Chapter : 1. The Making of a Global World
The Great Depression
The Great Depression :
The Great Depression began around 1929 and lasted till the mid- 1930s. The world experienced catastrophic declines in production, employment, incomes and trade. Agricultural regions and communities were the worst affected. The depression was caused by a combination of several factors.
(i) Agricultural overproduction remained a problem, which became worse with falling agricultural prices. As prices slumped farmers tried to expand production to maintain their overall income, pushing down prices even further. Farm produce rotted for a lack of buyers.
(ii) In the mid - 1920s, Many countries financed their investments through loans from the US. US overseas lenders panicked at the first sign of trouble and withdrew their money from the market. Countries that depended crucially on US loans now faced an acute crisis. The withdrawal of US loans affected much of the rest of the world. In Europe it led to the failure of some major banks and the collapse of currencies. The US attempt to protect its economy in the depression by doubling import duties also dealt another severe blow to world trade.
(iii) With the fall in prices and the prospect of a depression, US banks had also slashed domestic lending and called back loans. Faced with falling incomes, many households in the US could not repay what they had borrowed, and were forced to give up their homes, cars and other consumer durables. As unemployment soared, people trudged long distances looking for any work they could find. Ultimately, the US banking system itself collapsed.
Trending Articles & Blogs
Download Old Sample Papers For Class X & XII
Download Practical Solutions of Chemistry and Physics for Class 12 with Solutions