THE GREAT DEPRESSION

The Great Depression

The Great Depression

Introduction

The Great Depression, also known as the 1929 crisis, major crisis or collapse of Wall Street, was a grave economic crisis that shook the world economy in the late twenties, with serious repercussions in the early years of the next decade. The depression had its origin in contradictions similar to those that led to the economic crisis of 1873-1895. The beginning of the Great Depression is associated with the crisis of the New York Stock Exchange (the Stock Exchange on Wall Street) on 24th October 1929 (Black Thursday), which was followed by the final collapse of the stock market 's October 29 (Black Tuesday), after years of booming stock. The depression had devastating effects both in industrialized and in those commodity exporters. International trade declined considerably, as well as the incomes of workers, income tax, prices and profits. Major cities around the world were hit hard, especially those who based their economy on heavy industry. The construction sector suffered an abrupt halt in many countries. The agricultural and rural areas suffered significantly as a result of a collapse in prices between 40 and 60%. The mining and forest areas were among the hardest hit, due to the sharp decline in demand and the limited alternative employment.

Causes of the Great Depression

There are various reasons for the first recession in 1929, which included the structural weaknesses and events, which made it a significant depression and spread from one country to another. The "Great Depression" was caused by underlying weaknesses and imbalance within the U.S. economy that had been obscured by the boom psychology and speculative euphoria of the 1920s. It was then struck the first signs of overproduction. However, the government has not reacted to these signs properly. It is because of the fact that the state does not have a decisive regulatory influence on the economy. There have been proposals to improve its stability, but these proposals were rejected. For example, Woodrow Wilson proposed the creation of a central bank, which would hold a portion of the member bank reserves, and issued currency against commercial assets and gold. Depression also caused such things as the weakness of political and financial institutions in the fight against defects in the economy that is fully established in 1930. Before the "Great Depression" of the government rarely took any action during the economic downturn, relying on a market economy, in order to achieve fiscal correction. The U.S. market was not able to handle the depression, which led to radical changes in the entire policy of the United States. After the "Great Depression" government influence regardless of the form of tax or industrial regulation, public works, insurance or services, or deficit in the finances, began to take a major role in ensuring economic stability in most industrial countries with market economies.

Theories about the causes can be classified in three ways:

Orthodox classical economics: monetarist, Austrian and neoclassical theory. Austrian school of economics consider the effects of money supply in the ...