Great Depression

Definition

The Great Depression was a severe worldwide economic downturn that began in 1929 and lasted until the late 1930s, characterized by massive unemployment, plummeting stock markets, and widespread poverty. Its impact reshaped economies and political landscapes, setting the stage for conflicts and shifts in global power dynamics.

5 Must Know Facts For Your Next Test

1. The Great Depression began with the stock market crash on October 29, 1929, known as Black Tuesday, which wiped out millions of investors.
2. In addition to the United States, the Great Depression had a global impact, severely affecting economies in Europe and other regions, leading to increased political instability.
3. Governments around the world responded with various measures, including tariffs and trade restrictions, which often worsened the economic situation.
4. The social effects of the Great Depression included widespread poverty, homelessness, and a significant rise in migration as people sought work and better living conditions.
5. The legacy of the Great Depression influenced economic policies for decades, leading to the establishment of social safety nets and government interventions in economies.

Review Questions

• How did the Stock Market Crash of 1929 contribute to the onset of the Great Depression?
  • The Stock Market Crash of 1929 was a critical event that triggered the Great Depression. The crash led to a loss of confidence among investors and consumers alike, resulting in reduced spending and investment. As businesses faced declining revenues, they began laying off workers, leading to skyrocketing unemployment rates. This vicious cycle of economic decline caused a widespread downturn that affected both national and global economies.
• Analyze how governments' responses to the Great Depression influenced political changes during this period.
  • Governments responded to the Great Depression with various measures aimed at economic recovery. In the United States, Franklin D. Roosevelt's New Deal introduced significant reforms and public works programs to stimulate economic growth and provide relief. In Europe, countries like Germany saw a rise in authoritarian regimes as discontent with traditional governments grew. These responses not only shaped national economies but also altered political landscapes by fostering new ideologies and movements.
• Evaluate the long-term impacts of the Great Depression on global economic policies and social structures.
  • The long-term impacts of the Great Depression were profound, reshaping global economic policies and social structures for decades. It led to a reevaluation of laissez-faire economics and prompted governments to adopt more interventionist approaches in managing their economies. The establishment of social safety nets and regulatory frameworks aimed at preventing future economic crises became standard practice. Additionally, it fostered greater cooperation among nations through institutions like the International Monetary Fund (IMF) and World Bank, fundamentally altering international economic relations.

Related terms

Stock Market Crash of 1929: A major financial collapse in October 1929 that marked the beginning of the Great Depression, leading to a rapid decline in stock prices and investor confidence.

New Deal: A series of programs and policies implemented by President Franklin D. Roosevelt in response to the Great Depression, aimed at economic recovery and social reform.

Unemployment Rate: The percentage of the labor force that is jobless and actively seeking employment, which soared during the Great Depression, reaching as high as 25% in the United States.