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Thursday, November 30, 2017

21. Economic Development of the World: 1929 - 34

•    The Great Depression was a severe worldwide economic depression in the decade preceding World War II.
•    The timing of the Great Depression varied across nations, but in most countries it started in 1930 and lasted until the late 1930s or middle 1940s.
•    It was the longest, most widespread, and deepest depression of the 20th century.

•    The depression originated in the U.S., after the fall in stock prices that began around September 4, 1929, and became worldwide news with the stock market crash of October 29, 1929 (known as Black Tuesday).
•    Even after the Wall Street Crash of 1929, optimism persisted for some time; John D. Rockefeller said that "These are days when many are discouraged. In the 93 years of my life, depressions have come and gone. Prosperity has always returned and will again."
•    The stock market turned upward in early 1930, returning to early 1929 levels by April. This was still almost 30% below the peak of September 1929.
•    The Great Depression had devastating effects in countries rich and poor.
•    Unemployment in the U.S. rose to 25%, and in some countries rose as high as 33%.
•    Personal income, tax revenue, profits and prices dropped, while international trade plunged by more than 50%.
•    Cities all around the world were hit hard, especially those dependent on heavy industry.
•    Farming and rural areas suffered as crop prices fell by approximately 60%.
•    The decline in the US economy was the factor that pulled down most other countries at first, then internal weaknesses or strengths in each country made conditions worse or better. Frantic attempts to shore up the economies of individual nations through protectionist policies, such as the 1930 U.S. Smoot–Hawley Tariff Act and retaliatory tariffs in other countries, exacerbated the collapse in global trade.
•    By late 1930, a steady decline in the world economy had set in, which did not reach to bottom until 1933.
•    In November 1932 US Presidential Election the Republicans lost to Democrat Franklin D. Roosevelt; he introduced policies known as New Deal to try and put the country on the road to recovery.
•    As the Depression wore on, Franklin D. Roosevelt tried public works, farm subsidies, and other devices to restart the US economy, but never completely gave up trying to balance the budget.
•    In Europe, the Great Depression strengthened extremist forces and lowered the prestige of liberal democracy.
•    In Germany, economic distress directly contributed to Adolf Hitler's rise to power in 1933. The Nazis' public-works projects and their rapid expansion of munitions production ended the Depression there by 1936.
•    Prior to the Great Depression, governments traditionally took little or no action in times of business downturn, relying instead on impersonal market forces to achieve the necessary economic correction. But market forces alone proved unable to achieve the desired recovery in the early years of the Great Depression, and this painful discovery eventually inspired some fundamental changes in the United States' economic structure.
•    After the Great Depression, government action, whether in the form of taxation, industrial regulation, public works, social insurance, social-welfare services, or deficit spending, came to assume a principal role in ensuring economic stability in most industrial nations with market economies.