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What Is The great depression – Important For All

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With the terms ” Great Depression, “” Crisis of ’29,” or ” Wall Street Crash,” we refer to the economic crisis that hit the world economy at the end of the 1920s, reducing production, employment, income, wages on a global scale. Consumption and savings. The beginning of the Great Depression coincides with the heavy collapse that struck the Wall Street Stock Exchange. When about 13 million shares were sold, causing the index to fall by more than 50 percentage points. In this content, you will be clear on what is the great depression. So, keep your eyes on this blog.



What is the great depression and What were the main causes of the 1929 crisis?

The speculation was not, however, the only cause of the great collapse. Part of the crisis is in fact blamed on the fall in the prices of agricultural products, which occurred as a consequence of the enormous accumulation of unsold stocks following the improvement in agricultural production in European countries; so tons of wheat and coffee spilled into the sea or set on fire in an attempt to raise prices. The accumulation of stocks that prevented the heavily indebted farmer. From paying the banks interest on the sums they borrowed and speculation among the causes that led to the crisis’s outbreak.




How did the crisis of ’29 come about?

In the years following the Great War, the United States experienced a real boom thanks to the flourishing automotive industry and high productivity. It also due to the rationalization of production processes by adopting a scientific organization of work (the so-called Taylorism ). Which allowed prices and wages to be kept unchanged, favoring investments and therefore productivity.

The existence of accumulated savings and the absence of limits to speculative activities created the conditions for wide credit use by investors. It led the latter, together with the banks, to speculate on the stock market. From 1920 to 1929, equity investments tripled their volume, and stock market indices rose, from 1926 to 1929, from 100 to 216. Still, the increase in the value of industrial shares, however, did not correspond to an actual increase in the production and sale of goods.


what is the great depression on the Consequences of the 1929 crisis

The exit from the market through the mass sale of securities, especially by the bourgeoisie, which in the early twenties had stimulated the production and consumption of durable goods with their purchases, caused Wall Street’s collapse.

To suffer the consequences were precisely the industries of durable consumer goods such as those of the car that had to cut their orders to companies belonging to the same supply chain, lower wages (with serious damage to consumption), and reduce staff. The contraction in consumption caused by the cut in salaries caused the crisis to spread from the industrial sector to the agricultural sector, causing damage to an already severely weakened primary industry.

Since the industrial sector then linked to the banking sector. Which kept rates low to encourage investments in the stock market at the time of the Wall Street crash. A small savers rushed to credit institutions to withdraw their money. The call encountered a liquidity crisis, contributing to the failure of many banks and, in turn, of the industries in which they had invested.

Industrial production fell 50%, and failures and redundancies led to the food consumption crisis, contributing to a vicious circle that led the US economy at a stage of the arrest.


What measures were taken in the United States to counter the crisis of ’29

The solutions proposed to counter the great crisis initially limited to stimulating spending on public works and pressure maneuvers against industrialists to reduce wages. With the creation of corporations to support and stabilize the sharply falling prices by opposing at the beginning to deflationary measures. President Herbert Hoover did not adopt an assistance program in an office, leaving everything to federal governments and private assistance.


New Deal: the Roosevelt plan and the recovery from the 1929 Crisis

The recovery took place in 1933 with the election of Franklin D. Roosevelt as president of the United States on March 4, 1933. Roosevelt adopted a program of economic and social reforms between 1933 and 1937. It known as the New Deal consisting of the following points:

  1. the abandonment of the gold parity and the devaluation of the dollar by 40% to reduce debts and facilitate exports;
  2. avast, public works plan to absorb unemployment;
  3. a comprehensive system of social insurance for the benefit of the working classes and greater taxation of the wealthy;
  4. an increase in wages ;
  5. the reduction of working hours in factories ;
  6. the obligation for employers to recognize workers’ unions and to negotiate with them;
  7. control of the banking system, the stock exchange, and the stock market.

what is the the great depression – dollar devaluation matter

Therefore The dollar devaluation authorized by Congress spurred public spending. The program of economic and social reforms implemented between 1933 and 1937. It known as the New Deal, helped bring the United States out of one of the darkest periods in history.

By stimulating public spending through a vast program of interventions, Roosevelt employed an unemployed workforce. Therefore pushing the demand for consumer goods. Which allowed the production process to restarted. Roosevelt also supported farmers by controlling the production by reducing farmland and granting subsidies.

Final word

Therefore The Tennessee Valley Authority and the NIRA (National Industrial Recovery Act) promoted large public works. The lifeblood for the private sector and the workforce during the Agricultural Adjustment Act. Therefore  The Civil Work Administration and the Wagner Act other measures. It adopted to stop the crisis and restore vitality to a sector oppressed by stagnation. Now you are clear about what is the great depression. Thanks for your effort.