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The Great Economic Depression
The Great Economic Depression
This was the situation in the world history where there was economic decline in the capitalist system which took place firstly in U.S.A and spread to Britain, Canada, Italy, France, Austria and the colonies with the exceptional of the Union of Soviet Socialist Republics. The Depression created problems such as unemployment among the people, low salaries for few people who remained in industries and low ability to buy manufactured goods. The G.E.D mainly happened in 1929 to 1932/33 when there were a lot of measures to solve it.
Features of Great Economic Depression (1929-1932)
Causes of Great Economic Depression
- Fall of production in the industries in USA, Britain, and others due to over production of goods which were not purchased by the consumers.
- Low prices especially of wheat in the US and Canada which faced farmers who had stock piles of crops, they had to dump some wheat and other crops into the sea or burned them in order to create scarcity.
- Closure and poor performance of banks in the Capitalist powers, for example, 5000 American banks closed by 1932. In 1931 the largest Austrian banks announced the great loss, so this crisis in the banks was caused by a failure of businessmen to pay back the money they had borrowed for more production in the economy.
- Unemployment in the world. For example, 30 million people had no job by 1932.
- Fall of World’s international trade prevailed from 1929 to 1932/33
- The collapse of the national income of capitalist countries for example between 1929 and 1932 the USA’s national income fell from $85 billion to $37 billion.
- Low wages, food shortages and poor social services were the common problems during the economic depression.
Effects of G.E.D in the USA and Europe
- First World War and its effects, the war had ruined the capitalist economies with the exception of US economy, after the war the capitalist nations took steps to revive their economies by constructing industries, railways, roads and establishing farms for the production of cash crops in the early 1920’s.
- High protective tariffs by the USA on the imported goods from Europe, this became a trade barrier in the International trade. These tariffs were fixed by the US in order to protect its industries from competition with foreign goods so this led to the rise of stock piles which could not be consumed.
- Unequal distribution of income in the capitalist world, capitalist aimed at increasing profit in the production of goods so they paid low income to the workers/ proletarians who later failed to buy the goods due to low purchasing power.
- The fall of stock exchange in USA, stock exchange are the places where businessmen sell and buy shares in the companies which produce goods. Normally the companies use the shares to expand production and make profits which would be divided as dividends to the shareholders. So with this fall many businessmen were no longer buying shares and others withdrew their money from industries, banks and farms. Companies had no capital to continue with production and sales.
- Failure of speculators in paying back for the loans borrowed from Banks, they had obtained such money with the intension of investing in industries, farming, and other business with the aim of getting profit. In 1929 they could not pay so banks had to close down due to the loss of the money which had been lent to the speculators in the economy.
Effects of G.E.D in the African colonies (East Africa)
- People lost jobs because the trading companies and industries closed.
- Germany was no longer able to pay the war reparation to Europe allies.
- Caused the rise of over production in US, Britain and other powers, they were too many goods which could not be bought.
- A financial system such as banks had no money and many closed down.
- It led to the growth of military and dictatorial states in Europe, such states were Germany under Adolf Hitler and his NAZI party in 1933 and Italy under Benito Mussolini with fascism ideologies in 130’s
- Drastic fall in the prices of raw materials in the colonies, capitalist could not demand raw materials as they did before the depression.
- Fall of worker’s wages in the colonies, colonial governments had low income. They reduced the number of wages. For example, in Kenya, the wages fell from 36 to 10 in 1930’s
- The colonial government reduced the size of armies in order to minimize government expenditure so unemployment happened in the colonies.
- Africans continued to get a poorer education and health services due to the reduction of government expenditures.
|08-01-2017 01:23 PM