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The Great Depression- What was it ?

In this topic we will talk about the great incidence that shook off the whole world that is the Great Depression. This as a incidence in which some greedy people sell everything to earn which leads to the failure of banks and lead to crash of stock market people become unemployed and become very poor that also leads to Suicide of some people. It is one of the biggest economic fall in the 20th century in 1929 happened in America. So lets start all you need to know about it : 

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What was it ? :

In 1929 what happened that people suddenly started selling their stocks because of fear that they will loose the money. And the news of worldwide crash in the stock market spreads all over the world on October 29 1929. That's why this day also called as the Black Tuesday in the history. And was the longest depression ever in the history till now. Many people lose the money and that's why it leads to suicides.

Background : 

It was all started when during the world war 1 Germany has to face the many consequences and after it the Allied forces, countries are in the power and lead.Financial condition of Britain was also not good at that time but they recovered it from India. After world war 1 America launched the scheme of "buy now pay later". After it people started buying suddenly in high amount which causes great problem later. And secondly Liberty bonds were issue that time which was war bonds by government which even a common people buy. And the money given for that bond goes to the war and it helps them and makes them very happy. So that's why Private companies comes and sell their bonds to gain profit. So people believed in it and makes every one happy but this all changed in 1929 as the things changed. In one week the whole stock market crashes. 

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Main causes of Depression : 

1.) Over production : 

This problem mainly occur in agriculture and industrial sectors. Producer are more than the buyers which creates the huge problem. If you want to run an economy smooth and easy there has to be production according to the need otherwise can cause the problem. This also leads to wastage of products and huge of money. 

2.) Unequal distribution of Wealth :

Few people are very rich and more people are very poor. So the power distribution is also unequal due to this.This also creates a problem in maintaining the market as many people were poor and they are not familiar with the stocks. So this also creates the problem of unrest during this period.

3.) Monetary policy : 

It is very poor as schemes like buy now pay later are very less effective and leads to problems. Unequality and over production directly affect the monetary policy of government.And government also didn't involve in it much as they were confident that educated and more experienced people were working in the wall street. This creates the problem as there was no proper policy to deal with such situations. So it is also one of the reason of this depression. 

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4.) High tariffs & War debts : 

Heavy Import duties were imposed holly smooth tariff is also one of them. which brings the whole economy down. High tariffs leads to less import of sufficient supplies of good of different companies which affects them badly in terms of wealth . 

5.) Stock market Crashes and Financial panic : 

It was also the one of the biggest factor for biggest depression at that time.Financial Panic is one of the major reason to fall in an economy. If people lost their trust then this kind of situation occurs usually and no one can stop it other than the trust.

So these are the main causes which leads to this great depression. And these are interrelated to each other. There is also great corruption which cause much problem. 

The crash of Stock Market : 

Herbert Hoover was the president of US at that time and promised continued prosperity "A chicken in every pot". People throw rotten tomatoes eggs on him him due to the unemployment of people at that time. People had nothing no money clothes nothing and only tried to find the job. This stock fall led America to fight against it for next 10 years. Everyone sell their shares as to protect the money from loss. People withdraw their money from the banks America faces loss of billion and billions of dollars. This affect the many big companies and the countries and their economies as well. 50 % of Britain was affected PM of Britain at that time was Winston Churchill also loose his money as he also invested the money in American Stock Market. 

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Hoover Brings so many companies to US that many of them was fake and started selling their shares so people also continued to purchase the shares and people also don't know how wall street works this also leads to misfortune. 

Effects : 


  1. American withdraws the money from the banks so the banks collapsed very badly as there was no trust left with the banks.
  2. Salaries were also cut and prices goes high of every single item so there is high cut in the salaries.
  3. Unemployment of people rose upto 25%  and many people don't even have clothes to wear. Even the top educated people were unemployed at that time.
  4. Farmers affected very badly ad their income dropped by 50% and agriculture is always the backbone of any economy. 
  5. Industries and national product fall drastically as there was production stopped due to lack of money and many companies were shut down with heavy losses.
  6. The entire economy collapsed and the great depression set in and lasted for a decade in that decade people have seen worst day ever of their life.

New Deal Policy By Roosevelt : 

It was bring in by new President Mr. Roosevelt to deal with this situation. Many reforms bring to raise the companies industries which were hit very hard. It was a series of federal programs, public work projects, financial reforms and regulations in US to response to this great depression. And also to Pump in money in the companies to deal with this but this doesn't help that much this all Ends after the 2nd World War Ends in 1945.    

So during this great depression many people committed suicide and people were went jobless and suffered a lot. Whole world is affected by this depression and many big companies and countries affected by this. A huge loss of money was seen in America ans around the world. It took time for America to recover from it. Many reforms were done to deal with situation but they also couldn't help a lot. So yeah this was all about his Great depression of 1929. 

Thank You

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