The Great World Crisis of 1929 became a significant world economic crisis. The Great Depression, as it was called, became the largest crisis of the twentieth century. It originated from a stock market fall in the US on “Black Thursday” and expanded to the states of Latin America and Western Europe, as well as to Asian and African countries. It has become so powerful that it has embraced all the industrialized countries of the world.
Prerequisites of the Great Depression
After the First World War, Western European countries became debtors to the United States. The victorious states hoped to repay a significant part of the debts with the help of reparations received from Germany, but it was unable to pay them. The United States refused to forgive or reduce its debts, and instead, American banks provided European countries with new loans that were to be used to repay previous debts. This US financial strategy did not work mainly due to the deepening crisis trends in industry and agriculture in Western Europe: the capacity to repay their loans to the US did not improve, if anything, it deteriorated. The American economy has largely become hostage to the European one.
Essence of the Great Depression
The Great Depression is a global crisis that has dramatically changed world development trends, both economic and political, changed the entire system of international settlements and the gold and foreign exchange system, and squeezed world trade. As a result of the crisis and the rise of protectionism, according to the League of Nations, world trade fell threefold from 1929 to 1933. The world as a whole was rejected in the crisis of 1929 until about 1908-1909.
Consequences of the Great Depression
Prior to the crisis, the United States, which was at the epicenter of the Great Depression, produced almost the half of the world’s industrial output (excluding the Soviet Union), which was more than Britain, France, Germany, Italy, and Japan combined. The US ranked first in the world in terms of exports during the First World War. In 1929, for the first time in 300 years, Britain lost to another country in the total foreign trade turnover. Very significant changes have taken place in the social life and social legislation of a number of countries, which has resulted in a reduction in the length of the working day and an increase in social guarantees and social insurance. As a result of this crisis, the Securities and Exchange Commission was established in the US to establish rules of the game and punish violators.
It should be noted that in Western Europe, there were up to 30 million unemployed. Moreover, the situation of farmers, small entrepreneurs, and the middle class has deteriorated; many people found themselves below the poverty line. The popularity of both left-radical (communist) and right-radical (fascist and radical-nationalist) parties has increased significantly. The economic crisis undermined the material and social foundations of a number of American political regimes and led to violent political upheavals and revolutions. The National Socialists, led by Adolf Hitler, rose to power in Germany as a consequence of the Depression, forestalling the advent of fascism in Italy. In conclusion, it might be assumed that the Great Depression, which began in the United States, led to World War II.