Global Economic Crisis of 1929

Definition

The Global Economic Crisis of 1929, also known as the Great Depression, was a severe worldwide economic downturn that began after the stock market crash in the United States on October 29, 1929. This crisis led to massive unemployment, widespread poverty, and significant declines in industrial production and international trade, fundamentally altering global economies and societies in the 20th century.

5 Must Know Facts For Your Next Test

1. The Global Economic Crisis of 1929 started with the stock market crash known as Black Tuesday on October 29, leading to a significant loss of wealth and confidence in the economy.
2. Unemployment rates soared during the Great Depression, reaching as high as 25% in the United States by 1933, causing widespread hardship and social unrest.
3. Many countries faced deflation as prices fell due to decreased demand for goods and services, which worsened the economic situation globally.
4. The crisis led to a shift in economic policies, with many governments abandoning laissez-faire principles in favor of interventionist strategies to stabilize their economies.
5. International trade plummeted due to protectionist measures such as the Smoot-Hawley Tariff Act, which raised tariffs on imported goods and contributed to a further decline in global trade.

Review Questions

• How did the stock market crash of 1929 trigger the Global Economic Crisis, and what were its immediate effects?
  • The stock market crash of 1929 triggered the Global Economic Crisis by eroding public confidence and causing panic among investors. The immediate effects included a steep decline in stock prices, leading to widespread bank failures and significant losses for businesses. As people lost their savings and jobs, consumer spending dropped sharply, creating a vicious cycle of economic contraction that resulted in severe unemployment and reduced production.
• Evaluate the impact of the Global Economic Crisis on different countries and how their responses varied.
  • The Global Economic Crisis had a profound impact on countries worldwide, with industrial nations like the U.S. experiencing severe economic decline while others faced social unrest. The responses varied; for instance, the U.S. implemented the New Deal, which focused on relief, recovery, and reform through government programs. In contrast, some European countries turned to authoritarian regimes or isolationist policies as they struggled to cope with economic pressures. These differing responses reflected each nation's political climate and economic structures.
• Analyze how the Global Economic Crisis of 1929 influenced political changes and societal shifts in Europe and beyond during the early 20th century.
  • The Global Economic Crisis of 1929 significantly influenced political changes and societal shifts across Europe and beyond by fostering an environment ripe for extremism. Economic hardship led many people to lose faith in traditional political parties, paving the way for radical movements such as fascism and communism to gain traction. Countries like Germany saw the rise of Adolf Hitler and the Nazi Party as they promised recovery from economic despair. Additionally, societal shifts included changes in gender roles, with women entering the workforce in larger numbers due to labor shortages caused by unemployment.

Related terms

Stock Market Crash: The sudden dramatic decline of stock prices on the New York Stock Exchange in October 1929, which marked the beginning of the Great Depression.

New Deal:

A series of programs and reforms introduced by U.S. President Franklin D. Roosevelt in response to the Great Depression aimed at economic recovery and social reform.

Protectionism: Economic policy that restricts international trade through tariffs and other measures, which increased during the Great Depression as countries sought to protect their domestic industries.