The Global Effects Of The Great Depression

The Great Depression was the biggest crisis ever experienced by the world economy. It hit almost every country. The highly developed economies of Western Europe and the United States: the less developed ones like Canada and, Australia, Japan and Argentina: and the underdeveloped countries of Latin America, Asia and Africa, just as soon as they became involved in the world market.

Many countries experienced the catastrophic breakdown of their national economies, and only a few came away without major damage. The Depression manifested itself in events which had no obvious relevance for many people, such as the complete deterioration of stock prices, the dissolution of the international currency system or the fall of world prices.

Statistics cannot convey the extent of the effects of the Depression. In 1932, 30 million people were unemployed, while millions more suffered from short hours and extremely low wages. The consequences were hunger, a higher mortality rate apathy and hopelessness, as well as an increase in crime.

The Great Depression hit America unprepared. At the end of the 1920s people in developing nation had no idea of what was coming. Even leading industrialists and businessmen were full of optimism. In the New York Times of October 29th 1928, Alfred Sloan, president of General Motors, declared his “conviction that our general economic and industrial situation is thoroughly sound”.

The fact, the American economy had shown signs of weakness even before 1929. Investment opportunities were no longer unlimited, as demand fell off during the second half of the 1920’s especially for housing and durable consumer goods.

In agriculture, at this time still an important factor in the national economy, real incomes had stopped growing: falling prices in the world market posed big problems for American farmers too.

The buoyant bull market at the New York Stock Exchange in 1928 had produced record speculation, eventually culminating in the Crash of 1929, which not only reinforced the recession but finally destroyed confidence confidence in the expansion of the 20’s. Even though New York capital markets were brought back under control relatively fast, the slide into the Depression had started.