History

The great depression is a terminology that had been given to severe economic circumstances of the world during the years of 1920s to 1930s. The great depression or economic downturn preceded the World War II. Some of the countries remained under the effects of the great depression till the 1940s while some of the countries recovered quite earlier than others. This paper analyzes the causes of the most widespread and deepest economic decline of the world and also enlists the countries which were greatly affected by the great depression.

There have been a great number of causes of the great depression. Some of the economists believe it was a structural deformity that caused the great depression. Some of the events made it a larger than life problem for most of the countries. It is believed and researched that the major cause behind the great depression was the crash in the stock market on 29 October, 1929 after which the stockholders lost almost 40 billion dollars. Moreover, the banks failed to provide the savings of the people as their deposits were uninsured. The statistics of failed banks were 9,000 in 1930s. Some of the banks which survived during the years of failures stopped providing loans to the consumer that added in the crucial situation. An American economist Irving Fisher demonstrated that debt and deflation was another greater factor that leads to the great depression (Fisher, 1993).

Another great cause of the great depression was the breakdown of the international trade. Trade was not a major part of the economy of United States but it was a significant part of economic finance of other countries. The introduction of Smoot-Hawley Tariff Act in United States minimized the international trade that resulted in retaliatory tariff in other countries. The causes of the great depression worsened the economic situation of the world one after another starting from the crash in the stock market, followed by the failures of banks (Kindleberger, 1973).

A great number of western countries were affected by the great depression. Australia ranked on the highest number of the list of countries which were regarded as the highest-hit countries. Canada comes next in the list as its industrial production fallen 58 during the great depression.  Chile was also affected by the great depression as the GDP rate dropped by 14 resulting in decline of Chiles export earning to 28. The affect of great depression took toll in France around 1930s. France meant its loss by great depression quickly in comparison with other countries (Kindleberger, 1973).

Germany also got affected by the great depression as unemployment rate touched the extreme limits. Latin America suffered greatly due to the great depression as United States had higher levels of investment in Latin America. The impact of great depression on United States and United Kingdom were devastating as the Banking sector greatly failed and so the infrastructure caused the nations to suffer from extreme poverty, mortgage and unemployment. Other most affected countries were Soviet Union, South Africa and Netherland (Rothbard, 2000).

Great depression was a global epidemic from 1920s to 1930s as constant devastating blows of great depression on the economies of the countries gave rise to the societal and political changes. The war of racism between whites and blacks became severe during the era of great depression. The great depression became the topic of writing for many authors as it had been the reason behind emotional trauma among nations.

It took almost thirty years for the western countries to get away with the great depression. There have been many economic downturns in the global village but none was equal to the effects and consequences of the great depression during 1920s and 1930s.