The Great Depression was a severe worldwide economic recession that started in 1930.
It was a very complex event, but I have a few main points that I want to highlight that I wrote up on the board.
The transcript is for your convenience
First of all, economists differ as to how it started. Some believe it was caused by bank failures and the stock market crash.
Stock prices started decreasing in 1929, and the stock market crashed later that year on what is known as Black Tuesday. Now, other economists believe it was caused by the Federal Reserve and its poor monetary policies during that time. Now, let’s take a look at the effects of the Great Depression.
Unemployment skyrocketed. In fact, in the US, it rose to levels of around 25%. Also, tax revenue, profits, prices, and international trade all decreased during this time. It’s important to remember that the Great Depression did not just occur in the US. It occurred in countries all across the world.
So, it stands to reason that if the two countries were in a severe economic recession, such as the Great Depression, that trade between the two countries would be severely decreased. In fact, international trade was cut in half at some points during the Great Depression.
Industries that depended on natural resources, such as farming and mining and logging, were especially hit hard by the Great Depression. Also, things like construction were often halted in countries across the world.
Now, since the Great Depression was happening in so many different countries, the recovery of countries do not all happen simultaneously. Countries’ economies started to bounce back at different times. Some economies recovered as early as the late 1930s, while others took about until the mid-1940s.
It is believed that the start of World War II either ended the Great Depression or mask its problems because, during World War II, the industry was severely increased during this time, because the government was pumping money into the economy to manufacture things for the war.
In fact, this helped the economic growth rate double in the US. Also, unemployment went down during this time. In fact, in the US, it went below 10% because of World War II. Not only were people being employed in the Armed Forces, they were also being employed in manufacturing, to manufacture things for the war.
So, overall, the Great Depression is known as the worst economic recession of the 20th century.