The Great Depression (1929-1939)

“The only thing we have to fear is fear itself, nameless unreasoning, unjustified terror which paralyses needed efforts to convert retreat into advance” (Parker, p. 236). This quote was made famous by the President of the United States Franklin D. Roosevelt for his campaign at the most difficult time period in the world. This unprecedented event for the world began in the United States on October 29th 1929, also known as “Black Tuesday”, when their economy fell into peril of complete economic collapse. What started out in the United States was soon felt all over the world as a depression began to affect the Western world. Jobs became scarce to the population, and nominal wages were at poverty levels unsupportive of a middle class lifestyle of luxury goods. The gap between the rich and poor were expanding while businesses defaulted and credit contracted as a consequence. The effects of the Great Depression were ubiquitous in terms of economic impact to the global economies. What started in the U.S was soon felt all over the world: deflation and the impact of the Gold Standard, contraction of credit, high unemployment, protectionism and international trade. Overall, these effects of the Great Depression were evidence of the economic impact in the United States that globalized to the rest of the world.

To being with, deflation is an effect of a monetary policy in which the prices of goods and services fall to make it less advantageous for business to continue operation. For example, according to author Charles Kindleberger of The World in Depression, 1929-1939, the annual percentage change in wholesale prices between 1929 and 1930 are as followed: “U.S -12.2%, France -6.7%, Japan -22.3%, Canada -16%, U.K -14.9%, Germany -10.8%, and...

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...eologies around the beggar-thy-neighbour theory contracting all international trade. By and large, “in an increasingly interdependent world, no man in an island” (Esler, p. 613)

Works Cited

Esler, A. (2004). The Human Venture: From Prehistory to the Present. New Jersey: Pearson Education.

Galenson, W., & Zellner, A. (1957). International Comparison of Unemployment. NBER.

Ganzel, B. (2003). Bank Failures. Retrieved February 29, 2012, from Farming in the 1930s: http://www.livinghistoryfarm.org/farminginthe30s/money_08.html

Kindlerberger, C. P. (1986). The World in Depression, 1929-1939. Los Angeles: University of California Press.

Parker, S. (2008). The Great Crash: How the Stock Market Crash of 1929 Plunged the WOrld into Depression. Great Britain: Piatkus.

Rothermund, D. (1996). The Global Impact of the Great Depression 1929-1939. New York: Routledge.