Vous êtes sur la page 1sur 40

THE GREAT

DEPRESSION
By
Professor & Lawyer
Puttu Guru Prasad
THE GREAT DEPRESSION
THE GREAT DEPRESSION
The Great Depression was a severe worldwide economic
depression in the decade preceding World War II . The
timing of the Great Depression varied across nations, but
in most countries it started in 1930 and lasted until the
late 1930s or middle 1940s. It was the longest, deepest,
and most widespread depression of the 20th century. In
the 21st century, the Great Depression is commonly used
as an example of how far the world's economy can
decline. The depression originated in the U.S., after the
fall in stock prices that began around September 4, 1929,
and became worldwide news with the stock market crash
of October 29, 1929.
THE COMING OF DEPRESSION
During the 1920s, many Americans enjoyed what seemed like an endless era of
prosperity. But in 1929, the stock market crashed.

World wars loans.

Declining trade.

Production fell, unemployment rose, and the economy went into a period of dramatic
decline.

Years after the Great Depression began, periodic contraction was seen as part of the
business cycle.
Economic historians usually attribute the start of the Great Depression to the sudden
devastating collapse of US stock market prices on October 29, 1929, known as Black
Tuesday.
By mid-1930, interest rates had dropped to low levels, but expected deflation and the
continuing reluctance of people to borrow meant that consumer spending and
investment were depressed.
By May 1930, automobile sales had declined to below the levels of 1928. Prices in
general began to decline, although wages held steady in 1930; but then a deflationary
spiral started in 1931.
Conditions were worse in farming areas, where commodity prices plunged, and in
mining and logging areas, where unemployment was high and there were few other
jobs.
THE BEGINNING
The economic contraction that began
with the Great Crash triggered the
most severe economic downturn in
the nations historythe Great
Depression. In the beginning in mid-
1930, a severe drought ravaged the
agricultural heartland of the US.
The Great Depression lasted from
1929 until the United States entered
World War II in 1941. The stock
market crash of 1929 did not cause
the Great Depression. Rather, both
the Great Crash and the Depression
were the result of deep underlying
problems with the countrys
economy.
Together, government and business spent more in the
first half of 1930 than in the corresponding period of
the previous year. Consumers, many of whom had
suffered severe losses in the stock market the
previous year, cut back their expenditures
CAUSES OF GREAT DEPRESSION
Banks failure.

Unequal Decline of
distribution of international
wealth. trade.

Overproduction of
Decline of agricultural goods.
farming
industry.

Over
production of
industrial
goods.
BANKING INDUSTRY COLLAPSED
Families lose savings in crash; banks
have little cash left on reserve.
Banks lose money loaned to buy
on the margin (even people who
did not invest lost out!).
People default on mortgages due to
unemployment.
European nations could not repay
their debts.
America would not forgive the
loans.
Banks begin to fail.
INTERNATIONAL TRADE DECLINED
European demand for goods declines
Factories producing more
Personal income , tax, revenue, profits and prices dropped.
International trade plunged by more than 50%.
Interest rates dropped to low levels
Overproduction of
Agricultural Goods
American farmers had prospered during World War I
Use profits to buy machines to produce more
After World War I, demand drops surplus!
Huge supply + Low demand = Low prices
Overproduction of
Industrial Goods
o Technological advances change how
Americans live and work
o In the Roaring 1920s:
Consumer demand is very high
Machine produce quality products quickly
Unrestricted capitalism
o By 1929, supply greatly exceeds
demand!
FARMING INDUSTRY DECLINE
Farmers borrowed from bank to buy
machinery
Foreclosed on mortgages and other debts
Banks closed due to defaults and stock
market
Between 1929 and 1933 farmers income
50%
Farmers in dept.
One million families lose their farms by
1934
Many people too poor to buy goods to lift
economy
UNEQUAL DISTRIBUTION OF
WEALTH
Gap between the rich and poor widens in
the 1920s
By 1929 some Americans have more wealth
Wages increased
The income of rich increased
Wealth does not trickle down
Consumers in debt ; Cannot afford products
EFFECTS OF GREAT
DEPRESSION
The Great Depression had devastating effects in
countries rich and poor . Personal income , tax,
revenue, profits and prices dropped, while international
trade plunged by more than 50%. Unemployment in
the U.S. rose to 25%, and in some countries rose as high
as 33%. Cities all around the world were hit hard,
especially those dependent on heavy industry.
Construction was virtually halted in many Countries.
Farming and rural areas suffered as crop prices fell by
approximately 60%. Facing plummeting demand with
few alternate sources of jobs, areas dependent on
primary sector industries such as cash cropping, mining
and logging suffered the most. Some economies
RESULTS OF GREAT DEPRESSION

Gross
Rising price Gap National
Hardship,
Nations Farmers resulted in between Product
Banks homelessn
economy struggled declining rich and decreased,
failed. ess
crashed. a lot. of poor Unemploy
increased.
consumers. widened. ment
increased.
THE NATIONS SICK ECONOMY
As the 1920s advanced, serious problems
threatened the economy while
Important industries struggled, including :

Agriculture
Railroads
Textiles
Steel
Mining
Automobiles
Housing
Consumer goods
FARMERS STRUGGLE
No industry suffered as much
as agriculture
During World War I
European demand for
American crops soared
After the war demand
plummeted
Farmers increased production
sending prices further
downward
CONSUMER SPENDING
DOWN
By the late 1920s, American
consumers were buying less
Rising prices, stagnant wages
and overbuying on credit
were to blame
Most people did not have the
money to buy the flood of
goods factories produced
GAP BETWEEN RICH & POOR
The gap between rich
and poor widened
The wealthiest 1% saw
their income rise 75%
The rest of the
population saw an
increase of only 9%
More than 70% of
American families
earned less than $2500
per year
FINANCIAL COLLAPSE
After the crash, many
Americans panicked and
withdrew their money from
banks
Banks had invested in the
Stock Market and lost
money
In 1929- 600 banks fail
By 1933 11,000 of the
25,000 banks nationwide
had collapsed
GNP DROPS, UNEMPLOYMENT
SOARS
Between 1928-1932, the U.S.
Gross National Product (GNP)
the total output of a nations
goods & services fell nearly
50% from $104 billion to $59
billion
90,000 businesses went
bankrupt
Unemployment leaped from 3%
in 1929 to 25% in 1933
HARDSHIPS,
HOMELESSNESS INCREASED
The Great Depression
brought hardship,
homelessness, and
hunger to millions
Across the country,
people lost their jobs,
and their homes
Some built makeshifts
shacks out of scrap
material
WORLD WIDE EFFECTS
AUSTRALIA
EAST ASIA
FRANCE
GERMANY
LATIN AMERICA
INDIA
USA
AUSTRALIA
Australia's extreme dependence on
agricultural and industrial exports meant
it was one of the hardest-hit countries in
the Western world
Falling export demand and commodity
prices placed massive downward
pressures on wages
Further, unemployment reached a record
high of almost 32% in 1932
After 1932, an increase in wool and meat
prices led to a gradual recovery
East Asia
The Great Depression in East
Asia was of minor impact
The Japanese economy shrank
by 8% 192931
The invasion and subjugation
of Manchuria into a Japanese
puppet-state in September
1931, thus providing Japan
with raw materials and
energy, the Japanese economy
was able to recover by 1932
and continued to grow.
FRANCE
The Depression began to affect
France from about 1931

France's relatively high degree


of self-sufficiency meant the
damage was considerably less
than in nations like Germany

Hardship and unemployment


were high enough to lead to
rioting and the rise of the
socialist Popular Front.
Germany
Germany's Weimar Republic was hit hard by the
depression, as American loans to help rebuild the
German economy stopped.
Unemployment soared, especially in larger cities, and
the political system veered toward extremism.
Hitler's Nazi Party came to power in January 1933.
In 1934 the economy was still not balanced enough
for Germany to work on its own.
LATIN AMERICA
Because of high levels of United States
investment in Latin American economies, they
were severely damaged by the Depression
Chile, Bolivia and Peru were particularly badly
affected
One result of the Depression in this area was
the rise of fascist movements.
INDIA
Decline of international trade
resulted the obtaining of low
revenue.
Indian gold reserves sold off.
Uninhibited increase in land
rent.
Value of the agricultural
produce came down to
alarming levels.
Heavy losses resulted the
farmers to sell off their
valuables in order to pay the
land rent and other taxes.
This resulted the farmers in
dept.
USA
About 13 million people
became unemployed
In the early 1930s, more
people emigrated from the
United States than
immigrated to it
From 1929 to 1932, about
5,000 banks went out of
business.
Many people suffered from
diseases.
Us GDP and stock
market declined.
GREAT DEPRESSION IN USA
GREAT DEPRESSION IN USA
The Great Depression began in August of 1929, when the United States
economy first went into an economic recession . Although the country spent
two months with declining GDP, it was not until the Wall Street Crash of
October, 1929 that the effects of a declining economy were felt, and a major
worldwide economic downturn ensued. The market crash marked the
beginning of a decade of high unemployment, poverty, low profits, deflation ,
plunging farm incomes, and lost opportunities for economic growth and
personal advancement. include numerous factors, especially high consumer
debt, ill-regulated markets that permitted overoptimistic loans by banks and
investors, and the lack of high- growth new industries, all interacting to
create a downward economic spiral of reduced spending, falling confidence,
and lowered production. Industries that suffered the most included
construction, agriculture as dust-bowl conditions persisted in the agricultural
heartland, shipping, mining, and logging as well as durable goods like
automobiles and appliances that could be postponed. The Depression caused
major political changes in America. The Depression also resulted in an
increase of emigration of people to other countries for the first time in
American history.
CAUSES OF GREAT DEPRESSION
IN USA
Banks began to fail in October 1930 (one
year after the crash) when farmers
defaulted on loans. There was no federal
deposit insurance during that time as
bank failures were considered quite
common. This caused the money supply
to shrink and the economy to contract
and a significant decrease in aggregate
investment. The decreased money supply
further aggravated price deflation, putting
further pressure on already struggling
businesses High interest rates needed to
EFFECTS OF GREAT DEPRESION ON USA
13 million people became unemployed. Many people belonged to families
with no regular full-time wage earner. Industrial production fell by nearly
45% between 1929 and 1932. Homebuilding dropped by 80% between the
years 1929 and 1932. About 11,000 of the US banks had failed. U.S. GDP
fell around 30%, the stock market lost almost 90% of its value. The
unemployment rate fell down to about 3%. In 1933, 25% of all workers and
37% of all nonfarm workers were unemployed. Over one million families
lost their farms between 1930 and 1934. Corporate profits had dropped
from $10 billion in 1929 to $1 billion in 1932. Between 1929 and 1932, the
income of the average American family was reduced by 40%. About nine
million savings accounts had been wiped out between 1930 and 1933. Over
273,000 families had been evicted from their homes in There were two
million homeless people migrating around the country. Over 60% of
Americans were categorized as poor by the federal government in 1933. In
the early 1930s, more people emigrated from the United States than
immigrated to it. Many people became ill with diseases such as tuberculosis.
GREAT DEPRESSION IN INDIA
GREAT DEPRESSION IN INDIA
The Great Depression of 1929 had a very severe impact on India, which was
then under the rule of the British Raj . The Government of British India
adopted a protective trade policy which, though beneficial to the United
Kingdom, caused great damage to the Indian economy. During the period
19291937, exports and imports fell drastically crippling seaborne
international trade. The railways and the agricultural sector were the most
affected. The international financial crisis combined with detrimental policies
adopted by the Government of India resulted in soaring prices of commodities.
High prices along with the stringent taxes prevalent in British India had a
dreadful impact on most Indians. The discontent of farmers manifested itself
in rebellions and riots. The Salt Satyagraha of 1930 was None of the measures
undertaken as a response to heavy taxation during the Great Depression. The
Great Depression and the economic policies of the Government of British
India worsened already deteriorating Indo-British relations. When the first
general elections were held according to the Government of India Act 1935 ,
anti-British feelings resulted in the pro-independence Indian National
Congress winning in most provinces with a very high percentage of the vote
share.
EVENTS RELATED TO THE
GREAT DEPRESSION IN INDIA

Declaration of Salt satyagraha


independence
DECLARATION OF
INDEPENDENCE
On December 31, 1929, at a session of the Indian
National Congress held on the banks of the river Ravi
in Lahore, Jawaharlal Nehru unfurled the tricolor
and declared that complete independence from British
rule would, henceforth, be the goal of the Congress.
This was a remarkable shift of policy for the Indian
National Congress as it had, till now, been a staunch
advocate of dominion status. This declaration also
triggered the Civil Disobedience Movement , which
commenced with the Salt Satyagraha.
SALT SATYAGRAHA
The Salt Satyagraha formed the highpoint of the Civil
Disobedience Movement. While the heavy salt tax was
always a burden to the poor peasant, the widespread
poverty during the Great Depression made it even more
difficult for the commoner to procure salt. In response to
this tax, between March 12, 1930 and April 5, 1930,
Mahatma Gandhi marched with over 30,000 followers to
the coastal town of Dandi in Gujarat , where they illegally
manufactured salt and defied the Government monopoly
on salt. Subsequently, similar satyagrahas were organized
at Dharasana and Vedaranyam. The Government
responded with a massive roundup, but by then, the
march and the media coverage had radically molded
international opinion.
THANK
YOU