What is Great Depression?

What is great depression? | and its features.

This refers to the greatest and longest economic fall which occurs in 1929 until the end of 1930s. It was started in USA and later spread to the whole world. It is among the economic crisis in the world which caused by many factors. Among the factors that lead to this great economic depression includes; excessive borrowing, the crash in stock markets and banking crisis, many banks become bankrupt. The following are the features of great depression;

Stock market crash.

Due to this economic depression market production start falling. This was marked as “black Tuesday”. There was no selling or buying of goods and services. Every person collects food for his or her family members. Since there is no business market starts falling and hence great depression.

Excessive unemployment.

This is the most common feature of great depression, most of employees and workman losses their job and it was hard to get another job. This is because the company can’t continue paying for someone who does not work for anything. Due to lack or less production the industries thought to reduce the number of people.

Reduction in wages.

Since there is no good production of goods in industries, many industry owners tend to reduce wages of their workers. This leads to poverty because the wage obtain could not sustain to maintain his or her family well.

Bank failures.

Banks systems were failed because many people start borrowing money without paying back their debts. This causes crisis to the bank system and banks lack confidence in financial system and many people who invested in those banks lost their savings.

Decline in agricultural prices and farming crisis. Agricultural sector was hit hard during the great depression. Crop prices fall without any rate and farmers faces financial difficulties. Others lost their land, homes and live hood.

Decline in industrial production.

Due to lack of raw materials to the industries, production rate was reduced and as the production rates reduced many workers and employees lost their job. Many factories were closed due to lack of capital to run the factory and to pay for workers. These reduces manufacturing activities.

Collapse of international trade.

Since this depression was all around the world, many countries set high tariffs in order to collect money from imported goods, this situation prevents many business man from ordering of goods outside their countries hence affects the international trade. Also, the trade restriction was another cause of international trade to fail. Most countries set the restriction which are harder to obey if you want to do business from outside that country.

Reduction in government assistance.

in any country the government has a tendency of providing assistance to his people, this assistance may include water services, health services, electricity services, health services and many more. But in this time, the government reduces the assistance since there is no revenue as people do not pay for taxes or anything. Therefore, people have to struggle for their lives. This led to weak people in the country due to diseases.

These features make the great depression to be historical event which cannot be forgotten by economists. Not only for economists but also the great depression causes impacts on social and political systems. It saves as a case study in economic history and has influenced subsequent economic thought and policy making.

REFERENCES:

Roth, B. (2009). The Great Depression: A Diary. Public Affairs.

Watkins, T.H. (1993). The Great Depression: America in the 1930s. Little, Brown, and Company.

Galbraith, J.K. (1955). The Great Crash1929. Mariner Books.

Hall, T.E., & Ferguson, J.D. (2002). The Great Depression: An International Disaster of Perverse Economic Policies. University of Michigan Press.

Steinbeck, J. (1939). The Grapes of Wrath. The Viking Press."

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