The Great Depression represented the most serious economic contraction that affected the world in the twentieth century. It occurred the decade before the Second World War broke out, in the 1930’s. The Great Depression began and ended in differing years in the various countries and economies of the world. In general it started around 1929 and held countries in its grip through the end of the 1930’s and the early years of the 1940’s.
The Great Depression turned out to be the deepest, hardest, longest, and most geographically encompassing depression that the world had seen. Nowadays, the Great Depression is still held up as the model for how badly the economy of the world can collapse. In the eighty years since the great depression began, economists have not named another economic contraction in the world or the United States as a depression.
The Great Depression began in the United States. It commenced with the stock market crash that began on September 4, 1929. The far steeper stock market decline of October 29, 1929 became known as Black Tuesday and eclipsed the worldwide newspaper headlines. This rapidly spread from the U.S. to nearly all countries around the globe.
Practically all nations of the world, whether rich or poor, felt the tragic and crushing impacts of the Great Depression. International trade plummeted by as much as one half to two thirds of its previous level. Along with this, profits, personal incomes, tax revenues, and prices plunged. In the United States, unemployment soared to twenty-five percent, but in other countries, this level reached even thirty-three percent.
Cities all over the globe suffered especially, particularly those that relied on heavy industry as their economic mainstay. In a great number of nations, construction came practically to a stop. Even farming suffered terribly with the prices of produce crashing by around sixty percent. The areas that depended on industries in the primary sector took the worst hit, including logging, mining, and cash cropping. Job losses in these industries turned out to be among the worst.
A few nations’ economies began recovering in the middle of the 1930’s. For most countries around the world, the terrible consequences of the Great Depression remained until the outbreak of the Second World War. The military output required by the conflict rapidly increased production and employment everywhere.
Numerous events and problems caused the Great Depression’s original economic collapse of 1929. Structural weaknesses were present, only waiting for particular events to turn the crash into a worldwide depression. It is particularly interesting how the contraction ran from one country to the next like a wildfire in a forest. Regarding the structural weaknesses of the 1929 economic contraction, historians are quick to point out that enormous and widespread bank failures only became worse as the stock market crashed. Others hold up specific monetary policy like the Federal Reserve in the United States contracting America’s money supply, and the British Empire choosing to go back to the pre-World War I parity of the Gold Standard with one pound equal to $4.86.