How the great depression of 1929 influenced USA and contemporary Europe
After the finish of the First World War when other countries were beset with the post-war reconstruction people worldwide had been surprised to observe the wonderful economic development of America. The American development was visible in every sphere of economic activities be it scientific invention, manufacture, trade and commerce or any other fields of economy.
(1) The characteristic Features of the US Economic Advancement: The most conspicuous feature of the American economic development was the growth of production resulting from the application of new scientific inventions. New sources of power and new techniques for promoting efficiency were invented. Besides there were various other factors responsible for the economic advancement of the USA.
(a) As a consequence of new system of production the manufacturing industry, especially automobiles, developed rapidly.
(b) It was the production of consumer durables that made the biggest strides.
(c) Because of the technological progress the number of workers in factories was reduced considerably.
(d) There was a tremendous increase in the sales. Purchasers taking advantage of the ‘hire-purchase revolution’ of the time went wild for purchasing everything.
(e) Cinema industry also flourished. In the 1920s movie going became a national habit. Thus it appeared that the USA had entered a new era of permanent abundance. However, the economic structure on the basis of which the economic advancement was made was not at all free from weaknesses.
(2) The Great Depression of 1929: The unprecedented economic boom appeared to the American people as if there would be no end to the tide of rising prosperity. But soon the people were disillusioned. Already there were signs of economic stress before 1929. In fact, economic problems were surfacing and it became apparent that the US economy was heading towards a depression. For example, food prices were collapsing; farmers were borrowing money for their survival; goods were stockpiling for the want of market; no import or export of the US goods was possible. Industrial weaknesses led to large-scale unemployment.
(3) Black Thursday: The signs of weaknesses in the economy were ignored. When the share market had registered a boom nobody thought of any imminent danger. On 24 October 1929 the American share market crashed. However, 24th being a Thursday the day is remembered even today as the Black Thursday, and the crash is known as the Wall Street Crash. Incidentally, Wall Street in New York, USA is the location of the principle share market just like the Dalal Street in Mumbai, in India.
(4) Impact in USA: As a result of the Wall Street Crash the American economy also crashed. People had to sell their shares at a very low price sustaining a huge loss. Industry, trade and commerce also suffered due to the economic crash. The companies and banks that had invested in shares suffered most. The farmers were also not immune from the impact. They could not repay their mortgage installments due to fall in price. In such cases the banks took over the farm and sold it for whatever price it could.
(5) Impact in Europe: The Great Depression impacted the countries of the world. Even India was not immune from it. But in Europe the impact was on a wider scale. The USA had a major role in the post-war reconstruction of European countries. These countries suffered from the lack of financial support from the USA. Of course the political repercussion of the Great Depression was greater. Many European governments, unable to deal with the problems facing their countries, were overthrown. Leaders and political parties rose and fell. None of them using the democratic methods was able to solve the problem of unemployment and poverty.