The Great Depression: Principal Effects on the World
The Great Depression was a severe economic downturn that occurred between 1929 and 1939. It was an era of intense poverty, widespread unemployment and diminished consumerism. The causes of the Great Depression include stock market speculation and a lack of consumer demand. Many of the resulting effects of the Great Depression continue to be felt today. This article will explore the principal effects of the Great Depression on people, industry and the global economy.
Impact on the American People
The Great Depression had a devastating effect on the lives of American people. The combination of job losses, diminished wages, decreased consumer spending and increasing prices had a profound effect on the lives of millions of people. Here are the principal effects of the Great Depression on the American people:
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Decreased Living Standards: When incomes declined and prices increased, Americans were forced to reduce their standard of living. People moved back in with their families, shared accommodations with strangers and faced real difficulties providing for basic needs.
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Increased Poverty: Many families lived in poverty, with breadwinners reduced to relying on government relief payments, charity and the proliferation of soup kitchens.
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Growing Unemployment: The prevalence of unemployment rose dramatically with approximately 15 million people unemployed at the peak of the depression.
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Mental Health Issues: The stresses of the Great Depression led to an increase in mental health issues, with increases in suicide, alcohol and drug abuse.
Impact on Industry
The Great Depression also had a significant effect on industry. The plummeting demand and dwindling profits led to a decrease in industrial production and production of non-essential goods and services. Industrial output fell from 800 billion to 400 billion from 1929 to 1933. Here are the main effects of the Great Depression on industry:
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Mass Layoffs: Businesses laid off large numbers of their workers to combat decreasing demand and conform to limited resources. Between 1929 and 1933 around 8 million Americans had lost their jobs.
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Bankrupt Companies: The increasing financial strain led to the bankruptcy of many American companies. Nearly 75,800 businesses had gone under between 1929 and 1933.
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Lifted Tariff Restrictions: International trade regulations were also affected, with high tariff regulations used to limit the import and export of goods. The United States increased their tariffs to increase domestic production.
Global Implications
The Great Depression had implicative effects across the global economy. Many countries were forced to implement austerity measures and adjust their governments’ fiscal policies. Here are the principal effects of the Great Depression globally:
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Effect on International Trade: The amount of international trade fell sharply, with a decrease of 60 percent between 1929 and 1934. The lack of demand and high tariffs forced upon countries meant there was little incentive to participate in international trade.
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Increased Social Unrest: As increasing hardship mounted, people began to challenge the existing political systems. For example, Adolf Hitler rose to power in Germany in 1933 due to the promise of a new and responsible government.
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gold standard Abandoned: Many of the worlds’ governments abandoned the gold standard in 1931. This meant countries no longer had to attach their national currency to gold prices, giving the government more control of fiscal and monetary policy.
The Great Depression was a chaotic episode in history. It had a devastating effect on the lives of ordinary Americans and the global economy. The effects of the Great Depression continue to be felt today with increases in unemployment, poverty, bankruptcy and implications for international trade. Although the period was marked mainly by hardship and despair, it was one of the most important developments in the history of the global economy.