The Great Depression
The Great Depression
The Great Depression Refers to a period of economic downturn which occurred between 1929 and 1939. It was the longest and harshest depression in the Western world’s history. It occurred in the industrialized areas of the world, including Europe and North America. The onset of the depression was marked by the collapse of the New York Stock Exchange stock market prices in October 1929. The depression began on October 24, 1929, which was named the Black Thursday, when almost 13 million stock shares were sold in a single day leading to the stock market crash (Burg, 2009). The volume of the stock shares sold was twice the record of previous days (Burg, 2009). The stock process continued to drop in the following years and this affected investors and strained financial institutions. Numerous banks went into insolvency (Burg, 2009). The confidence in the economy dropped and spending levels declined. There was also a decline in demand and production, which exacerbated the economic depression. Furthermore, there was a drop in output and increased unemployment rates (Robbins, 2011). Another effect of the Great Depression was an increase in homelessness as farmers lost their farms and were also affected by the Dust Bowl drought (Burg, 2009). Most farmers went out to look for employment and ended up homeless. Some of the triggers of the Great Depression include the return of most Western countries to the gold standard after World War I (WWI), as well as money supply behavior coupled with the actions of the Federal Reserve (Parker 2003). The countries returned to the gold standard at the same price as that before the war. Although the Great Depression started in the U.S., it quickly became a global downturn because of the financial relationship between the European economies and the U.S. after WWI. When the depression occurred in the U.S., the finances and investment credits stopped flowing to Europe.
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