What is the Great Depression?
The Great Depression began on October 24, 1929, with the Great Wall Street Crash (Black Thursday) in the United States, and spread throughout the world into the late 1930s.
Booming America
In the 1920s, the United States, which suffered little damage from World War I, enjoyed a booming economy.
Along with the huge growth of the automobile industry, stock prices have grown five times in six years.
Those who believed that stock prices would continue to rise continued their bullish speculation.
Wall Street Crash
On September 3, 1929, the Dow Jones Industrial Average (NY Dow) hit a record high of $381.17.
From then on, stock prices gradually declined.
After a 17% drop in one month, the price recovered by about half, then rapidly resumed its decline.
The Wall Street Crash (Black Thursday) occurred on October 24th.
The stock price fell 12.8% in one day, -12.8% on the 28th to $260, and -11.7% on the 29th to $230.
The price hit a low of $198 on November 13th, and then reached $294 on April 17th.
However, this was only a temporary rebound, and on July 8, 1932, the price hit $41.22.
Depression spreading across Europe
Funds from the United States, which was unscathed by World War I, were being invested in European countries such as France and Great Britain, which had been badly affected by the war.
When those funds were withdrawn, many European banks went bankrupt and the Great Depression spread worldwide.
Measures for economic recovery
New Deal
- When Franklin Roosevelt became president, he changed from the liberal economic policy of the past to a state-capitalist economic policy in which the state actively intervened.
Therefore, in order to escape from the Great Depression, an economic policy called the New Deal was implemented based on the three ideals of relief, recovery, and reform.
Tightly control banks. The government lends to renewable banks.
The National Industrial Revitalization Act was enacted. It temporarily suspended antitrust laws for companies, allowed price cartels, and guaranteed workers the right to organize and bargain collectively.
Created public works projects by spending billions of dollars on public engineering projects such as the Tennessee River Basin Development Authority.
Agricultural Adjustment Law enacted. Instead of restricting agricultural production, the government stabilizes the prices of agricultural products by providing subsidies and purchasing surplus produce.
The Social Security Law was enacted to provide relief to the unemployed and poor.
The Securities and Exchange Commission was established to monitor speculation and excessive lending.
Increased tariffs on agricultural products and industrial products.
Building a Block Economy
In order to prevent the outflow of funds from within the country, countries such as the United Kingdom and France tried to create their own economic zones by imposing high tariffs on other countries in order to circulate economy and trade among countries with which they had close ties and their own colonies. .
As countries moved toward protectionism, trade slumped around the world and economic stagnation persisted.
