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Unlock your guides13.1 Causes and impacts of the Great Depression
3 min read•july 25, 2024
The Great Depression, triggered by the 1929 stock market crash, exposed deep flaws in the U.S. economy. , , and led to widespread . The crisis quickly spread globally, causing international trade to plummet and unemployment to soar.
The Depression's impact reached far beyond economics, reshaping society and politics. Millions faced poverty, homelessness, and mental health struggles. These hardships sparked social changes, from strengthened community networks to shifts in gender roles, leaving a lasting imprint on American culture.
Economic Factors and Initial Impact
Factors of Great Depression onset
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- triggered economic collapse
- (October 29, 1929) saw stock prices plummet
- Loss of investor confidence led to widespread panic selling
- Market lost $30 billion in value over two days
- Weaknesses in 1920s U.S. economy exposed underlying issues
- Overproduction in agriculture and industry created surplus goods
- Uneven distribution of wealth concentrated money at the top
- Excessive speculation in stock market inflated asset prices
- Weak banking system lacked safeguards
- No federal deposit insurance left savings unprotected
- and runs caused financial instability
- and created financial vulnerability
- Easy credit policies encouraged risky borrowing
- Installment buying allowed purchases beyond means
- Decline in international trade disrupted global economy
- High tariffs () reduced imports/exports
- European economic instability post-World War I weakened trade partners
Societal impacts of Great Depression
- Farmers faced severe economic hardship
- Plummeting crop prices reduced income drastically
- Foreclosures and loss of family farms displaced rural populations
- and agricultural migration forced mass relocation (Okies)
- Industrial workers experienced widespread job loss
- reached 25% at peak
- Wage cuts reduced income for those still employed
- Labor unrest and strikes increased ()
- Middle class saw erosion of financial stability
- Loss of savings and investments wiped out nest eggs
- Downward social mobility changed class structure
- Delayed major life decisions (marriage, homeownership) altered demographics
- Long-term impacts reshaped American society
- Shift in economic policies embraced
- Expansion of government role in economy and welfare ()
- Changes in consumer behavior emphasized frugality and saving
- decreased birth rates and accelerated urbanization
Global Consequences and Social Impact
Global effects of Great Depression
- Collapse of international trade reduced economic activity
- Global demand plummeted for goods and services
- Rise of further restricted trade (Imperial Preference system)
- Financial contagion spread economic crisis worldwide
- Failure of major European banks () triggered panic
- Currency devaluations and abandonment of destabilized markets
- Impact on commodity-exporting countries devastated economies
- Latin America faced economic instability and political upheaval ()
- Southeast Asia saw decline in rubber and tin exports
- Global unemployment crisis affected millions
- Industrial production decline worldwide reduced jobs
- Widespread poverty in developed and developing nations increased inequality
- Political consequences reshaped global landscape
- Rise of extremist ideologies gained traction (fascism in Italy, Nazism in Germany)
- Collapse of democratic governments occurred in some countries (Weimar Republic)
Social consequences of Great Depression
- Unemployment effects damaged individual and family well-being
- Loss of self-esteem and identity led to psychological distress
- Increased rates of depression and anxiety affected mental health
- Family stress and breakdown strained relationships
- Poverty and material deprivation impacted quality of life
- Malnutrition and health issues increased mortality rates
- Education disruption for children reduced future opportunities
- Reliance on charity and public assistance became widespread (soup kitchens)
- Homelessness and displacement created social upheaval
- Rise of "" (shanty towns) in urban areas
- Increased mobility in search of work led to mass migrations
- Social cohesion and community response emerged as coping mechanisms
- Strengthening of local support networks provided mutual aid
- Emergence of mutual aid societies filled gaps in assistance
- Changing gender roles as women entered workforce altered family dynamics
- Cultural impact reflected societal changes
- Shift in artistic themes embraced (Dorothea Lange photography)
- New forms of entertainment as escapism gained popularity (movies)
- Long-lasting attitudes toward financial security and frugality shaped generations
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