The Great Depression information ( USA) - Pictures, causes of the Great depression.

The stock market crash that began on a black Friday in October 1929 and deepened in the ensuing months had immediate repercussion in Europe. Indeed, even before this, the superheated boom in stock prices that marked the bull market of 1928 siphoned money from Europe. The pricking of the bubble sent shock waves throughout the world.

Large exports of American capital had helped sustain Europe, besides providing an outlet for American surpluses of capital, during the 1920s. Investment in European bonds now contracted sharply and swiftly, as banks that were "caught short" with too many of their assets invested in securities desperately tried to raise money. By June 1930, the price of securities on Wall Street was about 20 percent, on average, of what it had been prior to the crash; between 1929 and 1932 the Dow-Jones average of industrial stock prices fell from a high of 381 to a low of 41!

The American market for European imports also dropped sharply as the entire American economy went into shock; and, to compound trouble, congress insisted on passing a high tariff law in 1930, against the advice of almost all economists. Effective operation of the international economy required that the United States import goods to allow foreign governments to pay for American loans. Moreover, the raising of tariffs set off a chain reaction as every government tried to protect itself against an adverse trade balance leading to currency deterioration. The result was a drying up of world trade that further fueled the economic downturn.

These exceptions may seem more numerous than the rule, but the United States and most parts of Europe did enjoy relatively favorable economic conditions between 1924 and 1930. But it turned out that this prosperity rested on American loans and American markets, which now almost vanished. A European economy still recovering from the trauma of the war and its aftermath was too frail to weather this storm.
 

Indices of Industrial Production, 1929-1938,
in Major European Countries
(1937 = 100)
Year 1929 1930 1931 1932 1933 1934 1935 1936 1937 1938
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France 123 123 105 91 94 92 88 95 100 92
Germany 79 69 56 48 54 67 79 90 100 92
Italy 90 85 77 77 82 80 86 86 100 100
Gr. Br. 77 74 69 69 73 80 82 94 100 101
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Unemployment (in thousands)

1929 1930 1931 1932 1933 1934 1935 1936 1937 1938
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France neglig. 13 64 301 305 368 464 470 380 402
Germany 1,899 3,070 4,520 5,575 4,804 2,718 2,151 1,593 912 429
Italy 301 425 734 1,006 1,019 964 - - 874 810
Gr. Br. 1,216 1,917 2,630 2,745 2,521 2,159 2,036 1,755 1,484 1,791
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The business cycle had long had its ups and downs. If this downswing turned out to be words than any previous one, the reason must be sought in the profound structural changes heaped on top of a normal cycle. Fulcrum of the world economy, the United States had not yet learned how to play that part, as its erratic financial policies and high protective tariffs indicated. Deeper changes were going on in the world. Policies of "autarchy" had developed after the war an were to be perpetuated during the Great Depression; that is, countries that were no longer prepared to trust the international order tried to insulate their economies by tariffs, import quotas, or a managed currency. During the 1920s, while sometimes readjusting the rate at which their currencies were exchanged for gold, most nations clung to the gold standard, which facilitated international trade by permitting currencies to be freely exchanged in terms of gold. But beginning in 1931, when Great Britain was driven off the gold standard, country after country left it in order to protect themselves against a flight of gold leading to deflation and unemployment. The flight from gold was followed by all kinds of nationalist economic policies - exchange controls, import quotas, tariffs. International trade was thus further impaired.

 Perfect competition was obviously lacking in an era increasingly prone to both corporate business monopolies or allowance for wars, revolutions, dictatorships, the dismemberment of countries, and all kinds of political factors.

Whatever the causes, panic soon spread through Europe. In 1931, after the World Court refused to allow Austria to enter a customs union with Germany, that economically distressed country collapsed. The central bank failed, touching off a panic that threatened Great Britain next. president Herbert Hoover of the United States proposed a moratorium on all war debts and reparations, but French opposition delayed its acceptance.

One of the most punishing features of the depression had been the drastic fall in agricultural prices, together with other primary products. The years from 1925 to 1928 brought good harvests all over the world, the latter a record in wheat. The price of grain tumbled just as the industrial and financial slump hit, compounding the crisis. Loss of urban and international markets afflicted farmers already in trouble from overproduction and, frequently, from a burden of debt incurred in expanding production and buying agricultural machinery. With unemployed workers suffering from hunger, the sight of farmers refusing to harvest crops because the price was too low to make it worthwhile drove home the bitter lesson of poverty in the midst of plenty, the curse of Midas fallen on man. But by 1936 agricultural prices had risen somewhat........

By 1933, 26.6% of people who were wage earners were unemployed. Workers were either fired, laid off, or had extra work to do with less pay if they still had their job. The domestic market was affected and many lost their lands because they couldn't keep up with the payments, and most factory workers had to work twice as had to earn the same amount of money they did before the Depression hit.


Pictures of the Great Depression :