust Bowl” encouraged mass migration from farms to cities in search of work.
The Great Depression In the fall of 1930, the first wave of panic banking started, as many investors lost confidence in resolving their banks and demanded a deposit, forcing banks to repay loans in order to supplement their insufficient funds. Banks ran the United States again in the spring and autumn of 1931 and autumn of 1932, and by early 1933 thousands of banks had closed their doors. In the face of this dire situation, Hoover’s executives have tried to finance failed banks and other institutions with government loans; The idea was that banks would lend to businesses, which would be able to hire their own employees.
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Hover, a former Republican U.S. trade secretary, believed that the government should not intervene directly in the economy, and that it had no obligation to create jobs or provide economic assistance to its citizens. In 1932, however, as the country was engulfed in the depths of the Great Depression and about 15 million people (more than 20 percent of the U.S. population at the time) were unemployed, Democrat Franklin D. Roosevelt won by a landslide victory.
The Great Depression On opening day (March 4, 1933), all U.S. states had ordered the remaining banks to close at the end of the fourth wave of banking crisis, and U.S. Treasury Treasurer He did not have enough money to pay all the government employees. Nevertheless, the FDR (as it came to be known) produced a calm and hopeful state, declaring surprisingly that “the only thing we should fear is fear itself.”
The Great Depression Roosevelt took immediate steps to address the country’s economic woes, first announcing a four-day “bank holiday” in which all banks would close so that Congress could pass a reform law and reopen those banks that are determined to stay healthy. He also began speaking to the public directly on the radio in a series of interviews, and these so-called “fire talks” went a long way in restoring public confidence.
The Great Depression During Roosevelt’s first 100 days in office, his superiors passed legislation aimed at stabilizing industrial and agricultural production, creating jobs, and reviving regeneration. In addition, Roosevelt tried to change the financial system, set up the Federal Deposit Insurance Corporation (FDIC) to protect the accounts of the trustees and the Securities and Exchange Commission (SEC) to control the stock market and prevent such harassment that led to the 1929 crash.