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Great Depression, name given to the profound global economic crisis that lasted from 1929 to 1939.

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Introduction

Great Depression, name given to the profound global economic crisis that lasted from 1929 to 1939. At first each country coined its own title for the economic collapse, although every country in the world was affected by a crisis that also had serious consequences for social and political life. In Britain it was called "The Slump" and in Germany "Die Krise" (The Crisis). In time, however, the American term "The Great Depression", which in Britain was reserved for the period 1873 to 1896, has come to dominate. The collapse of the American stock market on Wall Street in October 1929 is usually taken to mark the onset of the economic collapse. The world economy had already begun to turn downward in 1928, with demand for both agricultural and industrial goods, as well as for construction work, beginning to decline. Indeed, these trends were evident in the United States and helped to trigger the wave of selling on the American stock market. But it was not the Wall Street Crash itself, but the policy response to it, which tipped the world economy into the greatest depression ever known. sidebar SIDEBAR The Times Report of the Wall Street Crash This report on the developing Wall Street stock market crash appeared in The Times on October 25, 1929. ...read more.

Middle

Thanks to their painful memories of the chaos caused by the post-war inflation, they found it very difficult to forsake the gold standard. In 1930 many economic forecasters believed the crisis would be short-lived but by the following year confidence in the future had evaporated. Not only were governments cutting back on spending, so, too, were companies, farms, and households. Demand for industrial and agricultural products now dried up and this caused prices to fall yet further. By the summer of 1931, many economies began to crack under the strain of falling prices, a lack of demand, and spiralling levels of unemployment. Across much of the world, economic, political, and financial pressures combined to produce a financial crisis that swept the world like a flash flood. Events in Austria and Germany were among the most dramatic. With some of their most prestigious banking houses facing ruin, the German and Austrian governments were forced to become directly involved in managing the financial system. In Britain it was not commercial banks that came under pressure in 1931, but the central bank, the Bank of England. Britain's financial crisis culminated in the British Empire and Commonwealth countries leaving the gold standard (Australia left in 1929 and South Africa in 1932). This was a key-turning point in the Great Depression. ...read more.

Conclusion

Although many countries had rudimentary welfare systems-a notable exception was the United States-the very scale of the problem, coupled with budget orthodoxy, soon exhausted the welfare budget. Where they existed, state schemes to support the unemployed were simply not designed to cope with either the sheer volume of jobless or the length of time people were out of work. Private charities and small relief schemes, like the soup kitchens that sprang up in towns and cities across the United States, tried to step in to fill the vacuum left by failing government programmes. The failure of governments to combat the depression effectively caused domestic politics to become increasingly turbulent. In much of central and eastern Europe, as in the Weimar Republic, when politicians from moderate, centrist parties (Liberals, Conservatives, Democratic Socialists) failed to introduce policies to tackle the crisis, they lost out to extremist parties to the Far Right and Left of the political spectrum. Britain, in 1931, sought to combat this trend by forming a National Government made up from members of the Conservative, Liberal, and Labour parties to "generate national unity". There were similar developments in France, Belgium, and the Netherlands in the mid-1930s. But it is important not to oversimplify the relationship between economic misery and political radicalism. Many countries around the world experienced intense economic hardship, yet did not succumb to political extremism; the United States, which endured the most acutely depressed economy of the western world, is the most notable. ...read more.

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