Great Economic Depression of 1929: First Global Economic Crisis

Abstract

The great economic depression of 1929, which is one of the most important economic crises ever in the history of the world economy and continued its effects for decades, first appeared in the United States of America and caused some economic, sociological, and political consequences by affecting almost the whole world. It would not be wrong to attribute the causes of the great depression that emerged in 1929 to the economic developments and policies in the United States. To put it more clearly, the stock market crash because of speculative and credit purchases, the decrease in consumption compared to overproduction, abundance of money, declining trust in the economy and bank panics, inexperienced economy management, applied customs tariffs caused the crisis. The practices of other world countries deepened the crisis and turned it into a world economic depression. This chapter aims to give detailed information about the great economic depression of 1929, which has an important place in the history of the world economy and has led to the emergence of a new economic approach. The historical development of the Great Depression, the reasons for its emergence, its effects on the selected countries in various ways, the changes in the economic policies, and the strategies of selected countries implemented to exit the Great Depression constitute the main parts of the study. Pre-depression and post-depression economic data of both the USA and selected countries are incorporated to reveal the historical development of the Great Depression, the reasons for its emergence and its consequences. Thus, the effects of the Great Depression on world economies were explained through data such as unemployment, growth, interest rates, trade volume. In many countries, with the Great Depression, the gross domestic product fell at high rates, the world trade volume decreased significantly, and unemployment rate increased. The effects of crisis lasted for years, and it took a long time to recover. The Great Depression also played an important role in the political structures and economic policies of the countries. The classical economic approach, which was accepted until the Great Depression, has been replaced by the Keynesian economic approach. The new approach that foresees direct state intervention in the economy influences the world economy for about 40 years after the Great Depression. The negative effects of the Great Depression were tried to be eliminated by applying exit strategies from the crisis within the framework of Keynesian economic policies in both the USA and other countries.