The Great Depression

Introduction

The Great Depression was the most catastrophic event that shook the world it began in 1929 and lasted till the 1930s. During this global economic failure unemployment had shot up to a record high, and incomes and production decreased drastically. There was variation among the effects of depression around the world but it can be ascertained that the worst hit were agricultural communities of the world because the high fall of agricultural prices was greater than the prices of industrial goods.

Now let us take a look at the different factors that accumulated during the great depression.

Factors that Accumulated During The Great Depression

• The post-war economy was fragile and this was due to the declining agricultural prices, so when the prices and overall production fell the farmers tried to expand the volume of produce to maintain overall income. But this backfired which made the prices lower.

• In the 1920s, the US was the largest financier of investments around the world, and many financed loans from the US.

• In 1928 US overseas loans amounted to over 1 billion. And after a year it shot up to a quarter of a billion and countries that depended on the US were in a crisis.

Withdrawal of US loans affected the rest of the world in different ways:

• Major banks in Europe failed due to the sudden withdrawal of US support and it led to the collapse of currencies such as the British pound sterling.

• In Latin America, the decrease in agricultural products and raw materials took a huge hit.

• The US doubled the import duty to save its domestic market and producers also took a hit in the world trade.

The US was one of the main industrialized nations that suffered severely in the economic downfall:

• As the prices fell the US started to call back the loans and cut off the domestic lending and due to this the farmers could not repay their loans due to insufficient sales of harvest and this ruined household income.

• Unemployment skyrocketed and this made people travel a long distance to find work and in the end, US banking itself collapsed and they were unable to recover loans and repay their depositors which led to the collapse of thousands of banks. The statistics tell us that by 1933, 4000 banks collapsed, and between 1929 and 1932 110,000 companies were shut down.

Economic recovery was on the way in 1935 in most countries but the wider effects of the Great Depression on politics, society, and international relations had the wider implication

India at the Time of The Great Depression

The global depression was not an isolated event but its ripples were felt all over the world because the world was closely interlinked with each other which means it had its impact on India as well because during the 19th century India was one of the largest manufacturers of agricultural goods and a large importer of other manufactured products. This is evident from the fact that between 1928 and 1934 the prices of wheat had fallen beyond 50 percent.

• The condition of peasants was the worst because even as the prices of the goods fell the British government neglected the reduction of revenue demands which further pushed them to indebtedness.

• Throughout the sub-continent rural indebtedness increased every day, they had to sell their land and jewelry to afford basic necessities like food.

• Through the years of depression, India became a major exporter of precious metals and jewelry, particularly gold.

Conclusion

Even though the rural parts of the Indian sub-continent suffered, the urban parts of India were in a better place with the prices falling, and the people with fixed incomes and those who received rent were doing better. The government had put tariff protection for industries and investment on them due to the pressure from the nationalist. So the global depression affected every country around the world including India which particularly affected the Indian agriculturists the most.

FAQs

Qns 1. What is the Great depression?

Ans

The great depression was the severe reduction in economic activities that took place around the world starting in the U.S. in the 1930s. Even though the countries that were hit by the depression were not in synchrony, it mostly happened from 1929 to the 1930s.

Qns 2. What are the effects of the Great Depression?

Ans

• Personal income, Tax revenue, profit, and prices dropped at a record low and the international trade dropped to more than 50%

• Unemployment in the U.S. only accounted for 25% or more in other countries it was 33%.

• It took 25 years for the stock markets to recover from the aftermath of the depression.

• In 1933 the U.S. only produced 57 billion which was half of it produced in 1929.

Qns 3. What are the consequences of the Great Depression?

Ans

• Around 12 million unemployed people in the U.S. and 2.5 million unemployed in Britain.

• It brought a phenomenon known as the Dustbowl which is referred to as drought-affected southern plains of the U.S. which resulted in the loss of crops and the death of farmers.

• Around 300,000 companies went out of business.

• The average family income dropped by 40%.