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What Were The Consequences For The Economy, People, Government and International Relations After the Wall Street Crash
The Great Depression of 1929-33 was the most severe economic crisis of modern times. It was the longest and most severe depression ever experienced by the industrialized Western world. Though the U.S. economy had gone into depression six months earlier, the Great Depression was said to have begun with a catastrophic collapse of stock-market prices on the New York Stock Exchange in October 1929. There were many consequences as a result of this catastrophic collapse of the US economy.
The Economy: This map shows the areas of economic decline after the crash in 1929. There are many places that are striped in blue which shows areas of economic decline. This was the story right across North America.
The US economy had experienced rapid economic growth and financial excess in the late 1920s, and initially the economic downturn was seen as simply part of the boom-bust-boom cycle. Unexpectedly, however, output continued to fall by which time half of the population was in desperate circumstances. During the next three years stock prices in the United States continued to fall, until by late 1932 they had dropped to only about 20% of their value in 1929. Besides ruining many thousands of individual investors, this precipitous decline in the value of assets greatly strained banks and other financial institutions. Many banks were consequently forced into insolvency; by 1933, 11,000 of the United States' 25,000 banks had failed.
The People: As a consequence of this crash there was huge unemployment. This graph below shows the high levels of unemployment right across the world but the highest figure is for America as this was where the Wall Street crash had its biggest impact. The Wall Street crash had even more affects on Europe and the other industrialized nations of the world. Many more millions were put out of work because of the downfall in the US economy.
The Government: The Depression had profound political implications. In the United States the government intervention ultimately resulted in the creation of welfare systems and the managed economies of the period following the Second World War. In the United States Roosevelt became President in 1933 and promised a "New Deal" under which the government would intervene to reduce unemployment. The most encouraging thing that came as a bonus to the Americans from the New Deal was the great public works projects such as the Hoover Dam. It did not lead to rapid recovery. GNP per capita was no higher in 1939 than in 1929, although the government’s welfare and public works policies did benefit many of the neediest people.
International Relations: The international economy broke up into trading blocs determined by political allegiances and the currency in which they traded. Trade between the blocs was limited, with world trade in 1939 still below its 1929 level. Although the global economy did eventually recover from the Depression, it was at considerable cost to international economic relations and to political stability. In countries such as Germany and Japan, reaction to the Depression brought [next page]